Who can buy HDB flat in Singapore?

by admin | Aug 23, 2022 | Uncategorised

Kumar Properties

Who can buy HDB flat in Singapore?

This question is one of the most frequently asked question by the people. Generally people have questions like who can buy HDB flat? Or Is PR eligible to buy HDB flat in Singapore?

There are multiple eligibility criteria to buy HDB flat

First thing comes under consideration is Citizenship. Atleast 1 of the applicant of the HDB flat should be Singapore citizen or Permanent Resident (PR).
Next you should qualify for alteast one of the following schemes such as Public Scheme, Fiance / Financee Scheme, Orphans Scheme.

i) Public Scheme: To qualify for this public scheme, any one of the following family nucleus should you need to form

If any Spouse and children
If any parents and siblings
If widowed/ divorced, children under your legal custody, care and control

ii) Fiance/Fiancee Scheme: If you want to qualify this scheme, you need to have nuclear family with your spouse-to-be and you should marry within three months of getting your HDB flat keys. To buy HDB flat will require a photocopy of marriage certificate.

If you have married before your marriage before collecting the keys, you need to submit the photocopy when you have visited HDB office to collect keys.

Else if you married after collecting keys, then you will need to submit your marriage certificate to your managing HDB branch.

iii) Orphans Scheme: For this type of scheme, If HDB buyers are orphans and single, cannot buy or rent flats separately. And you should have one of the deceased parents who are Singapore citizens or permanent residents.

Age is the third thing should be considered, If you are widowed or orphaned you should be atleast 21 years and if you are unmarried or divorced you should be 35 years old.

You should be within the incoming ceiling of the flat you want to purchase.
Property ownership is the next step should be qualified. If you wanted to own HDB flat in Singapore you should not bought HDB/DBSS flat or Executive condominium or received any CPF Housing Grants before.

These are things to be considered and you should be eligible to buy HDB flat in Singapore. To know more details about HDB or any property visit us.

If you want to buy HDB flat or you wanted to sell your HDB flat contact us, we will help you in any property investments.

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How to Upgrade from HDB Flat to Private Property?

by admin | Jul 20, 2022 | Uncategorised

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How to Upgrade from HDB Flat to Private Property?

In Singapore, almost 80% of the people have HDB flats. Their main aim is to buy better private property. If you have bought your first HDB flat with an easy process, they upgrading HDB flat is simple. But upgrading from an HDB flat to private property is much harder than buying first HDB flat.

Why Buying HDB Flat is Much Easier Than Upgrading From HDB to Private Property?

When you buy your first property, you will be having main concern about the minimum paying downpayment and you will be thinking about whether you will qualify for an HDB/ bank loan. If you want to choose an HDB loan, the minimum downpayment required is 10% and for a Bank loan, the minimum downpayment required is 25% and 5% should be cash. Because of this reason, many of HDB buyers prefer HDB loan instead of Bank loan eventhough interest rate of bank loans are higher.

When upgrading from HDB flat to private property, steps will be much more complex. If you are careless while processing, there will be much more chances of getting something wrong. Still for upgrading HDB to private property is a double process, first you need to sell your HDB flat then you need to buy property.

So for upgrading HDB flat to private condo consulting property agent is the best idea to make process in smooth way. The property agent will guide in every step of selling and buying process of property. You will be having stress process for upgrading your property.

Do You Want to Sell Your HDB Flat Before Buying a Private Property?

If you want to upgrade from HDB flat to private condo, my suggestion is to first sell your HDB flat then plan for a condo. By selling your HDB flat you will receive some amount of money and you can analyse which property you can afford. Then you can afford better property than you think. Secondly, if you sell your existing hdb flat within 6 months you can avoid 12% of ABSD (Additional Buyer Stamp Duty). Selling your HDB flat in a hurry to get ABSD remission is the last thing you want to happen, as this may result in accepting a lower offer than you wanted.

