Every day, we pick a piece of property jargon to demystify on 99.co. Today, we’re looking at the annoying MOP that faces HDB flat buyers:
What is the Minimum Occupation Period (MOP)?
When you buy an HDB flat, you are subject to a five-year MOP. During this time, you’re not allowed to:
- Sell your flat (except back to HDB for special reasons)
- Rent out your whole flat (but renting out rooms is okay)
- Purchase a private property
|HDB flat type
|Minimum Occupation Period (MOP)
|New HDB flats (including BTO, EC & DBSS)
|New flats under the HDB Prime Location Housing (PLH) Model
|Resale HDB flats* (2-room or larger, applied on or after 30 Aug 2010)
|Flats purchased under the Fresh Start Housing Scheme
|5 years from the effective date of the replacement flat, or 7 years from the date of selection of the replacement flat
|*An exception to this rule are any 1-room resale flats or flats purchased before 30 August 2010 without any grants. Here is the full list of HDB MOPs.
|**Refer to this article for rules regarding flats released under the PLH model.
The time of your MOP begins from the date of key collection. Also, by the official rules, you must be residing in your flat to fulfil the MOP. For example:
Say you live in your flat for two years. After that, you’re posted overseas for a year. When you return to Singapore, you must live in your flat for another three years to fulfil the MOP; the time you spent away doesn’t count. We assume HDB has some sort of super-secret housing inspector, who will find out (don’t ask us, we just list the flats).
Flats sold under the HDB Prime Location Housing (PLH) Model are exceptions to the rule, where you’re not allowed to rent out the entire flat even after completing the extended 10-year MOP.
Why is MOP important?
The MOP ensures that HDB flats are used for their primary purpose of providing housing rather than as an investment. For example, consider if someone’s parents own a big condo, and they can stay in it while renting out their flat.
Without the MOP, they could buy the flat and start using it to generate rental income right away. That’s not fair to other Singaporeans however, who may genuinely need that home.
And while there’s already the Seller’s Stamp Duty (SSD) rule in place, the five-year MOP also prevents people from buying a flat and then quickly flipping (reselling) it for a profit in a short span. If we let that happen, resale flat prices would go through the roof, which is a bad but appropriate pun.
Why do some SERS flats have a seven-year MOP?
Relax, it’s not as bad as you think. For flats purchased under SERS, the MOP is either:
- Seven years from the date of flat selection, or
- Five years from the date of occupation
However, note that the seven years includes the waiting time for getting your SERS flat (e.g. if it takes two years to build, those two years count toward your MOP).
How do the rental rules work with regard to MOP?
You can rent out rooms so long as your flat is 3-room or bigger, and you continue to occupy the flat while it’s rented out. This means that so long as you’re occupying at least one of the bedrooms, the other rooms can be tenanted.
Also, as with any normal rental situation, the rules for tenants must be followed. They must have valid work or student passes, for example, and the minimum lease of six months applies.
Note that you cannot lock one room up, and then rent out the flat claiming that you “haven’t rented all of it”. This practice is illegal, and HDB doesn’t have sufficient humour to appreciate your clever word play. We can attest that HDB conducts spot checks, in which you’re required to prove that you live in the unit. You’ve been warned.
The penalty for breaking these laws can be confiscation of your flat. As such, the risk is almost never worth it. The rental income from illegally letting out the flat won’t make up for losing the whole property.
What are the situations when you can sell on the open market, despite the MOP?
There are a few situations we know of, in which you may be allowed to sell your flat on the open market despite the MOP
- Divorce – this is the majority of special cases; you won’t be forced to live together, and can just sell and split the proceeds
- Bankruptcy proceedings – If you could potentially avoid a bankruptcy declaration by selling and downgrading, HDB may allow you to do so before the MOP is up.
- Inability to service the home loan, for an indefinite period – This is when the sole breadwinner of the family has passed away, or is somehow unable to earn an income for an indefinite period. HDB sometimes allows such families to sell despite the MOP.
- Terminal illness – This is reviewed on a case-by-case basis
- Loss / renouncement of citizenship (moving abroad permanently) – With permission, you can sell the flat early and buy a new home where you’re headed. You’ll get your CPF money back too, so you should be all set.
Since around 2016, only about one per cent of all flats have been sold during their MOP period, for the reasons above.
It’s best not to assume that HDB will allow you to do so, if you run into trouble. Commit to buying a flat only if you’re ready.
How you can check for MOP
The Minimum Occupation Period (MOP) is determined from the day you receive the keys to your apartment and does not include any period during which you do not reside in the apartment, such as when the entire unit is rented out or when there has been a violation of the lease agreement.
To determine if you have fulfilled the MOP requirement in order to sell your apartment, you can log in to My HDBPage using your Singpass. Navigate to “My Flat,” then “Purchased Flat,” and finally “Flat Details and Minimum Occupation Period (MOP).”
The duration of the MOP is based on factors such as the mode of purchase, type of apartment, and the date of the flat application.
The Minimum Occupation Period (MOP) varies depending on the mode of purchase and type of flat. For flats bought directly from the Housing Development Board (HDB), the MOP is generally 5 years. However, for Prime Location Public Housing (PLH) flats, the MOP is extended to 10 years.
If the flat was purchased under the Design, Build and Sell Scheme (DBSS) from a property developer, the MOP is also 5 years. Similarly, if the flat was acquired under the Selective En bloc Redevelopment Scheme (SERS), the MOP differs based on the announcement date of the SERS site.
For SERS sites announced before April 7, 2022, the MOP requirements are as follows: at designated replacement sites, either 7 years from the date of selecting the replacement flat or 5 years from the date of collecting the keys, whichever is earlier. If portable rehousing benefits are provided, the MOP is 5 years from the date of collecting the keys.
For SERS sites announced on or after April 7, 2022, the MOP is simply 5 years from the date of collecting the keys.
Resale flats bought from the open market have a standard MOP of 5 years, regardless of whether CPF housing grants were utilised or not. Again, for PLH flats, the MOP is extended to 10 years.
Lastly, flats purchased under the Fresh Start Housing Scheme have the longest MOP, which is 20 years.
The Minimum Occupation Period (MOP) is a crucial aspect of HDB flat ownership in Singapore, ensuring that these properties serve their primary purpose of providing housing rather than being used for investment purposes.
The MOP duration varies depending on factors such as the mode of purchase and type of flat. Generally, HDB flats have a MOP of 5 years, while Prime Location Public Housing (PLH) flats and flats acquired under the Selective En bloc Redevelopment Scheme (SERS) have an extended MOP of 10 years. Resale flats from the open market have a standard MOP of 5 years, and flats under the Fresh Start Housing Scheme require a lengthy MOP of 20 years.
It is essential to comply with the MOP regulations, as violating them can result in penalties or even confiscation of the property.
Do you have any thoughts about MOP? Let us know in the comments section below.
If you found this article helpful, 99.co recommends Property Jargon of the Day: ABSD and Property Jargon of the Day: Total Debt Servicing Ratio (TDSR).
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