The government of Singapore introduced a fresh round of property cooling measures on 6 July 2018. These include higher Additional Buyer’s Stamp Duty (ABSD) and lower Loan-to-Value (LTV) limits for those buying a second property in the city-state.
If you want to know how these new property curbs impact HDB flat owners who aspire to purchase a private condo, please do read our up-to-date and comprehensive guide.
What Are The Key Considerations To Own An HDB Flat And Condo Together?
Prior to purchasing a private property while currently owning an HDB flat, please take into account the following rules and guidelines, in addition to taxes that need to be paid.
1. Minimum Occupancy Period (MOP)
When you purchase a build-to-order (BTO) unit directly from the Housing and Development Board (HDB) or a resale HDB flat from the open market, you are required to comply with a Minimum Occupancy Period (MOP).
Within this period, you are not allowed to:
- Rent out the entire residential property
- Dispose the BTO unit or resale HDB flat via the open market
- Acquire any private property, either in Singapore or abroad
The MOP starts from the date when you receive the keys to the BTO unit or resale HDB flat. It excludes any period when you did not live in the property, like when the whole property is rented out or when there has been a violation of the MOP. However, please note that you risk paying fines of up to S$50,000 or getting the HDB flat compulsorily acquired by the government if you flout the MOP rules.
Notably, the duration of the MOP depends on the purchase mode, unit type and the date when you applied to purchase the flat. For details, please see table below.
| Purchase Mode | MOP Duration | ||
| Flat bought directly from HDB (includes BTO) | 5 yrs | ||
| Design, Build and Sell Scheme (DBSS) flat bought from a developer | 5 yrs | ||
| Executive Condominium (EC) bought from a developer | 5 yrs | ||
Flat purchased under the Selective
En bloc Redevelopment Scheme (SERS)
| Either of the ff: | ||
| 5 yrs from date of occupation | |||
| 7 yrs from date of flat selection, including wait time and occupation period | |||
| Flat bought under SERS with Portable SERS Rehousing Benefits | 5 yrs | ||
| Resale flat bought from open market w/ CPF Housing Grant | 5 yrs | ||
| Resale flat bought from open market w/o CPF Housing Grant | 1-room flat | No MOP | |
| 2-room or larger flat | Application date on or after 30 August 2010 | 5 yrs | |
| Application date from 5 March to 29 August 2010 | 3 yrs | ||
| Before 5 March 2010 | 1 yr if you didn't obtain HDB loan | ||
| 2.5 yrs if you obtained HDB loan | |||
Note: When buying ECs for the first time, buyers need to comply with 5-yr MOP. After that, it can be sold to Singapore Citizens and Permanent Residents (PRs). After 10 years in all, it can be sold to foreigners. Buyers of resale EC don’t have to comply with MOP.
Source: HDB
2. Citizenship Or Residency Status
Can a Permanent Resident (PR) concurrently own an HDB flat and condo?
The answer is no. According to the Housing Board, even if they have fulfilled the MOP, PRs who own an HDB flat and their essential family members who occupy the unit must dispose their HDB flat within six months of buying a completed or off-plan private residential property in Singapore.
Only Singapore Citizens have the privilege of owning an HDB flat and private condo at the same time. But they still need to comply with the MOP before they are allowed to purchase a private residential property. They also can’t do it the other way, which is buy a private housing first then an HDB flat, as they need to sell the private property after completing their purchase of an HDB unit.
However, not many Singapore Citizens are capable of buying a private property while owning an HDB flat due to the large expenses involved.
3. Buyer’s Stamp Duty (BSD)
Whether you’re a Singapore Citizen, PR or foreigner, if you buy a property in Singapore, you will need to pay Buyer's Stamp Duty for documents effecting the transfer of ownership over the property.
This tax will be computed depending on the purchase price stated in the document to be stamped or the property’s market value, whichever is higher.
If you obtained a monetary discount in the selling price, it will be taken into account when calculating the BSD, provided that the net price still reflects the property’s actual market value.