For instance, if you want to buying other private property, price of that condo is $1 million you need to pay 12% of ABSD that means you need to pay $120,000. If you have not sold your HDB flat upon exercising the option to purchase the private property.

Steps to Upgrading from HDB flat to Private Property

Step 1: Making decision to sell your HDB flat:

If you decided to sell property, engaging with property agent is the best thing to complete selling process easy. Before giving your property for marketing make sure to discuss about the commission fee and exclusive agreement with the real estate agent.

One of the best agent for selling property or upgrading your property is Kumar. He will help you to sell your property above market value and also give suggestions for next purchase of your property. First you need to register your intent to sell for your HDB flat. You can only grant an Option-To-Purchase (OTP) to buyers at least 7 days after registering your intent to sell. Depending on the location, demand on your property it takes time to sell your property.

Step 2: Issuing An Option-To-Purchase (OTP), Receiving The Option Fee & Exercise Fee

If you market your HDB flat and you will be receiving so many offers from the buyers. You should choose potential buyer who can offer more money to buy your HDB. To grant the OTP for an HDB flat, the potential buyer needs to pay an option fee of between $1 to $1,000. This is unlike buying a private property when the option fee is usually at least 1% of the mutually agreed price.

In the case of a poor valuation report, the cash over value (COV) will be $50,000. If the HDB valuation report is only $450,000, the flat will cost $500,000, but the cash over valuation (COV) will be $50,000. As HDB will only perform the valuation after the OTP is issued, buyers and sellers faced some uncertainty.

It doesn’t matter whether you have issued the buyer an OTP or not. They can still look for other flats that are more suitable for them. The same block/level as a parent’s HBD flat may suddenly become available to an already committed buyer for a similar price. In such a situation, even if they have paid you $1,000 for the OTP, they may choose the other flat and not exercise it. Alternatively, they may find a cheaper flat, even after accounting for the option fee that they have paid.

During this period, you cannot issue an OTP to another buyer. If your buyer does not exercise his OTP within 21 working days, the option lapses, and you are allowed to grant your OTP to other buyers.

To exercise the OTP, the buyer will need to pay a deposit to you. This is an amount that should not exceed $5,000.

Step 3: Once The Buyer Exercise The OTP, You Can Start Looking For Your Private Property

Once your buyer has exercised the OTP for your HDB flat, this gives you the leeway to start looking for your private property.

At this point in time, you would already know the selling price of your HDB flat and how much cash proceed you will get from the sales. You will also have a gauge on when you are expected to hand over your keys to the new owners. This basically acts as the timeline to finding your new place.

Most importantly, according to IRAS, once an agreement to sell your HDB has been issued and executed to buy the property, it’s no longer considered as a residential property that you own. Essentially, this means that if you buy a private property after the OTP for your HDB has been exercised by the buyer, you would not be liable for ABSD.

Source: IRAS

Depending on how urgent you need to move into your new home, you may need to speed up the process of purchasing your private property. A piece of advice here would be to shortlist a few potential places that you can afford in advance before you sell your HDB flat. This allows you to immediately start looking and negotiating for your private property purchase once your buyer has exercised the option to purchase your HDB flat,

Alternatively, if you have interim housing solutions for your family, you will have more time to search for your next property purchase.

Step 4: Calculate Carefully Your Cash Flow Timeline From Selling The HDB Flat

Being able to afford to upgrade from an HDB flat to a private property is one thing. Managing the cash flow situation that is required to complete the transaction smoothly is another. Here’s a scenario to explain.

Let’s assume you have sold your HDB flat for $500,000. With an existing loan of $200,000, your proceeds will be $300,000. Of this, $150,000 needs to be refunded to your CPF Ordinary Account (OA). We also assume that the private property purchase would be $1 million.

For simplicity, let’s assume that the option for your HDB flat was exercised on 1 January. After the option had been exercised, both buyers and sellers must submit a resale application for HDB to approve. We assume that this was done in 2 weeks’ time, on 15 January.

