Saturday, May 6, 2023
HomePropertySo you've got met your MOP. Now what are you able to...

So you’ve got met your MOP. Now what are you able to do together with your flat?

Flat homeowners look ahead to their MOP like NS males look ahead to their ORD. As soon as it occurs, you’re free to…keep it up with 20 extra years of debt? Obsess over the impression of a close-by columbarium on property worth? Eh, listed below are some higher concepts.

However first, what’s the MOP?

The Minimal Occupation Interval (MOP) is a five-year stretch that applies to most HDB properties (sure, together with Government Condominiums that haven’t but been privatised).

*The MOP is prolonged to 10 years for Prime Location Public Housing (PLH) flats.

Through the MOP, you can’t promote your flat on the open market, and you can’t hire out your entire flat (though you possibly can nonetheless hire out particular person rooms, offered you continue to dwell there). As well as, you can’t purchase a personal property through the MOP.

One exception to the rule is when you personal a one-room resale HDB flat, which you bought with none HDB grants. There’s no MOP on these models. (Though this exception doesn’t appear to use anymore; as of this replace, HDB’s web site states that resale flats purchased with none grants are topic to the five-year MOP).

hdb mop
Supply: HDB

The MOP begins from the day you full the sale transaction (aka once you gather the keys to your new house). If there’s a niche wherein you’re not dwelling within the flat (e.g. you fly abroad to work for 2 years), these years don’t depend towards your MOP.

So, that being mentioned, what are you able to do after your MOP? Effectively, you possibly can…

  • Purchase a personal property along with your flat (when you’re a Singapore Citizen)
  • Improve to a personal property
  • Transfer in elsewhere and hire out your entire flat (when you’re a Singapore Citizen)
  • Promote and transfer to a special flat

1. Purchase a personal property along with your flat (when you’re a Singapore Citizen)

You should purchase a flat after which a condominium, and personal each. However NOT the opposite approach round.

Should you’re a Singapore Everlasting Resident (PR), skip to level 2, or maintain studying to rage on the unfairness.

A Singapore Citizen should buy a personal property along with their HDB flat, as soon as the five-year MOP is up. Additionally, do you’ve got some huge cash? Since you’ll want a ton of it. Like, enough-to-take-a-year-off-work ranges of cash.

First, you could pay all the standard taxes, such because the Further Purchaser’s Stamp Obligation (ABSD) of 17% on the second property. Then, you could be prepared for both an enormous down fee or to repay the excellent house mortgage of your present HDB flat.

That’s as a result of, when you nonetheless have an excellent house mortgage once you purchase the second property, the most you possibly can borrow is 45% of the property’s worth or worth (whichever is decrease).

Assuming you agree all that in money with out triggering a Central Narcotics Bureau investigation, congratulations! You’re a proud proprietor of a flat and a condominium. You possibly can generate rental revenue by dwelling in a single and renting out the opposite.

As an essential apart, notice that you simply can’t do that the opposite approach round. Should you personal a personal property after which purchase an HDB resale flat, you’ll have to promote the non-public property inside six months.

(Though the present short-term regulation is that, following the September 2022 cooling measures, you’ll need to promote the non-public property 15 months earlier than you should buy a resale flat. That’s, until you’re 55 years previous and above and shopping for a 4-room flat or smaller.)

The one method to have each an HDB flat and a personal property is to be a citizen, purchase a flat, anticipate the MOP to be over, after which purchase a personal property.

2. Improve to a personal property

Private Property Prices Increase
Promote first and purchase subsequent, or purchase first and promote subsequent? Be sure you perceive the variations entailed.

After the MOP is up, you possibly can promote your flat and improve. There are two methods to do that:

First, you should buy a personal property first, after which promote your flat. That is often extra handy, as it might remove the necessity for short-term lodging. But it surely’s additionally a a lot greater problem.

Should you select to purchase a second property earlier than promoting your flat, you could pay the ABSD as ordinary. Then, when you’re a married couple and at the least one in all you is a Singapore Citizen, you will get ABSD remission when you promote the flat inside six months of shopping for a second property. Should you can’t promote the flat inside six months, then thanks on your contribution to nation constructing.

Additionally, you’ll in all probability need a mortgage dealer to kind out the paperwork with the financial institution. Until your current flat mortgage has been paid off, you might get a decrease financing on your non-public property as a result of Whole Debt Servicing Ratio (TDSR), which limits your month-to-month debt obligations.

You’ll want documentation to show to the financial institution that you simply’re within the strategy of promoting your flat, and can accomplish that in six months. These embody:

  1. A replica of a signed enterprise to the HDB committing to finish the sale of your present property inside the interval stipulated within the enterprise
  2. A written declaration that you’ll take steps, in accordance with the signed enterprise, to promote your present property.

The financial institution will then take into account excluding the month-to-month instalments of your present flat within the TDSR calculation, to be able to get the next financing.

