top of page

Sell, rent, or stay? What's next after your HDB BTO reaches its MOP?

Your quick and easy guide to help you decide on life after MOP.

Five years. After half a decade, you’re bound to grow attached to your current home. But what’s next?


Should you move? Should you stay? How should you decide?

Everybody's property story is different - which is why you need to plan for what's best for you.


If you're currently feeling unsure, fret not! This guide will help you understand your available options, to better decide which path you should take after your Minimum Occupancy Period (MOP).

 

First up, what is MOP and what are its rules? Minister of National Development Desmond Lee recently spoke in parliament to refresh our memories -

The MOP is the time period that you are required to physically occupy your flat before you can sell it on the open market. (Source: HDB website)

Besides selling, it’s also the time when Singapore citizens can rent out your whole unit.


The MOP is calculated from the date you collect the keys to your flat and excludes any period where you do not occupy the flat - a response likely sparked by news about a 5-room Yishun BTO that was left vacant for 8 years and was listed for sale in December 2022.


Beyond the familiar 5 year MOP, there are actually also other lesser-known schemes that extend to 10 years (for Prime Location Housing/PLH) or 20 years (Fresh Start Housing Scheme). That’s a really long time, especially considering how MOP was only 3 years before 2010.


So what are your options?

If you think it’s just choosing between keeping or selling, you’re only half right. Across both decisions, there are also three possible options each. Sounds confusing?


Don't worry as we’ll cover some of the pros and cons of each option so you’ll know what suits you best.


 

The 3 “Keep” Options


1. Keep and continue living

2. Keep but rent out the entire unit

3. Keep and buy a private property

The 3 “Sell” Options


4. Sell and upgrade/downgrade to another HDB

5. Sell and buy a private property

6. Sell 1 buy 2

 

"Keep" your BTO flat

Yes, the potential profits might be tempting - especially after hearing neighbours sell and move one after another. But don’t FOMO and rush to sell!


Not until you’ve thought it through anyway.

After all, your current home might still be serving you well, and there is definitely a hassle (and cost) associated with selling. But there are still a few options to take while keeping your current unit, so read on to find out more.

 

Option 1: Keep and continue living


We kept this as the first option, as it's usually the safest and most comfortable option. It is also the option to return to after you've compared all the other options AND still concluded that it makes sense to maintain status quo.


Buying, selling, or renting a home definitely comes with its own hassles and that's why many choose not to take action - which is completely fine! But read on to the five other options before making a decision.


Pros: No action required - which means no selling/buying cost.

Cons: Might not be maximizing your unit's potential.

Other considerations: Explore the other options before you decide on this!

Ideal for you if.. you're comfortable with your current place and don't want to change the status quo

 

Option 2: Keep but rent out the whole unit


To put it upfront, this is not for everyone, and can only be done by Singapore citizens.

Renting out your flat means that you’d need to have an alternate place to live in - perhaps with a relative, or in another property.


You could also rent somewhere else, just to rent out your unit. Why would anyone do that?

Well perhaps you’d prefer to live elsewhere temporarily for the convenience (school or work), yet you don’t want to sell and buy elsewhere just yet.


Pros: You can earn passive rental income from the unit

Cons: You'd need another accommodation option; there's hassle and cost from being a landlord

Other considerations: You'd have to pay a higher non-owner-occupied tax; rental stamp duty if you're renting elsewhere

Ideal for you if.. you have an alternate accommodation option, or if you need to move temporarily

 

Option 3: Keep and buy a private property


In the past, this option made a lot of sense for Singaporeans who aspired to own both a HDB and a condo - living in one and renting the other. After all, the only way was to get a HDB first.


However, with cooling measures introduced over the years, the killer four-letter word you’d have to face today is ABSD.


It’s an instant 17% gone into the pockets of IRAS, which might take years to recoup, even from the additional rental income. This is the key reason why we don’t often recommend this option anymore.


Pros: Own both a HDB and a private property - earn rental income from one

Cons: 17% ABSD on the next property, lower loan if HDB loan not fully paid

Other considerations: Non-owner occupied tax on the rental flat, hassle/cost of being a landlord

Ideal for you if.. you truly desire to get a second property but can't bear to let go of your HDB


P/S: There are also other ways to own both a HDB and condo, but we won't elaborate on it here to keep it short - feel free to drop us a message if you're keen to find out more!


But if your desire is merely to own two properties, keep an eye out for another option covered at the end of the article.