Upon receiving the resale application, HDB will post the application results – if all documents are in order – within 14 working days (about three weeks),. This will bring us to the first week of February.

Upon HDB’s acceptance, it will take about 8 weeks from the date of acceptance to process the sales application. Based on the timeline, this brings us to the first week of April. You will receive your cash proceeds during that period, but it will take about a week before the refund is made to your CPF. This means that you will only have the full disposable cash and CPF amount of $300,000 to utilise for your private property purchase sometime in mid-April.

Step 5: Cashflow Timeline For Buying A Private Property

The cash flow timeline from purchasing a private property is crucial. Since the HDB flat has been sold for $500,000 with an outstanding loan of $200,000, you will get a sales balance of $300,000. On paper, with $300,000 in cash and CPF to deploy, you would be able to meet the minimum down payment requirement of $250,000 (25% of $1 million).

However, that is not the only thing to be concerned about. Cash flow timeline management is also vital.

To make an offer for a private property, you usually have to pay an option fee of 1%. This means that you need $10,000 in cash to secure the OTP. By default, you need to pay the remaining 4% to exercise your option within two weeks though you can negotiate the option period with the seller.

Thus, to exercise the option, you need a total of $50,000 in cash. This means that you either need to have the cash on hand to secure and exercise the OTP, or wait till early April when you receive the cash proceeds from the completed sale of the HDB flat. You will also need to pay the buyer stamp duty in cash, which is about $24,600 for a $1 million property. All in all, the total cash outlay to secure the OTP, exercise the option and pay the buyer stamp duty is $74,600, for a $1 million private property.

Assuming you have enough cash, you have the means to start searching, secure the OTP and exercise the option for your private property before early April. If you do not have enough cash, you will need to wait until the full amount from the sale of your HDB flat is credited to you.

Typically, upon exercising your option for a private property purchase, it will take about 12 weeks for the date of completion for the property. Say, if your HDB option was exercised on 1 January, and you exercised the option to purchase your private property on 19 January, then the date of completion would be around 19 April. This gives you just enough time to ensure that you have received the proceeds from the sale of your HDB, to pay for the down payment required for your private property.

The table below shows the timeline beginning from the sale of your HDB flat to the purchase of your private property.

As you can see from the table above, the timeline is relatively tight when it comes to when you would receive the full amount from the sale of your HDB flat, and when you need to pay the down payment to complete the purchase of your private property. If you don’t have enough funds, you will need to delay the completion of your private property purchase.

During this period, you will need to secure the bank loan required to finance your private property purchase and engage a law firm to assist you with the paperwork required to complete your property transaction. Legal fees would typically cost you between $2,500 to $3,000. You will also need to pay the commission to your agent, which will typically be deducted from the proceeds that you get from the sale of your HDB flat.

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Why do People in Singapore Buy Property Under Their Children’s Names?

by admin | May 25, 2022 | Uncategorised

Kumar Properties

Why do People in Singapore Buy Property Under Their Children’s Names?

In these recent years, many people are purchasing property under their children’s names. Buying property is the biggest dream for many people. In 2019 there are some articles mentioned there is no data about it but there are some signs that a number of wealthy families are buying private property under their children’s names.

There are some queries about this topic. Why do parents purchase property under their children’s names? Are there any benefits in the future for their children? Any financial concerns involved – should follow this rule? In this way, there are many things people have confused about purchasing a property.

To answer these kinds of questions we are sharing this article here. Please read this article and share it with other people who have queries. Let’s know more.

What Are The Benefits of Buying Property in Singapore Under Child’s Name?

1. In the Future Good Investment For Your Child

Indeed some parents are anxious about the rise in private property prices in the future, if they purchase now in their child’s name they will make a profit. These are the reasons which made buying a property now, but in their children’s names, a decision popular among some parents who are cash-rich and able to afford the mortgage payments.

