Complete Guide to BTO VS Resale Housing Grants - More Grants for Resale over BTO

Housing costs in Singapore can be daunting, even if you’re opting for the more ‘wallet-friendly’ HDBs (be it BTO or resale) over condominiums or landed properties. In the first half of 2021, resale HDBs prices have risen 5.9%, and there were 106 resale flats that were sold for over $1 million.

These price points undoubtedly can not be easily paid for by the average joe, and in a bid to offer some help for citizens in Singapore to own a flat, the government has put forward a list of grants that can help lessen the load slightly. 

Read on to find out the types of housing grants available in Singapore, their eligibility criteria, and why the amount of grants for resale HDBs are significantly higher than BTO HDBs. 

Grants and Eligibility

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BTO VS Resale Flats

Though the idea is that new is better, there are a lot more factors to take note of when choosing between a BTO or resale flat. The top factors people look at generally include their eligibility and price. 

Some of the other more important factors include location, waiting time, lease, capital growth as well as our main topic today, grants. 

Location

Location wise, you have a wider variety of choices when it comes to resale flats as these are flats that are already built in the different areas in Singapore, and you can usually have your pick. 

For BTOs, they are generally either built in leftover areas that are more quiet and out of the way or are in prime locations but are supremely hard to obtain the chance to purchase. 

Waiting Time

A more known fact to all is that when you purchase a BTO, expect to wait 3-5 years before construction is finished, and this does not even include the time spent balloting for the flat! If you are in a hurry to move in, this situation will most definitely be less than ideal.

Due to the current pandemic, homebuyers should also take note that this process can be further delayed due to the lack of foreign workers and raw materials. Also, it was recently reported that the main contractor for five ongoing BTO projects have gone bust, thus delaying a total of 2,982 units in the five projects. (via Straits Times)

On the other hand, resale HDBs can shorten the move-in period to as early as 2 months from the date of purchase, especially if no renovations are needed. Comparatively, this will be the superior choice for those who are aching to move out to a place of their own.

Lease

Depending on each unique scenario, the lease term left on the flat can have a significant impact when making a choice between BTO/resale. For those who are planning a family, BTO’s full 99-year leasehold will help ensure that future generations can continue living in the flat.

On the other hand, resale flats can have much shorter lease terms leftover, with some having a good price point due to the less-than-ideal term. This would be good for older couples planning for retirement, but probably wouldn’t be very beneficial for new families.

Capital Growth

For resale flats, there generally isn’t much chances for capital growth due to the lower lease term and fixed developments around the area. Whereas for BTOs, it can be sold after it’s MOP period (usually 5 years) and by then, the lease term left is still much more attractive than other resale flats in the market.

The potential for future developments for BTOs located in non-mature estates is also high, which can then cause the value of the flat to appreciate over time.

Grants

Last but no least, the grants available. From the table above, you can easily see that the amount of grants for resale flats trumps the grants for BTOs. Furthermore, some of these grants can be stacked, meaning you can enjoy up to 3 grants at one go if eligible, which means you can expect some serious savings if you purchase a resale flat!

Why Are There More Resale Grants?

Taking a look at the pros and cons above, more and more people who can afford to wait are opting to purchase BTOs instead as they feel that it is more beneficial in the long run. 

In many cases, BTOs have a more appealing price point as well since they are directly sold to the buyer at a subsidized rate. On the other hand, price points for resale flats ultimately depend on the market conditions, and those located in estates with an abundance of amenities can definitely fetch a higher premium.

In a bid to offer up a more compelling alternative in the form of a resale flat, more grants were created to benefit those who pick this option. Part of the reason why this is so can be linked to the four factors below:

1. Aging Population

Previously talked about in our Aging Population article, there is a real possibility of a price meltdown in the next few decades when a portion of our current aging population is not around, resulting in their current residence being sold off or reverted to the government.

This will mean that we might be looking at an overabundance of supply of properties in the market during the period of time, and high supply will naturally cost a price drop. By offering more benefits for resale flats gives the elderlies a chance to consider downsizing or moving in with their children and selling off their current place for extra retirement funds.

