BTO vs Resale
The Ultimate Guide
Are you eligible for a BTO/ resale flat?
To qualify for a BTO/ resale HDB flat at all, the first requirement is that if you’re buying as a couple, at least one of you must be a Singapore citizen, while the other must either be a Singapore Citizen or a Singapore Permanent Resident. If you’re buying as a single, you must be a Singapore Citizen.
BTO hopefuls, the next step is to match yourself against the other eligibility criteria for applying for a BTO flat. In comparison, the criteria for buying a resale HDB flat is more lax. For instance, some might be priced out of the BTO option if their income is too high.
Can you wait?
It’s no secret that one of the biggest drawbacks of getting a BTO flat is the waiting time. In comparison to resale HDB flats where it can take you as quickly as 8 weeks to seal the deal and move in, BTO involves a lot more patience, and luck.
To begin with, you have to be successful in your BTO application. Some lucky ones hit the BTO jackpot on their first few tries, but for some others might still be unsuccessful after years.
From then, it takes 3-5 years for your new home to be built.
So, the question is: Can you afford to wait?
Location
BTO projects tend to be in non-mature estates, or even in towns that kind of don’t even exist yet. Non-mature estates are residential areas that are considered less than 20 years old, namely: Bukit Batok, Bukit Panjang, Choa Chu Kang, Hougang, Jurong East, Jurong West, Punggol, Sembawang, Sengkang, Woodlands and Yishun.
If you’re looking to buy a resale HDB flat, on the other hand, you’re free to look for homes anywhere in Singapore, even in mature estates like Marine Parade, that pretty much never have any BTO launches any more.
Space
If you’re looking at buying an older HDB flat (by which we mean at least 30 or 40 years old), you might get more floor area.
But here’s the other thing to look at: the design of the flat. Over the years, HDB flat layouts have changed to make it easier to maximise each space within the flat.
For instance, each HDB flat’s dining area has been incorporated into the living area to provide a more spacious overall common living space, which also gives you greater flexibility in styling your home.
How much is it?
BTO flats come heavily subsidised by the government, which explains why they’re often cheaper than resale flats.
CPF Housing Grants
You’re actually entitled to more CPF Housing Grants when buying a resale HDB flat instead of a BTO.
For married couples, the maximum grant amount you can get for a resale HDB flat is $160,000, compared to $80,000 for a BTO. And for singles, you’ll get a maximum of $80,000 for a resale HDB flat vs $40,000 for a BTO flat:
Bargaining
With resale HDB flats, you’re able to negotiate for the price of the property.
Especially if it’s a buyer’s market – when there are more homeowners looking to sell their home than people looking to buy – you’ve got more bargaining power, giving you a better chance of successfully negotiating prices down.
Renovation costs
Home renovation is one huge aspect of home-buying that many overlook: all of the costs you rack up after you’ve bought your flat.
BTO flats come as a blank canvas, so most definitely expect some degree of home renovation. It’s up to you to do it up entirely, from installing flooring and built-in fixtures to painting the walls.
For resale HDB flats, you could technically not do any renovation at all, OR you might end up having to do even more renovation works than BTO flats require.
If you’re happy with the as-is condition of the flat, you might not have to do any renovation works at all. In fact, many homeowners choose to refresh their home with a fresh coat of paint or do some minor improvements just before selling their flat to improve its marketability, which means you as a buyer inherit a freshly spruced up flat.
On the flipside, if you’re planning on redoing your resale flat, that’s when it gets a lot more expensive than just doing a BTO flat. For instance, before you even pay for the installation of new floor tiles, you’ll also have to fork out a good amount to hack away the existing ones.
How many years are left on the lease?
BTO flats come with a fresh 99-year lease, whereas resale HDB flats, depending on how old they are, have a limited period left on their lease.
The number of years left on your flat’s lease affects 2 things: how much your flat is worth, and how much CPF you can use to purchase your flat.
Lease decay
When your HDB flat reaches the end of its leasehold life, it will be returned to the government at no cost.
It follows, generally, that the older a home, the less it’s worth on the resale market.
The allure of older resale HDB flats
Things aren’t this straightforward, of course. There are also other factors that might increase the value of resale flats.
For instance, homeseekers who value the wider range of amenities in mature estates may be willing to fork out more money for a resale HDB flat in the area, even if it’s an older one.
CPF limits
If the flat can cover you* until at least 95 years of age:
If the lease doesn’t expire before you turn 95, you’re allowed to use your CPF savings to finance your flat up to the flat’s Valuation Limit (the current property value or the purchase price of the property, whichever is lower).
If the flat doesn’t cover you until at least 95 years of age:
You’ll only be allowed to use your CPF funds up to the Valuation Limit pro-rated according to the length of time the lease can cover you.
But if the flat has less than 20 years of lease remaining:
You’re not allowed to use any CPF savings to finance your flat.
* “You” refers to the youngest buyer. For instance, if you’re 30 and your co-homeowning partner is 28, your partner’s age will be used in the calculation.
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