If a person is good at financial situations such as who can take a mortgage loan and without a break pay installments and if you are sure that your property value will increase in future. Then this is the right decision to purchase for your child. Otherwise, you need to face the hurdle of confirming whether your home loan is approved or not approved in such situations as purchasing property under a child’s name.

If you need any kind of guidance, feel free to contact Kumar Properties for recommendations and advice.

2. At An Early Age, Better Chance To Earn Income For Yor Child

To purchase private property under their child’s name, some parents will use a trusted system and rent that property. Later they put rent money towards the savings account for their child’s future. Alike investments or stocks, Your child’s financial future is reliably the safest space in Singapore’s property market. Genuinely property is a gift for the future, it is the benefit for your child to buy a Singapore property now because of the rise in future prices.

Another important note is that if your buy property by using a trust system for your child, you will not be allowed to take a home loan to finance it. If you want to take a home loan you need to wait until your child is at least 21.

3. Get Better Fund on the Next Home Loan

This is the best strategy for the people who already own one property and they want to afford a second property. Then the loan to value (LTV) ratio for a second property loan will be 45%. If you want to get more funds for the property’s cost as well as higher LTV, you need to opt for this approach, since it is taken into consideration as the first property for your child and eligible for the full LTV.

However, when your child matures only the full payment for your second property will be paid. During this period they look to move out from their current family, so they are financially free to make their own property and apply for their own lines of credit.

What are the drawbacks of buying property under a child’s name?

There are many advantages to buying property in Singapore under your child’s name. But, there are also some disadvantages that might affect your child’s future if you decide to buy a second property.

1. New ABSD (Trust) of 35%

On May 9th, the Ministry of Finance (MOF) announced an ABSD of 35% will be imposed on any transfers of residential properties into a living trust. For instance, if you buy a property for $2 million in trust for your child, you need to pay $700,000 in ABSD.

A new ABSD is imposed by the MOF in order to ensure equality among people. ABSD will be due regardless of whether the beneficial owner of the property is unknown at the time of the transfer. Many parents wish to leave a legacy for their children, but others feel that doing so risks worsening inequality.

Related Article: There is an article about Things to know about the new ABSD (Trust): 35% rate and conditions for the remission.

2. High Investment Risk May Affect a Child’s Future Credit Score.

You could adversely affect your child’s credit if you cannot afford to pay the mortgage installments on time and end up in arrears. If your child has a history of late payments and other mistakes, they may be unable to get loans for important things like education or cars in the future as a result of involvement in a mortgage. Your child is likely to end up with a money pit, and if they wish to buy public housing (e.g. an HDB flat) in the future, this ability may be impeded if they cannot sell the “investment property”.

Assuming you are still paying off the mortgage for the private property and your child wishes to settle down but is having difficulty letting go of the property, this may leave you in a difficult situation. You will still cause your child delays and inconvenience if you do sell the property easily, as HDB rules state that your child must wait 30 months before he/she can purchase a BTO from you after selling the property.

3. Disagreements regarding family property can result in legal disputes

The child becomes a legitimate owner of a property when it is placed under his or her name. Some parents fail to recognize this fact. Upon reaching that age, your child has the legal right to sell, rent, or take possession of your property. It is imperative that you take precautions when dealing with your child. Your child will be the one who determines what happens to the property.

It has been noted that legal disputes have arisen within families when parents and children cannot reach an agreement on what to do with the property in question, and many families have been strained or even broken by these disagreements.

4. Subsidies or vouchers will not be available to your child

Almost every child who owns at least one private property will not qualify for government subsidies, bonuses, or welfare cuts. In other words, GST vouchers and so on will no longer be considered part of the child’s assets.

Some parents neglect this when they buy their child a second home. If the above is not possible, you might want to reconsider putting the second home under your child’s name.

