{"id":44134,"date":"2021-10-08T13:15:57","date_gmt":"2021-10-08T05:15:57","guid":{"rendered":"https:\/\/www.99.co\/singapore\/insider\/?p=44134"},"modified":"2022-06-13T17:29:27","modified_gmt":"2022-06-13T09:29:27","slug":"why-should-not-cancel-appeal-bto-cancellation-penalty","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/why-should-not-cancel-appeal-bto-cancellation-penalty\/","title":{"rendered":"You can now appeal for BTO cancellation without penalties. But here\u2019s why you should not do so.\u00a0"},"content":{"rendered":"
<\/div>

Due to construction delays, the government announced<\/span><\/a> in July that you can now appeal for BTO cancellation without incurring penalties. HDB will then assess your situation before waiving the forfeitures. Applicable situations include having to buy a resale flat due to urgent housing needs (e.g. due to a baby on the way).<\/p>\n

Typically, there are penalties for cancelling your BTO application.<\/p>\n

What are the penalties incurred should you cancel your BTO?\u00a0<\/b><\/h2>\n

It depends on the stage at which you cancel your BTO application. But in general, those who cancel would usually need to forfeit their option fee (S$2,000 for a four-room flat or bigger) or 5% of the flat purchase price.<\/p>\n

On top of the money you stand to lose, there\u2019s also the one-year wait before you can apply for subsidised housing again. And this doesn\u2019t just include BTO, but also resale flats with grants.<\/p>\n

Given the construction delays, the government has decided to waive these forfeitures if you\u2019re buying a resale flat to move into a new house urgently.<\/p>\n

But if the reason for the BTO cancellation is not due to urgent housing needs, such as breaking up with your partner<\/span><\/a>, you\u2019ll still have to incur these costs.<\/p>\n

But should you cancel your BTO?\u00a0<\/b><\/h2>\n

One major advantage that resale flats have over BTO flats is the waiting time. With resale flats, you can literally move into the new house once the whole buying process is complete. This makes resale flats an attractive option over BTO, especially if you can no longer wait to move out of your parents\u2019 or in-laws\u2019 house to have your own space.<\/p>\n

So as a property portal, we should be saying, \u201cYes, you should cancel your BTO and buy resale!\u201d After all, our listings include lots of HDB resale units.<\/p>\n

(Check out our listings of flats for sale<\/span><\/a> here.)<\/p>\n

At the same time, even if you urgently need housing, we think cancelling your BTO to go for resale may not necessarily be the best option.<\/p>\n

Why you shouldn\u2019t cancel your BTO application just yet\u00a0<\/b><\/h2>\n

Before you jump into writing that appeal to HDB to cancel your BTO, here are a few things you want to consider. And maybe hold on to your BTO first.<\/p>\n

1. Resale flats are very expensive these days\u00a0<\/b><\/h3>\n

It\u2019s widely known that BTO flats are cheaper than resale flats. They\u2019re sold lower than the market rate as the government heavily subsidises them. That\u2019s why most young couples would usually go for BTO as their first home despite the long waiting time.<\/p>\n

But here\u2019s the thing, despite the pandemic, resale flat prices have been increasing for 15 straight months. In fact, prices have reached an all-time high in September<\/span><\/a>, surpassing the previous peak in April 2013 by 0.8%.<\/p>\n

And there have been reports<\/span><\/a> of more people paying for cash over valuation (COV)<\/span><\/a>, which is the difference between the transacted price and the actual valuation by HDB. As the home loan can only cover up to a certain percentage of the valuation, you\u2019ll need to pay this difference in cash. This year, one in three people have paid the COV<\/span><\/a>, as compared to one in five last year.<\/p>\n

So until prices start to drop, now may not be the best time to submit that BTO cancellation appeal to buy a resale flat, especially if buying one will stretch you financially.<\/p>\n

2. You can\u2019t move into a resale flat immediately
\n<\/b><\/h3>\n

From house-viewing, negotiations to finalising the resale application, the whole resale buying process<\/span><\/a> is not that fast. In fact, the resale completion stage itself takes around eight weeks to complete from the date HDB accepts the resale application.<\/p>\n

\"Person<\/a>
Resale flats, especially older ones, may require extensive renovation.<\/figcaption><\/figure>\n

What\u2019s more, if you end up with a resale flat that requires a lot of renovations, such as an old (and cheaper) flat, you won\u2019t be able to move in as quickly. You\u2019ll need to do a more extensive renovation for it, and may even spend more to hack the walls and do some rewiring.<\/p>\n

If you\u2019re lucky, you can move into your new home as fast as three months. Otherwise, it can take as long as one year.<\/p>\n

3. There are other housing options available, such as renting
\n<\/b><\/h3>\n

Instead of appealing for BTO cancellation, consider renting while you wait for your BTO.<\/p>\n

Renting may not seem like an attractive option, especially since all that money could have been saved to buy the resale flat or used for other pressing needs. But it can be a viable option if resale is not within your budget.<\/p>\n

Plus, you can practically move in immediately if you rent a fully furnished unit.<\/p>\n

Should you decide to rent, we recommend that you rent somewhere close to your upcoming BTO. This allows you to be familiar with the neighbourhood, and get used to living with your partner as well. What\u2019s more, renting allows you to pick up skills<\/span><\/a> like budgeting and maintaining your own space, which are essential aspects of homeownership.<\/p>\n

\n
\n
\n

Properties for rent<\/h4><\/div>\n
See all listings<\/a><\/span><\/div>\n <\/div>\n
\n
\n
\n FULLY FURNISHED<\/span>\n <\/div>\n
\n \"The\n <\/div>\n
\n
The Trizon<\/div>\n
2 Ridgewood Cl \u00b7 D10<\/div>\n
\n
\n \"bedroom\"\n 4<\/span>\n <\/div>\n
\n \"bathroom\"\n 3<\/span>\n <\/div>\n
\n 2,150 sqft<\/span>\n <\/div>\n <\/div>\n
S$ 10,800<\/div>\n <\/div>\n
\n