To buy or not to buy?
All HDB flats in Singapore are built with a 99-year lease. And when the lease expires, your HDB flat is returned to the Government.
Older HDB flats are cheaper
The bad news: Lease decay. Older flats are worth less because they have a limited number of years left on their lease; and in general, they’ll be worth less and less.
The good news: Nonetheless, people apparently still don’t mind buying older HDB flats.
Older HDB flats are larger in size compared to new BTO flats these days
Only if you compare super old HDB flats to super new HDB flats, as flat sizes have remained constant in size for the past 20 years.
HDB isn’t trying to shortchange you – they’ve also improved the layout of HDB flats to make it easier to maximise every inch of space within the flat.
Older HDB flats will always look… Um, old
Design-wise, there are certain characteristics found only in older HDB flats: rounded doorways, functional but definitely not aesthetic exposed pipes…
Older HDB flats have a lot more problems
According to HDB, flat owners of upper and lower floor units have a shared responsibility in maintaining the conditions of your respective flats, which means any repair costs will have to be shared between the both of you.
Older HDB flats are much more likely to get en bloc-ed
In the Selective En Bloc Redevelopment Scheme (SERS), certain HDB flats are selected to be repurchased by the government.
If your HDB flat is selected, you’ll have the option of moving to a new home with a 99-year lease and also receive compensation for rehousing.
That said, not all old HDB flats will automatically be selected for SERS. In fact, only 4% of HDB flats have been identified for SERS since it was launched way back in 1995.
While it’s true that there’s no good reason to en bloc a newly built BTO project, don’t count on SERS to definitely happen to your older HDB flat.
Older HDB flats won’t last me for the rest of my life
The limitations placed on how you can finance your HDB flat is actually a way to ensure that you’ll have a roof over your head even in your old 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).
This is meant to ensure you’ve got adequate funds in your CPF account, so that even if your lease expires in your lifetime, you’ll still have finances to have a home till a ripe old age, and, you know, survive and stuff.
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.
To buy or not to buy?
Although some Singaporeans think buying an older HDB flat is a bad property move, the increasing popularity of these flats suggest otherwise.
Perhaps some like the allure of older flats, especially those in heritage-rich districts like Tiong Bahru or Marine Parade; or for others, they’re most attracted to the price tag.
In any case, don’t immediately dismiss these older HDB flats, and you might just find yourself a gem.
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