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6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

by admin | Apr 12, 2022 | Uncategorised

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6,000 HDB flats to be built in Greater Southern Waterfront, first BTO project within 3 years

Around 6,000 Housing Board flats will be built on the Keppel Club site in the Greater Southern Waterfront (GSW), with the first Build-To-Order (BTO) project to be launched for sale within three years. These units are part of the 9,000 homes that will be built on the 48ha site, which will offer unique waterfront living that is close to nature, announced National Development Minister Desmond Lee on Tuesday (April 12).

The remaining 3,000 units are expected to be private housing. A mix of public and private housing developments will be progressively scheduled for launch in the next three to five years, said the Urban Redevelopment Authority (URA). The 48ha site at Keppel Club – about half the size of Bidadari estate – comes under the mature town of Bukit Merah and is bounded by Telok Blangah Road, Berlayer Creek and Bukit Chermin. It has been earmarked for residential use in the URA Master Plan since 2014.

Mr Lee said: “Given its central location and the two MRT stations nearby, we will seek to keep the estate car-lite and enable residents to get around easily by walking or cycling.”

Future residents will be served by Labrador Park and Telok Blangah MRT stations on the Circle Line, which will be connected to the estate via walking trails. Within the site, close to 10ha – about 20 per cent of the site area and the size of about 18 football fields – will be set aside as parks and open land. This includes four green corridors that will run through the estate and serve as recreational spaces – the Central corridor, Berlayer Corridor, Henderson Corridor and the Northern Corridor.

Mr Lee said the plans are guided by recommendations from an environmental impact study (EIS) and feedback from nature groups. These may be fine-tuned after public consultation on the EIS report. Housing blocks will be designed with staggered building heights which step down towards the green spaces, to give residents the view of greenery at their doorstep, HDB said. They will also feature skyrise greenery and landscaped terraces.

Green roofs on lower-rise blocks will serve as additional habitats for butterflies and smaller urban bird species such as the locally endangered blue-crowned hanging parrot and oriental magpie-robin. “As the site is quite close to the city centre, we will bring homes closer to jobs. This is part of our effort to move towards having more housing options and mixed-use development in our central region,” said Mr Lee.

All development works will be confined within the brownfield site of Keppel Club, he added. Brownfield sites are land that had previous developments on them.

When the lease of the golf course runs out, the authorities will redevelop the land for housing, said Mr Lee. A Singapore Land Authority spokesman said the lease for the existing golf course site expires June 30. The existing clubhouse has until March 31 next year to clear and reinstate the site.

Mr Lee added that there are also plans to transform the former Pasir Panjang Power Station buildings into a distinctive and vibrant mixed-use district characterised by its unique industrial heritage and waterfront location. On whether the BTO projects in the Keppel Club site will fall under the prime location public housing (PLH) model, HDB said the model will be applied to selected public housing projects in prime and central locations such as the city centre and surrounding areas, including the GSW. These are areas that have very high market values and would require significant additional subsidies to keep flats affordable, said HDB.

While the Keppel Club site is within the GSW, the authorities will consider a range of factors – such as the project’s location, attributes and market values – before deciding whether to apply the PLH model, it added. Owners of flats under the PLH model are subject to stricter buyer and selling conditions, including a 10-year minimum occupation period and having the additional subsidy clawed back by the Government should they sell the units.

Mr Lee said HDB is building more homes to cater to the strong demand for housing from echo boomers – children of the baby boomer generation – and the increasing societal trend of having smaller households.

When launched, the BTO project will kick-start the transformation of the GSW into a mega waterfront development along Singapore’s southern coast. It is expected to draw strong interest, based on previous BTO launches in the area.

The Telok Blangah Beacon BTO project launched in May 2021 saw more than 23.3 applicants vying for each available unit – one of the highest rates in recent years. First announced in 2013, the the GSW comprises 30km of coastline stretching from the Gardens by the Bay East area to Pasir Panjang. It contains 2,000ha of land – six times the size of Marina Bay and twice the size of Punggol.

This is the news article from The Straits times

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