HDB Policy Towards Private Property Owners

· Thinking of Selling

HDB Policies

The Details

Regulations allows HDB flat owners who have fulfilled their Minimum Occupation Period (MOP), which is 5 years, to purchase a private property. A HDB owner who wants to own a private property can purchase one after the 5-year MOP. In contrast, a private property owner who wants to buy a HDB flat needs to sell any private properties that they own.

In other words, if you want to own both a HDB flat and a private property, you need to buy a HDB flat first, wait 5 years, and then buy a private property after that. You can’t do it the other way around (i.e. buy private property first).

Why Are Private Property Owners Prevented From Owning Private Property And Then Buying a HDB?

The first reason that comes to mind is that by allowing private property owners to buy HDB flats without selling their existing private property unit(s), potential home buyers will be able to game the HDB MOP system by buying a private property first, before buying a HDB flat in order to own both a HDB and a private property without waiting out the 5 years MOP. In contrast, a HDB homeowner will need to wait 5 years before being allowed to buy a private property. This helps in keeping it fair for HDB owners.

The second reason has to do with socio-economics. Back in 2010 when the policy was first introduced, the property market was on a bull run and HDB flats were likewise “enjoying” sky-high valuations.

To help cool the market, the government disallowed concurrent ownership of both HDB flat and private properties during the MOP. This in turn helped cool the market, as richer private property owners were not allowed to enter the HDB market unless they were willing to dispose off their private property unit(s).

But Is This Unfair To Private Property Owners?

It is no secret that Singaporeans love properties. For the older generation, much of their savings and investments have been used to upgrade themselves slowly from a humble HDB flat to the condominium unit they now own and live in today.

However, not all private property owners are that rich from a cash point of view. Some of them may have the bulk of their net worth contained in a single private property.

A retirement strategy that many older folks used to be able to consider is to rent out their private property for rental income, while they downgrade to a simple HDB flat during their retirement. Yet, such a strategy is no longer possible because concurrent ownership of both HDB flat and private property is not allowed during the MOP.

What these people now need to do is to sell their private property in order to own a HDB flat.

Instead of monetising their private property through renting it out for passive income, they can only sell it for a lump sum amount and to re-invest the capital received elsewhere instead.


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