Andy October 27 2021

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Prime BTO Flats with 10 years minimum occupation period MOP and clawback of housing subsidies

Housing & Development Board (HDB) has announced that that buyers for future Prime BTO flats will have to commit to a requirement of 10 years minimum occupation period (MOP).

MOP defines the period that the owners must occupy their flats before they are permitted to sell it on the open market. A typical BTO flat MOP is only 5 years. 

Although these BTO flats in Prime locations will come with additional subsidies, those owners who eventually sell their units will have to pay back HDB a percentage of the flat’s resale price.

National Development Minister Desmond Lee said that this will address concerns that extra subsidies will lead to a windfall gain.

Since the flats in the prime locations will command a higher market value, the units will be priced with additional subsidies, on top of those existing subsidies given for all BTO flats.

HDB is fully committed to making flat prices affordable to most Singaporeans.

Following 10 months of public engagement, the new Prime Location Public Housing (PLH) model is introduced. 

In this new PLH model, the owners will not be permitted to rent out their whole flat, even after the ten years MOP is over. They could only rent out spare bedrooms.

The same restriction applies to the future resale buyers of the Prime BTO flats in the resale market.

Mr Andy Chia Jin Tai, associate division director at ERA Realty Network, said that the slew of measures of PLH model will ensure that the Prime BTO flat buyers are genuinely wanting to stay there and not with the intention to flip and earn a windfall.

Mr Chia said that it remains a challenge in the enforcement of the owners who rent out their whole flat. 

"The PLH model may benefit existing flat owners in Prime locations, for instance Pinnacle@Duxton," he added.

In the upcoming BTO sales in November, Rochor will be the first project under the PLH model.

HDB is targetting to launch at least one PLH project a year, subject to site availability, among other factors.