Please keep in mind that the cash discount must be stated in the instrument to be stamped, otherwise it won’t be taken into account when calculating the buyer’s stamp duty. Below are the tax rates before and after 20 February 2018.\
Before 20 February 2018
| Purchase Price or Market Value | BSD |
| First S$180,000 | 1% |
| Next S$180,000 | 2% |
| Remaining Amount | 3% |
Source: Inland Revenue Authority of Singapore
After 20 February 2018
First S$180,000
1%
1%
Next S$180,000
2%
2%
Next S$640,000
3%
3%
Remaining Amount
4%
Source: Inland Revenue Authority of Singapore
Assuming you purchased a S$1 million private condo in October 2018, you need to pay a Buyer's Stamp Duty of S$24,600. Although this is already a large amount, there is another more expensive stamp duty that you will definitely have to bear if you intend to keep an HDB flat and private condo at the same time.
4. Additional Buyer’s Stamp Duty (ABSD)
The Additional Buyer’s Stamp Duty (ABSD) was originally introduced on 8 December 2011 by the authorities to rein in the strong property investment demand by Singapore Citizens and foreign buyers. Another reason for its imposition is to maintain the affordability of residential properties for locals and to let home prices increase sustainably along with economic fundamentals.
The ABSD was subsequently raised on 12 January 2013 to tame the sizzling hot private housing market and prevent the occurrence of a property bubble and a sharp correction in home prices in the future. Thereafter, the tax rate was increased further on 6 July 2018. The latest rates are shown in the table below.
New and Former ABSD Rates
On/after 12 Jan 2013 to 5 Jul 2018
On/after 6 Jul 2018
Singapore Citizens buying 1st residential property
Singapore Citizens buying 2nd residential property
7%
12%
Singapore Citizens buying 3rd and subsequent home
10%
15%
Permanent residents buying 1st residential property
5%
5%
Permanent residents buying 2nd and subsequent residential property
10%
15%
Foreigners buying any residential property
15%
20%
Entities buying any residential property
15%
25%
Source: Inland Revenue Authority of Singapore
Given the ABSD rates above, a Singapore Citizen who currently owns an HDB flat, but wants to acquire a private condo costing S$1 million needs to fork out an Additional Buyer’s Stamp Duty of S$120,000 (12%). If you want to own a third property priced at S$1 million, you need to spend another S$150,000 (15%). Those are really huge sums compared to the BSD of just S$24,600.
5. Total Debt Servicing Ratio (TDSR)
The Monetary Authority of Singapore (MOM or central bank) introduced the Total Debt Servicing Ratio (TDSR) framework on 28 June 2013 to prevent home buyers from loaning too much to finance the purchase of a property. The rules apply to all residential mortgages granted by all financial institutions in the city-state, including by banks, moneylenders, insurance firms and others.
Under the TDSR framework, home buyers can only loan to up 60 percent of their gross monthly income. The cap also takes into consideration all outstanding debts you have like car loans, personal loans, credit card balances and student loans. Banks even include small financial obligations such as gym memberships and monthly payments for appliances, when computing the amount it can lend you for a home purchase.
Basically, your monthly housing loan repayments plus ALL of your other monthly financial obligations cannot surpass 60 percent of your monthly income.
For example, if your monthly salary is S$10,000 and you have no existing debts, then you can spend up to S$6,000 to service your monthly installments for a housing loan.
But if you currently spend S$2,000 to repay outstanding debts, you can only borrow up to S$4,000 if you want to buy a private condo.
6. Loan-To-Value (LTV) Ratio
Aside from higher ABSD rates, the government also reduced the maximum loan-to-value or the amount a home buyer can borrow based on a property’s selling price. Previously, you can borrow up to 80 percent if the loan term doesn’t exceed 30 years, or 60 percent if the loan tenure surpasses 30 years or if the maturity happens when borrower is more than 65 years old.
But now, you can only borrow up to 75 percent if the loan term doesn’t exceed 30 years, or 55 percent if the loan tenure of surpasses 30 years or if the maturity happens when borrower is more than 65 years old. That’s just for the first housing loan.
