HDB Build-To-Order (BTO) apartments have been classified differently since October 2024. The old classification of mature and non-mature estates has been abandoned. They are classified as HDB apartments that are standard, plus, or prime.
In the past, HDB BTO apartments that fell under the mature estate category were typically more centrally placed and equipped with more amenities. They were generally more well-liked, and the increased demand was reflected in their prices.
Conversely, the suburbs are home to less developed, non-mature estates. They compensated for their reduced BTO flat price, even though they lost out on location and convenience.
However, non-mature estates also became “mature” as they expanded and matured.
Therefore, to accomplish three key goals, a new home classification framework is required:
- Make homeownership accessible to people of all economic levels.
- Make sure that every town and area has a healthy social mix.
- A system that is equitable for all
Under the new categorization system, HDB BTO apartments are divided into three groups starting in 2H2024: Standard, Plus, and Prime.
With standard subsidies and limitations like the current 5-year minimum occupancy period (MOP), standard apartments will make up the housing supply.
Plus, apartments will be situated in strategic areas in Singapore, such as proximity to the town centre or an MRT station. Compared to standard BTO apartments, flat owners will benefit from more subsidies but more stringent regulations.
Singapore’s most sought-after neighbourhoods, usually those closer to the city centre, are home to prime flats. Of the three groups, they will have the most stringent rules and subsidies. Currently, the Prime Location Public Housing (PLH) concept is being used to offer these apartments.
Important aspects of the recently released HDB BTO house model
Additional subsidies to guarantee affordability
In addition to the subsidies now offered for standard apartments, prospective purchasers of BTO Plus apartments might anticipate additional benefits. This helps to guarantee that the Plus apartments are reasonably priced because their prime locations are likely to command higher prices.
Recovery of subsidies upon flat resale
Should they decide to sell their apartments later, owners of Plus and Prime apartments will be required to “return” the subsidy. This is to ensure equality with other apartment owners who do not benefit from these extra subsidies and to lessen excessive windfall benefits. The grant recovery for Prime apartments is set at 9% of the resale price as of October 2024, while the recovery for Plus apartments is between 6% and 8%.
Additionally, HDB stated that each BTO launch may result in a different subsidy clawback.
More stringent limitations on sales
Plus, apartments will have a 10-year MOP, which is comparable to prime apartments. This implies that before they may sell their apartments on the open market, owners must live there for a minimum of ten years.
The resale market for Plus flats would be open to Singaporeans with household incomes under $14,000. In addition, homeowners with private property will not be able to buy a Plus unit for 30 months. Singaporeans (and their spouses) who are 55 years of age or older are exempt from the period restriction if they want to purchase:
- HDB’s Community Care Apartment (for people 65 and older) or a short-term, two-room Flexi apartment (for people 55 and older); or
- Non-subsidized resale unclassified/standard apartment with four rooms or less that does not require an HDB housing loan.
- In addition to the limitations on resale, owners of Plus and Prime apartments will not be allowed to rent out their entire apartment.
The new HDB BTO classification’s effects on homeowners
The move will push landlords away from a perspective of “profiteering” from the sale of Plus apartments by imposing stricter resale restrictions and a lengthier MOP.
Furthermore, owners of Plus and Prime apartments are not allowed to rent out their whole apartments, which lowers their potential for high rental income because of the prime location.
It will be more than ten years before the first Plus and Prime apartments are offered for sale because the new categorization only applies to BTOs, which will become available or launched starting in October 2024.