2. Aging Flats

Many of the HDBs in mature estates have already been built for a good period of time. Though some may worry about the lack of amenities in non-mature estates, the fact of the matter is that the price gap between these two types of resale flats have been slowly inching closer.

More and more people have been prioritizing the impact of a decaying lease over the location, which resulted in better sales of the newer resale flats in non-mature estates. Over time, this can mean that older resale flats will become harder to sell off despite being in a mature estate, and those wanting to cash out to downgrade will find themselves in trouble.

3. Land Scarcity

Occupying just a dot on the globe, Singapore is a small country and thus does not have much land to spare to keep building new flats. In recent years, there have already been a number of developments built, be it for living purposes or facilities and amenities.

In due time, there will not be enough land left to keep building new housing, thus the importance in ensuring that resale flats are still an attractive option for new homebuyers. 

4. Not Viable to En Bloc All Old Flats

As mentioned above, there are already many old flats built in Singapore, with the first ever HDB built in 1960. Factoring in the time since then, many flats are now starting to mature past the 40-year mark. 

The en bloc scheme for HDBs, SERS (Selective En bloc Redevelopment Scheme) is highly selective, and is estimated to only select 4% from all these aging flats to be eligible. When selected, the block will be renewed and redeveloped within 4-5 years, and these homeowners will be offered a generous compensation package as well as the option to move into a new flat with the full 99-year lease.

With that being said, it is obvious that this is not something that can be done to ALL aging flats (thus the estimated 4% limit), as there are simply too many families to rehome and homeowners will definitely struggle to find new housing whilst their previous home is being redeveloped.   

Types of Grants Available

There are eight main types of HDB & Resale grants available; let us guide you through via simple descriptions of how each grant will benefit each individual based on various scenarios.

Enhanced CPF Housing Grant (EHG)/(Singles)

This is a CPF Housing Grant that benefits first-time flat buyers who are applying for a new BTO or resale flat. Prior to the EHG, the two grants buyers could apply for were the Additional CPF Housing Grant and Special CPF Housing Grant. They were then revised and combined into a single grant without limiting the flat type and location.

In a nutshell, eligible first-timers applying for new flats can receive up to $80,000 while singles can enjoy the EHG (Singles) grant of up to $40,000. For those applying for resale flats, they can enjoy up to $160,000 in grants - including up to $80,000 in EHG, up to $50,000 in CPF Housing Grant and up to $30,000 in PHG.

Of course, the amount of grant receivable will be in accordance with the average income of the buyer.

Enhanced CPF Housing Grant (EHG)

Who is eligible: All except second-timer applicants and singles

Who is it for: SC & SPR

Grant amount:  $5,000 to $80,000

Income ceiling: $9,000

Flat eligibility: Any BTO/resale flats

Enhanced CPF Housing Grant (EHG)(Singles)

Who is eligible: Singles

Who is it for: SC

Grant amount: $2,500 to $40,000

Income ceiling: $4,500 if buying resale flat under Single Singapore Citizen Scheme,

$9,000 if buying a resale flat under other schemes

Flat eligibility: Any BTO/resale flats

Step-Up CPF Housing Grant 

This grant helps second-timer families who have owned a subsidized flat previously, as well as those who are currently living in a rental flat. As housing grants are mostly given to first-timers only, these families can find it difficult to afford another home without any subsidy.

In this case, the Step-Up CPF Housing Grant will prove to be a great help as these aspiring homeowners are able to better secure a future dwelling. 

Current second-timer homeowners who are looking to upgrade from a 2-room subsidized flat in a non-mature estate to a 3-room flat in a non-mature estate as well as second-timer families who are rental tenants looking to purchase a 2-room or 3-room flat in non-mature estates will be eligible for a $15,000 grant as long as they meet the income ceiling requirement.

Who is eligible: Second-timer applicants

Who is it for: SC

Grant amount: $15,000

Income ceiling: $7,000

Flat eligibility: A 2-room Flexi* or 3-room flat in non-mature estates

 *Applicable only to second-timer families living in public rental flats
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Family Grant

The family grant is good for first-timer families/couples who are looking to purchase a resale flat. Depending on the household and flat-type, eligible buyers will be able to receive up to $50,000 in grant. Those who qualify for this grant may also benefit from the Enhanced CPF Housing Grant for further subsidies.