Revised LTV Limits on Housing Loans Granted by Financial Institutions for Individual Buyers
Former Rules
New Rules
Former Rules
On/after 12 Jan 2013 to 5 Jul 2018
On/after 6 Jul 2018
On/after 12 Jan 2013 to 5 Jul 2018
LTV Limit
80%; or 60% if the loan tenure is more than 30 years* or extends past age 65
75%; or 55% if the loan tenure is more than 30 years* or extends past age 65
Minimum Cash Down Payment
No change to existing rules
5%; or 10% if the loan tenure is more than 30 years* or extends past age 65
25%
Source: Monetary Authority of Singapore
New Rules on LTV Ratio and Minimum Cash Down Payment
| Number of Outstanding Housing Loan | Zero | |||
| Type of Property | HDB Flat | Private Property | ||
| Sum of Loan Tenure and Borrower's age at time of application | Loan tenure greater than 25 yrs; OR extends pass borrower's age of 65 | Loan tenure less than or equal to 25 yrs AND doesn't not extend pass borrower's age of 65 | Loan tenure greater than 30 yrs; OR extends pass borrower's age of 65 | Loan tenure less than or equal to 30 yrs AND doesn't not extend pass borrower's age of 65 |
| LTV Cap | 55% | 75% | 55% | 75% |
| Minimum Cash Down Payment | 10% | 5% | 10% | 5% |
Number of Outstanding Housing Loan
| One | |||
| Type of Property | HDB Flat | Private Property | ||
| Sum of Loan Tenure and Borrower's age at time of application | Loan tenure greater than 25 yrs; OR extends pass borrower's age of 65 | Loan tenure less than or equal to 25 yrs AND doesn't not extend pass borrower's age of 65 | Loan tenure greater than 30 yrs; OR extends pass borrower's age of 65 | Loan tenure less than or equal to 30 yrs AND doesn't not extend pass borrower's age of 65 |
| LTV Cap | 25% | 45% | 25% | 45% |
| Minimum Cash Down Payment | 25% | 25% | 25% | 25% |
Source: Monetary Authority of Singapore
If you have a current residential mortgage and want to take out another loan to buy a second property, then the LTV is either 25 percent or 45 percent. This means that if you are still currently paying the loan for you HDB flat and you want to buy a private condo costing S$1 million, you can only loan up to S$250,000 or S$450,000. The remainder of S$550,000 or S$750,000 must be paid through either cash or CPF savings. Ouch.
To give you more detailed calculations of how the above rules and taxes impact you if you really are strongly considering to buy a private condo, in addition to your existing HDB flat, we laid out some examples.
What Is The Most Affordable Option?
Let’s assume and Mr A and Mrs B, who are married Singapore Citizens, presently own a five-room HDB flat in Bedok costing S$580,000. They have resided there for six years and took out a $475,000 loan with a tenure of 20 years from the Housing Board.
If the happy couple wants to buy a three-bedroom private condo costing S$1 million, below is the financial breakdown of such transaction:
| Price of 3-bedroom condo | S$1,000,000 |
| Down payment of 55% given LTV of 45% | Cash (35%) - S$350,000 |
| CPF (20%) - S$200,000 | |
| BSD | S$24,600 |
| ABSD of 12% | S$120,000 |
| Overall Upfront Cost | S$694,600 |
Note: For illustration purpose only
Based on the above table, the total amount the couple needs to spend upfront is nearly S$700,000. On top of repaying the first housing loan for the HDB flat, the couple will also have to pay another residential mortgage of up to S$450,000.
Although you can tap your CPF savings to pay for the minimum cash component, please bear in mind that you can’t use all of it. You still need to set aside a Basic Retirement Sum of S$85,500 for members who turned 55 on or after 1 January 2018. For more details, please check out the CPF website.
This means you need to have lots of savings if you want to buy a condo, while you are still paying for your HDB loan.
On the other hand, you can get more LTV of 55 percent or 75 percent from banks if you finish paying first for the HDB loan. If you take this route, your upfront cost will be significantly lower at nearly S$400,000.
| Price of 3-bedroom condo | S$1,000,000 |
| Down payment of 25% given LTV of 75% | Cash (15%) - S$150,000 |
| CPF (10%) - S$100,000 | |
| BSD | S$24,600 |
| ABSD of 12% | S$120,000 |
| Overall Upfront Cost | S$394,600 |
Note: For illustration purpose only
As show by the above two examples, the best way of purchasing a condo is to finish repaying first your HDB loan, as your initial investment for the private property will be more bearable.
DISCLAIMER: This article should not be construed as a financial advice. If you need assistance, kindly consult licensed experts. PropertyGuru disclaims any damages or claims arising from your use of this article.
Aside from this article, you may also want to browse our resale HDB flats or private condos for sale or rent. If you want to know about future property hotspots in Singapore that will benefit from ambitious government plans, check our AreaInsider.
If you need someone to assist you for a property deal, kindly engage a licensed property agent or query them instead via AskGuru.
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29 October 2018 • 9 mins read
Source: PropertyGuru (29 Oct 2018)