HDB flats are public housing launched by the Singapore Government to solve the housing needs of all Singapore Citizens.
As such, there is a minimum occupation period (MOP) imposed.
What is Minimum Occupation Period?
The Minimum Occupation Period (MOP), is a time frame the owners of the HDB flats have to stay in the unit from the day they took over the unit from the Housing Development Board (HDB), whether resale or built to order (BTO) flats.
Five years MOP means you must physically stay in the unit during these 5 years, and not the owner of the Flat for five Years.
Case study
Mr and Mrs Tan got their keys to their BTO flat on 1st January 2015, in the year 2018, they are posted overseas to work for 3 years from 1 January 2018. For a valid reason, they have gotten approval from HDB to rent out their flat during these 3 years when they are away.
3 years later, in the year 2021, when they are back in Singapore, they decided to sell their HDB flat but was rejected by the Housing Developing Board. Why?
Whatsapp me for the answer.
Why is Minimum Occupation Period important?
In Singapore, the primary objective of an HDB flat is to provide housing to qualify Singapore Citizens (SC) and Singapore Permanent Residents (SPR), not to serve as an investment. The Minimum Occupation Period seeks to prevent people from buying resale flats and reselling them for higher prices immediately.
The minimum Occupation Period prevents property investors from driving up the prices of public housing.
The only exception to this rule is one-room resale flats that are purchased without any grants - these flats can be bought and resold without having to fulfil any MOP.
How long is the duration of the Minimum Occupation Period?
The Minimum Occupation Period duration differs depending on several factors: the date of your flat application, the flat type, and your mode of purchase.
The following purchase modes will see a Minimum Occupation Period of five years:
· Your flat is purchased from HDB
· Your flat was a resale, purchased from the open market with a CPF Housing Grant,
was a 2-room flat or bigger, and was applied for on or after 30 August 2010
Exceptions to the five-year MOP are as follows:
· Your flat was a resale, purchased from the open market with a CPF Housing Grant, and was applied for between 5 March to 29 August 2010 (3 years MOP)
· Your flat was a resale, purchased from the open market with a CPF Housing Grant, and was applied for before 5 March 2010 (2.5 years MOP with an HDB loan, 1-year MOP without an HDB loan)
· Your flat was purchased under the SERS (Selective En Bloc Redevelopment Scheme). Your Minimum Occupation Period will be either:
o 7 years from the date of flat selection, including the wait and occupancy time
o 5 years from the date of occupation
What restrictions during this period of MOP?
During the period within the Minimum Occupation Period, HDB flat owners,
· They are not allowed to purchase any private residential property.
· They cannot rent out the whole HDB flats.
· They are not allowed to sell their HDB flat.
What are the options when your HDB flat reach MOP?
There are several options you can do and never rush into any decision without any detailed strategized structure plan. I can be reached to assist you in all your planning. Click here to schedule a one-hour free Property Wealth Planning consultation.
Whatsapp me if you need any assistance. I can go through it with you and craft out the best suitable solutions for you.
Which Plan solution suit you most?
That depends on what kind of situation were you in when your HDB flats reached the Minimum Occupation Period
What are the options when your HDB flat reach MOP?
3 common approaches that HDB Flat owners will consider :
Options 1: Remain staying in the HDB flat.
For this option, I will suggest you check whether your flat is currently appreciating or the price is depreciating.
For Built-to-order (BTO) flats, during the first three years, the valuation will be at its peak after the Minimum Occupation Period, the HDB flat is still new (only 5 to 7 years old in the resale markets), and the renovation is still in good condition, some flat owners might consider exiting, so to obtain a higher profit.
Do consult a Real Estate professional or
WhatsApp me for a Free Property Wealth Planning consultation, or sign up here for the free consultation
Option 2: Proceed to buy a private residential property
If you are opt-in for this, you will need to pay an Additional Buyer's Stamp Duty (ABSD, currently at 20% for residential property), and if you are still servicing your existing HDB housing loan, your Loan-To-Value (LTV) will cap at 45% for a second loan for your second property.
For this option, you need to have strong financial capital.
Option 3: Sell your HDB flat and upgrade to private property.
This option involves the selling and buying process, so you need a professional to assist you in structuring and planning, especially the timeline for each transaction.
Whatsapp me, I will go through with you how to go about it in detail.
There are a few approaches if you opt for this.
· Buy first sell later.
· Sell first buy later.
· Sell and buy concurrently.
Buy first sells later.
For owners that are worried that they don't have a place to stay during the transition period will normally go for this approach.
The downside of this option is that they are liable to pay ABSD.
This might end up rushing to sell their HDB flat to apply for the ABSD remission.
ABSD remission only applies to a married couple, who jointly purchase their second residential property as their matrimony home, one of them must be a Singapore Citizen, and they have to sell their current flat within 6 months from their purchase of the second residential property.
Sell first buy later.
For owners that have a place to stay, you would most likely adapt to this approach.
You don't need to pay for ABSD for your next residential property, furthermore, you will have ample time to sell your flat.
Sell and Buy concurrently
For this approach, timing is the main factor.
You need to coordinate the buying and selling timeline correctly to avoid any hiccup during the transition.
I highly recommended you engage a trusted professional real estate agent to assist you in your planning.
Whatsapp me. I will be able to present you with a detailed, structured plan for your upgrading to your private residential property with a smooth transition during your buying and selling process.
Sell 1 buy 2
Last of all, if financially allow yourself by using your CPF and sale proceeds from your HDB flat, you might want to proceed to sell the HDB flat and buy 2 private residential properties for investment and generate passive rental income and capital appreciation.
Before you decide on which options, it's good that you must have a proper structure plan.
In real estate, experiences, Knowledge, and structural planning are essential for a smooth and happy transaction. I believe i will be able to assist you on this
Whatsapp me to understand more before you make any decision.
The Author
Peter Tan,
Since 1995, I’ve been providing professional consulting services to clients in Singapore and beyond.
From strategic planning to innovative solutions, my focus is always on building an efficient and results-driven relationship.
I’ll work with you to create a customized plan of action for yourself or your organization.
Get in touch to learn more about my vision consulting approach.
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