It is the perfect love story. You have finally met the person of your dreams. You both fall hopelessly in love, butterflies abound in your stomach, you cannot stop thinking about them, and you want to be with them forever.
The day comes when you decide to pop the long-anticipated question.
“Do you want to BTO together?”
They squeal in joy and say, “Yes, but….”
“I’ve already bought a HDB flat with my family.”
*record scratch*
Common problem couples face
This is a scenario that’s common in Singapore. An individual buys an HDB flat with someone other than their spouse, becoming co-owners with either of their parents or siblings under the Public Scheme of HDB’s Eligibility Schemes.
This is usually because of reasons such as providing financial support by helping their family pay for the mortgage using their CPF.
Rules for buying an HDB flat
In order to purchase a new or resale HDB flat, you need to be a couple or a family unit. This refers to your spouse and kids, or parents and siblings. Either way, it boils down to having two names as co-owners of a flat.
The only exception to this rule is if you are single and over 35 years of age. Then, you are eligible to purchase any resale HDB flat of your choice or a 2-room Flexi BTO flat in a non-mature estate.
Potential problems
However, by choosing to co-own a flat with your parents or siblings, it means you will probably have to make some hard decisions further down the road.
Here are two potential issues you may face:
Getting married? Should you decide to get married and want a flat of your own with your spouse, you will need to remove your name from your current HDB. You cannot co-own two HDB flats simultaneously.
Potential financial strain. If you decide to remove your name as co-owner, your parents, or siblings will need to buy over your share, which may cause financial strain. If they cannot service the loan, the financial burden will fall on you to do so.
What is the best solution?
Removing your name from the HDB flat is by far the best and most recommended option, short of changing your partner. (We are joking, of course.)
This can be done in two ways.
1. Change in flat owners
The first way is a conveyancing procedure that does not involve any monetary consideration. In order to change your ownership status as a co-owner with family circumstances such as marriage, divorce, or demise of an owner, you can apply for a change in flat ownership.
To change your ownership status, everyone involved must meet the eligibility requirements (current and proposed owners) and give their full consent. This process typically takes four months from start to finish.
There are 4 main types of ownership changes.
- Addition of co-owner, such as when a parent includes their child as an owner.
- Removal of co-owner. This is when a child removes themselves as an owner.
- Replacement of co-owner, for example, replacing the son with the daughter as the owner.
- Total change of owners, where a parent passes on and a child takes over the flat.
The caveat to this that most people baulk at is that the new owners taking over will have to refund the full CPF amount plus accrued interest to the person withdrawing their ownership from the flat. On top of that, they will need to be financially stable enough to discharge any existing mortgage loan.
During this transaction, additional fees will be incurred, such as
- Administrative fees
- Stamp & registration fees
- Conveyancing fees
- Valuation fee
But wait, that is not all! Keep your wallets open, because there are other payments or liabilities that may need to be settled before you can even apply. This includes fire insurance premiums, late payment charges, or bill charges. Also, if you have purchased an EC from a developer or an HDB flat (either BTO or resale using housing grants) before withdrawing your name as a co-owner, you may need to cough up a resale levy.
2. Resale of part-share
The second solution involves selling your share of the flat to another family member at a mutually agreed price. To do so, the flat must be eligible to be listed for sale on the open property market, so the Minimum Occupancy Period (MOP) of 5 years needs to have been met.
New buyers taking over the flat should keep in mind that they need to fulfil a fresh MOP before they can sell or rent out the flat or invest in property.
Picking this option means having fewer hoops to jump through than the previous one, and the process is like buying a resale HDB flat.
Other solutions to consider
1. Rent till you’re 35
One option is to rent a flat with your spouse until you’re 35 before tying the knot and buying a resale flat under the Singles Scheme.
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However, you cannot be renting indefinitely and should have an exit strategy in mind. Sitting down with your spouse and asking questions such as, “How long do we need to rent for?” and “What’s our budget for rental?” is important so you can figure out the steps you need to take in the future, should you wish to still buy an HDB with them.
2. Move in with either family
Either you move in with your spouse, or your spouse moves in with you. This would be great if both of you can get along famously with each other’s families and live happily together under one roof. Otherwise, this scenario is far from ideal, as living with each other’s in-laws can be stressful.
3. Sell off the flat and downsize
If you co-own the HDB flat with your parents, discuss selling it, assuming it has reached MOP. Your parents can then downsize to a cheaper property where the mortgage will be more affordable and easy to manage financially. In this scenario, everyone involved in the transaction must sell.
4. Buy a private property
If you have the means to do so, you can look at purchasing a private property such as a resale condo. Although you may find older private condos that fall within your budget, they are still more expensive than buying an HDB flat. You also need to factor in your potential future expenditures, such as having children, buying a car, saving for retirement, etc.
Conclusion
Unless you are absolutely sure you are going to stay with your siblings or parents for life, it would be ill-advised to co-own an HDB flat with anyone other than your spouse. It is better to use cash to help your parents out with the monthly HDB instalment instead of using your CPF.
Do you currently co-own an HDB with family? Let us know in the comments section below or in our Facebook post.
If you found this article helpful, 99.co recommends checking out Rent or buy a home in Singapore? and Renting your dream home with a live-in landlord.
Looking for a property? Find the home of your dreams today on Singapore’s fastest-growing property portal 99.co! If you would like to estimate the potential value of your property, check out 99.co’s Property Value Tool for free. Meanwhile, if you have an interesting property-related story to share with us, drop us a message here — and we will review it and get back to you.
About Jamie Wong
Looking to sell your property?
Whether your HDB apartment is reaching the end of its Minimum Occupation Period (MOP) or your condo has crossed its Seller Stamp Duty (SSD) window, it is always good to know how much you can potentially gain if you were to list and sell your property. Not only that, you’ll also need to know whether your gains would allow you to right-size to the dream home in the neighbourhood you and your family have been eyeing.
One easy way is to send us a request for a credible and trusted property consultant to reach out to you.
Alternatively, you can jump onto 99.co’s Property Value Tool to get an estimate for free.
If you’re looking for your dream home, be it as a first-time or seasoned homebuyer or seller – say, to upgrade or right-size – you will find it on Singapore’s fastest-growing property portal 99.co.
Meanwhile, if you have an interesting property-related story to share with us, drop us a message here — and we’ll review it and get back to you.
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Hi,i want to enquire about to remove my name as co-owner..because I want to buy a bto as I have alr reached the age of 35 .. what are the document that I will need it?