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One of the key aspects of buying an HDB flat is that after completing the flat purchase (a.k.a. the key collection), you’ll need to occupy the flat for a certain number of years. This period, known as the Minimum Occupation Period (MOP), usually lasts five years. (For Prime Location Public Housing (PLH) flats, it’s ten years.)
When the MOP ends, you’re allowed to:
- Sell the flat on the resale market
- Put the whole unit on rent
- Apply for an HDB flat through one of its sales exercises (BTO, SBF or open booking)
- Buy private property
HDB BTO projects hitting MOP in 2024/2025
Our data team has compiled a list of BTO projects set to MOP this year. A total of 20,940 units across 32 projects were completed in 2019, so we expect them to complete their MOP in 2024 or 2025.
Please note that we’ve excluded rental units. Some projects also have blocks with different completion dates.
Should you sell right after MOP?
For many homeowners, completing the five-year mark means it’s time to sell the flat. More often than not, you can sell it for a tidy profit, especially given that the flat was initially priced with subsidies.
What’s more, by selling the flat right after the MOP, you’re more likely to get a higher gain out of the sale.
This is because the flat is only five years old, with around 94 years of remaining lease and is still in good condition. It makes the flat much more desirable to buyers, who probably don’t have to spend much on renovation.
For instance, in November 2022, we reported that a 5-room BTO flat in Canberra that recently completed its MOP was sold for S$745,000. At that time, it was a record price for a 5-room resale flat in Sembawang.
What’s notable about the transaction is that its price during the BTO launch ranged from S$315,000 to S$373,000. This means the owners made a paper gain of S$372,000 to S$430,000, or around 100% to 137%.
(As of writing, this record has been broken by another recently MOP-ed 5-room flat, when it was sold earlier this month for S$760,000.)
We’ve also encountered resale flat transactions of recently MOP-ed flats that sold double their BTO price.
Factors affecting resale value after MOP
While the age of the flat and its remaining lease are significant factors in determining its resale value, other elements also play a crucial role. The flat’s location, its proximity to amenities like MRT stations, schools, and shopping centres, as well as its overall condition and any renovations done, can greatly influence its market value.
Additionally, the demand and supply dynamics of the housing market at the time of sale can either boost or dampen the potential profit. Monitoring market trends and consulting property experts or agents to gauge the best time to sell is essential.
But more importantly, don’t rush to sell off your flat
At the same time, before you put your HDB flat up for sale, take a step back and consider the next step in your homeownership journey.
Ask yourself why you’re looking to sell. Is it solely because of the high paper gain or the need to move closer to your kid’s primary school? Are you looking to move to a bigger flat or a condo?
For instance, if you plan to upgrade to a condo, ensure it’s within your financial means. Unlike HDB flats, which have the additional option of an HDB loan, the only financing option available for condos is bank loans.
Compared to HDB loans, the maximum financing for bank loans is 75% of the purchase price or valuation, whichever is lower.
With a condo purchase, you’ll have to contend with the higher price and down payment of 25%, of which 5% has to be paid in cash.
Aside from the housing loan, don’t forget to arrange temporary accommodation, especially if you want to sell your BTO before buying your next home or if the next house isn’t ready yet.
Planning for future housing needs and market trends
Before deciding to sell, homeowners should also consider their long-term housing needs. Will the proceeds from the sale be sufficient to finance a new home that meets your future requirements?
Additionally, understanding market trends can provide insights into potential price fluctuations in the coming years. For instance, if there’s an upcoming development or infrastructure project near your flat, it might be worth waiting a bit longer as such projects can enhance the value of properties in the vicinity.
On the other hand, if the market is experiencing a peak, selling sooner rather than later might be the wiser choice.
Conclusion
Whether to sell your HDB flat right after the MOP or not is a significant decision that requires careful consideration. While the allure of immediate profits, especially with the potential of high gains from newer flats, is tempting, looking beyond just the numbers is essential.
Consider your long-term housing needs, the current market trends, and the financial implications of your next move. Remember, a home is not just an investment; it’s a space where memories are made and lives are built.
Whether you choose to sell or stay, ensure that your decision aligns with your financial goals and aspirations for the future.
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Frequently Asked Questions (FAQs)
The Minimum Occupation Period (MOP) for most HDB flats is five years, while for Prime flats, it’s ten years. After the MOP, homeowners can sell their flat on the resale market, rent out the entire unit, apply for another HDB flat through various sales exercises (BTO, SBF, or open booking), or purchase private property.
A total of 20,940 units across 32 BTO projects completed in 2019 are expected to complete their MOP in 2024/2025. This milestone allows homeowners to sell their flats, potentially at a profit due to initial subsidies, given the property’s likely appreciation in value over the five years.
Homeowners should assess their long-term housing needs, the current housing market trends, and the financial implications of their next housing move. Factors such as the age and location of the flat, its condition, market demand, and potential future developments nearby can significantly affect resale value. Additionally, homeowners should contemplate their future living arrangements, including the financial feasibility of upgrading to a condo or another flat and whether the proceeds from the sale will suffice for their next home purchase.
Unsure of when you should sell your flat? Let us connect you with a property consultant for personalised advice.
If you found this article helpful, 99.co recommends Which property types to upgrade to after selling your first BTO? and What an HDB second-timer must know before deciding to sell.
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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.
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