The choice to all this problem is simply to promote your flat first, gather the proceeds and repay the flat mortgage, and then purchase a personal property. The draw back is that there could also be a delay, throughout which you’ve got neither an HDB flat nor non-public property to remain in. You’ll have to search out short-term lodging for some time.

Properties for hire which can be out there now


3. Transfer in elsewhere and hire out your entire flat (when you’re a Singapore Citizen)

Old man crossing his arms in an X
Transfer again in with dad and hire out your flat? What might go incorrect?

Once more, skip this when you’re a PR. Sorry, however solely residents get to hire out their total HDB flat. PRs can solely ever hire out rooms, however not the entire unit.

For you fortunate residents, this will flip your flat right into a cash-generating asset. For instance, in case your dad and mom have an enormous flat or condominium already, you possibly can transfer in with them and hire out your entire flat. It’s frequent for some {couples} to do that for a number of years after their MOP has completed, as they’ll save up the rental revenue as down fee on a condominium.

For instance, say you need a S$1.5 million condominium. The minimal money part is 5%, or S$75,000 (the remainder of the down fee can usually come out of your CPF). Should you transfer in with mum and pop, and hire out your total flat for S$2,800 a month, you possibly can greater than cowl this value after two and a half years.

Condos on the market at S$1.5m and beneath


4. Promote and transfer to a special flat

The tip of the MOP is a chance to maneuver someplace extra applicable. Both to be nearer to your office, to right-size for monetary advantages, or to minimise the probabilities of showing on Crime Watch, since you’re one argument away from throwing that annoying neighbour down the steps.

There’s three issues to notice, if you wish to do that.

First, when you’re going to purchase a second subsidised flat, you could be ready to pay the resale levy.

That is the quantity you could pay again to the federal government, as a result of they subsidised your first flat, bear in mind? The quantity is at the moment as follows:

  • 2-room flats – S$15,000
  • 3-room flats – S$30,000
  • 4-room flats – S$40,000
  • 5-room flats – S$45,000
  • Government flats – S$50,000

For Singles Grant recipients, the quantity will probably be halved. For instance, the resale levy for 2-room flat, for a Singles Grant recipient, is S$7,500 as a substitute of S$15,000.

Should you’re going to purchase the second flat earlier than promoting your present flat, the levy may be deducted from the gross sales proceeds — any shortfall should be paid in money. Be aware that you should promote your earlier flat inside six months of shopping for a brand new one.

Should you’re going to promote your current flat first, you’ll need to pay the resale levy upon shopping for your second flat (this needs to be in money).

Second, you could refund any CPF monies you used again to your CPF account.

This contains any CPF grants used, in addition to the 2.5% annual curiosity that you’d have earned when you hadn’t used your CPF monies for the home. You possibly can log in to your CPF account to confirm the quantity. The excellent news is you can nonetheless use your CPF monies to pay on your subsequent flat.

(Should you managed to pay on your flat with out utilizing CPF financial savings in any respect, then congratulations, you possibly can maintain the money.)

Third, when you’re shopping for a resale flat, there are some variations to the mortgage.

You possibly can take a second HDB mortgage and purchase one other flat instantly, as a substitute of ready for the gross sales proceeds out of your earlier flat.

However when you do that, the rate of interest is just not the standard concessionary fee of two.6%. As a substitute, it’s pegged to the rates of interest provided by the three native banks (DBS, OCBC and UOB).

After you’ve bought your earlier flat and gotten the gross sales proceeds, you should pay again as much as 50% of the money proceeds into this mortgage. On prime of that, you’ll have to make use of the CPF monies refunded to pay for the following home. After that, the mortgage is transformed to the standard HDB mortgage on the concessionary 2.6% every year.

If you wish to promote your current flat and purchase a second one on the similar time, you should utilize the Enhanced Contra Facility (ECF).

Merely put, ECF allows you to faucet on the sale proceeds and returned CPF monies to immediately pay on your second flat. However notice that stamp duties and authorized charges need to be paid in money, as a substitute of with CPF, when you use this methodology.

For extra data, try’s information on what it’s best to know earlier than shopping for your second HDB flat.

And people are your choices! Earlier than you decide any of them, simply bear in mind…

  • Make preparations for cumbersome furnishings, particularly when you’ll use short-term lodging
  • Examine on to ensure you’re getting one of the best costs on your subsequent house (psst, now we have listings which can be completely on
  • Begin the sale course of early, particularly when you’ll have to promote your flat inside six months. Don’t find yourself paying ABSD once you’re probably not shopping for a second home; that’s simply ridiculous. Work together with your actual property agent on a advertising and marketing technique, effectively earlier than the six month timer begins.

[Additional reporting by Virginia Tanggono]

Must promote your flat inside six months? Think about participating a property agent when you haven’t accomplished so.

Should you discovered this text useful, recommends Promoting your flat quickly after MOP: Sensible transfer or dumb transfer? and Full record of HDB BTO initiatives hitting MOP in 2023 (and do you have to promote proper after MOP?).



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