You will be able to list the rules that limit what you can do with an HDB flat or EC after you buy it.
When you buy an HDB flat, you agree to conditions that last for years. Most of them are written into the documents you sign. Most of them also stop you from doing something you had assumed you could do, such as renting the flat out or buying another property.
Hakim's former classmate bought a resale flat. Eighteen months later he was offered a two-year posting to Jakarta. He planned to rent out the whole flat while he was away so that the rent would cover his instalments. A tenant had already viewed the flat when he found out he could not do this. The flat was still within its minimum occupation period, and HDB does not allow owners to rent out the whole flat during that period.
The minimum occupation period (MOP) is the main condition. It is the period after buying during which you must live in the flat and cannot sell it on the open market, rent out the whole flat, or buy private property. For a resale flat, the MOP starts on the date the purchase completes. For a new flat, it starts at key collection. Lesson 1.1 explained when the MOP starts.
During the MOP, three things are not allowed:
selling the flat on the open market renting out the whole flat buying private property, whether in Singapore or overseas
HDB allows a sale during the MOP only in narrow cases that it approves, such as some changes in family circumstances. Don't build a plan that depends on getting one of these exceptions.
Renting out spare rooms is a separate case. HDB allows it under its conditions as long as you still live in the flat. Lesson 7.3, "Renting out a room or the whole home", sets out those conditions.
The ban on private property covers property overseas as well as in Singapore. Upgraders are surprised by the overseas part more than any other. Some buyers only find out when an agent abroad asks them for a deposit.
How long the MOP lasts and its exact conditions depend on how your flat was bought and when. Some newer flat classifications have a longer MOP and stricter resale conditions. Check the terms for your own flat on the HDB website.
During the MOP, you and everyone listed in the application must physically live in the flat. You can't treat it as an investment that you only visit now and then. You also can't keep it while you live with your parents.
HDB checks whether owners live in their flats. If it finds owners who are not living there, or who are renting the flat out without approval, it can fine them. In serious cases it can take the flat back. The HDB website describes these consequences, and they are serious enough that no expected rent is worth the risk.
Every household gets a subsidy on its first flat bought from HDB, or on its first resale flat bought with a grant. If you buy a second subsidised flat later, HDB may charge a resale levy. This payment recovers part of the subsidy you received the first time, so that help is shared fairly between households.
Whether the levy applies, and how much it is, depends on your first flat, its flat type and how you bought it. For many second-timers buying a new flat from HDB, the levy is a large sum. You pay it in cash or it is used to reduce your loan. The amount is set by flat type and does not depend on the profit you made selling your first flat. HDB publishes the current levy amounts and the cases where the levy applies.
Farah and Hakim (an invented example) are buying a flat in Bedok. The levy does not apply to the Bedok flat, because it would be their first. It would apply if they later sold it and bought a new flat from HDB again, for example a bigger flat as their family grows. They noted the levy down as a cost of a later move.
You usually can't own more than one HDB flat at a time. If you buy a second one, you must sell the first within a set period. Some renovation work needs HDB approval, especially structural work. Adding or removing owners also needs HDB approval. After selling once the MOP is over, some owners must wait for a period before they can buy another subsidised flat.
Co-owning a flat links the owners together in HDB's records. If a marriage ends, HDB has its own rules about what happens to the flat. Lesson 8.2, "The home, CPF and the children: practical decisions", in the course "Money as a couple and a family", covers those rules.
All of these conditions appear in the documents you sign, and the HDB website explains each one. Before you commit, read every condition in your documents and then read the HDB website's explanation of each. Don't rely on what the seller or the agent tells you. The agent is paid when the deal completes, and after that the conditions affect only you.
Next, check the conditions against your plans for the next five to ten years. Farah and Hakim did this with a three-column table: the rule, the year it stops applying, and the plan it could block. Their list started with the MOP and the ban on renting out the whole flat, because Hakim's job sometimes sends people overseas. They also included the ban on buying private property, because they had talked about buying a condo one day.
Make the same three-column table for your own flat and plans. Then pick the rules that would get in your way most. In the activity below, write the three rules that would limit your plans most in the first five to ten years after buying.
Write down the three rules that would restrict your plans most in the first five to ten years after you buy.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).