Explain how a BTO flat is priced, how long you wait for it and what the minimum occupation period ties you to.
When you choose a home, the price is the number people talk about first, and it is the easiest one to compare. A new HDB flat comes with two more costs that the price does not show. One is the time between booking a unit and having a home you can move into. The other is the period after you move in, when what you can do with the flat is restricted. Both costs are measured in years, so count them before you decide.
A Build-To-Order (BTO) flat is sold by HDB before it is built. You put in an application while a sales launch is open, and a ballot gives you a queue number. When your number is reached, you pick a unit. The building then has to be completed before you get your keys. HDB fixes the price when the launch opens. With a resale flat you bid against other buyers on the day, but with a BTO you don't, and the price stays the same for the whole wait.
Most buyers put too low a value on the waiting period. Between booking and key collection you still have to live somewhere, and for many couples that means paying rent or living with family for years. HDB gives each project an estimated completion date. Note that date before you apply, because your rent budget, your living arrangements and every other plan for those years depend on it. With a resale flat, you can usually move in within months of agreeing a price.
The second cost starts once you have your keys. Each HDB flat has a minimum occupation period (MOP). While it runs, you may not sell the flat on the open market, rent out the whole flat or buy private property. HDB allows an early sale only in narrow cases it approves. The MOP starts on the day you collect your keys, so the years spent waiting for construction do not count towards it.
To find the first year you could sell, start from your application date, add the building time to reach key collection, then add the MOP. Take a project that needs 4 years to build and has an MOP of 5 years (both invented figures). If you apply at 28 (an invented age), you collect your keys at 32 and the earliest you can sell is 37. That is nine years from application to the first possible sale. Over that time the flat has to suit the changes you can see coming, such as a job move, a growing family or a parent who may need care.
The MOP and the other conditions are not the same for every flat. HDB now sorts new flats into categories. Some categories have a longer MOP and stricter resale conditions, and in return the flat is cheaper or better located. These rules have been revised several times and could be revised again. Look up the conditions for the exact launch on the HDB website before you apply, and read them again before you book a unit.
A BTO can still be a sound choice. HDB sets the price instead of the market, grants can reduce it further, and a new flat comes with its full lease. In popular towns, many owners get a good price when they sell after the MOP ends, because buyers pay more for a newer flat with a long lease remaining. You can only make that gain after the MOP is over, and until then the money you have put in stays tied to the flat. If you pay with CPF, accrued interest builds up on the amount you use, and you have to pay that interest back into your CPF account when you sell. Module 8 shows how the refund is taken out of the sale proceeds before you receive any cash.
So comparing a BTO with a resale flat on price alone leaves too much out. On the BTO side, add the cost of waiting and the years you are locked in to the price. On the resale side, you have a higher price, an earlier move-in and a shorter lease. Lesson 1.2 looks at the resale side, and Lesson 1.5 puts BTO and resale into one sheet over ten years.
For now, pick one BTO launch you would realistically apply for. Write down its estimated price, the town and flat type, its estimated completion date, the MOP that applies to it, and the year you would actually be free to sell. You will carry those figures into the comparison at the end of this module.
Pick one BTO launch you would realistically apply for. Write down its estimated price, completion date, MOP and the first year you could sell.
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