 

Sell your BTO flat


The most obvious reason for selling off your BTO when it reaches MOP is to cash out on this ‘pot of gold’. You may view it as your reward for being able to endure the construction period along with the MOP.


In recent cases, owners have reportedly made over 100% returns from selling their BTO when it reaches MOP - and this doesn’t just apply to HDBs in central locations. Units in Ghim Moh have reportedly earned 113% in paper profits, while units in Yishun and Bukit Batok has paper profits of up to 209% and 125% respectively (Source: 99.co).


Before deciding to sell, you should also check your home valuation as that will affect what you can do after. You may speak to a housing expert, or use our free home valuation tool to do so. Now, let's explore the options you have after selling.

 

Option #4: Sell and buy another HDB


Buying another HDB also means letting go of the previous one (within 6 months from key collection).


There could be several reasons why you'd do that - e.g. upgrade to a larger-sized HDB because you're planning a kid (or two) or WFH more often, rightsize into a smaller HDB, or to move to another location.


Perhaps you might have settled when selecting your BTO flat, and now you're in a better financial situation. Sometimes, especially for younger adults, it might also make sense to sell an aging property to get a younger one to avoid a faster lease decay/depreciation.


Ultimately this option lies on you and your family's needs.


Pros: Profits from your BTO flat can help you purchase your next flat with greater ease

Cons: Hassle/cost of both buying and selling

Other considerations: Depending on your finances, you might need to plan your buying/selling timeline to avoid a situation where you'd have to rent elsewhere first or have insufficient funds

Ideal for you if.. your current flat no longer fits you and your family's needs - in terms of size, location, age.

 

Option #5: Sell and buy a private property


Unlike option 3, where you have to incur ABSD, selling off your HDB avoids that hefty 17% ABSD.


There are several reasons why one might choose to get a private property (usually a condo) after selling their BTO flat. It could be for the lifestyle - you might have dreamt of living in a condo with amenities like swimming pool, gym, function rooms, and potentially tennis/squash courts - but you might not have been able to afford it as your first property. However after earning the profits from selling your BTO, and/or a potential improvement in financial situation, this dream can finally be realised.


Aside from individual aspirations, another reason to get a private property could be from an investment standpoint. With HDBs being a public housing option, the government places greater emphasis on ensuring it stays affordable (although it is getting more and more expensive). Which is why from 2012 to 2022, while average non-landed private housing prices grew by 48%, average HDB prices only grew by 19% altogether (Source: EdgeProp). However, not all private property are great investment, so remember to do your own due diligence before any purchase!


Pros: Convenient amenities; use real estate as asset for wealth creation

Cons: Potentially higher mortgage; smaller unit size; higher maintenance costs

Other considerations: General private vs public housing considerations

Ideal for you if.. you want to live in a private property or want your home to be your investment asset.

 

Option #6: Sell 1 buy 2 properties If owning two properties and being a landlord with passive income sounds like your dream life, this option might be for you. And before you think “How can I afford to buy two properties at once??”, rest assured that this doesn’t have to be an immediate plan. This is something that can be planned 3 - 5 years in advance, depending on your ambition and financial situation. If you’re now thinking “wait, what about ABSD?”, then we’re glad you’re paying attention. But for couples, there’s a way to avoid that legally. This could be through decoupling, or through individual ownerships.


Not an easy route for sure, but this is a route that could reap good investment returns in the long-run.


Pros: Own two properties without incurring ABSD; living in one and renting another

Cons: Higher cost which means more sacrifices - but no pain no gain!

Other considerations: Complex financial planning and timeline planning required in order not to overstretch yourself

Ideal for you if.. you wish to own multiple properties in the long-run without paying ABSD

 

Hopefully you now have a clearer picture of what your next steps could be after your MOP.


Just remember, there are six different options you can choose from, and the best path for you is dependent on you and your family's needs and financial situation.


If you need help evaluating your financial situation or are still unsure about what to do, the first step would be to uncover what your home is worth today with our free ThreeStoreys Home Valuation Report. Simply select the request for a free financial plan and we'll get in touch to help guide you to find your best path!


Or if you have any questions on your mind, click on the button below to get in touch with us.

Make sure you check all the boxes in the Seller's Checklist so that you don't get blindsided or miss out anything during your sale!


Want to find other property guides? Check out our social media channels:

1 Comment


Guest
Mar 06, 2023

very informative, thanks!

Like
bottom of page