Who is eligible: First-timer 

Who is it for: SC/SC, SC/SPR

Grant amount: Up to $50,000 for 2-4 room resale flats, up to $40,000 for 5-room or bigger resale flats

Income ceiling: $14,000 OR $21,000 if purchasing with extended family

Flat eligibility: 2-room or bigger resale flats

Proximity Housing Grant

As mentioned in the name, the Proximity Housing Grant will offer help to those who are purchasing a resale flat located less than 4km from their parents/children, as well as those who are planning to live in the same flat as their family. This was introduced to encourage families to live close to or together for mutual care and support.

As long as the buyer has not received the PHG previously, he/she is likely to be eligible as the grant does not have an income cap and does not require you to be a first-timer applicant.

An additional condition to take note of is to ensure that at least one of the parent/child helping the applicant to qualify for the grant is a Singapore Permanent Resident.

Who is eligible: All

Who is it for: SC, SC/SPR

Grant amount: Families: $20,000 (additional $10,000 if living with parents/child),

singles: $10,000 (additional $5,000 if living with parents)

Income ceiling: None

Flat eligibility: 2 to 5-room flat if living near parents, any resale flat types if living with parents

Half-Housing Grant

Couples who are a mix of first-timer and second-timer when it comes to buying a resale flat may find it difficult to check their eligibility for these grants. Fret not, as the Half-Housing Grant seeks to help those with whose partner have previously enjoyed a housing subsidy.

This grant is half of the Family Grant the couple would have qualified for if both were first-timer applicants. 

Who is eligible: First-timer applicant whose partner has previously enjoyed any housing subsidy

Who is it for: SC/SC, SC/SPR

Grant amount: $25,000 (2- to 4-room flat) or $20,000 (5-room or bigger flat)/half of Family Grant qualified for

Income ceiling: $14,000 OR $21,000 if purchasing with extended family

Flat eligibility: 2-room or bigger

Top-Up Grant

Similarly, the Top-Up Grant seeks to help those whose partners have previously qualified for the Singles Grant and are looking to purchase a resale flat. Firstly, the couple will have to be eligible for the Family Grant. Once qualified, this additional Top-Up Grant will be the amount of Family Grant qualified for deducted by the Singles Grant received. 

This provides additional help for those who have already enjoyed subsidy while they were single, but find themselves in a different predicament where they need a larger home. 

Who is eligible: Singles

Who is it for: SC

Grant amount: Family Grant eligible for minus Singles Grant previously received

Income ceiling: $14,000

Flat eligibility: Any resale flat except those that has been announced for SERS

Singles Grant

Lastly, the Singles Grant aims to lessen the load for those who have passed the 35-year old mark and are currently under one of the three schemes: Single Singapore Citizen Scheme, Public Scheme or Non-Citizen Family Scheme. This is also part of the list of grants that are only applicable when purchasing a resale flat.

Who is eligible: Singles

Who is it for: SC

Grant amount: $25,000 (2- to 4-room resale flat), $20,000 (5 room resale flat)

Income ceiling: $7,000 if buying resale flat under Single Singapore Citizen Scheme, $14,000 if buying resale flat under other schemes

Flat eligibility: 2 to 5-room under Single Singapore Citizen Scheme, 2-room or bigger under other schemes

For more information, do visit the HDB site for the grants under resale and BTO flats.

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Example of Grants for 2 Different Flats

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Resale Levy

For those who are buying their flats and planning to live there with their families, this may not be a factor they will have to worry about. However, for those who are planning to sell off the flat in the near future, do take note of the resale levy.

The resale levy is imposed in order to ensure fair allocation of subsidies between first-timers and second-timers, and this is when second-timers will have reduced subsidies for their second flat/EC purchase.

If the cases below apply for you, you WILL need to pay the resale levy

• You dispose of your subsidized flat and then buy a second subsidized flat from HDB
• You dispose of your subsidized flat and then buy an EC from a developer

Credits HDB

However, if you are purchasing a Design, Build and Sell Scheme (DBSS) flat from a developer, HDB resale flat or a private residential property after disposing of your subsidized flat, you will not have to pay this levy. 

If you are a Singles Grant Recipient and subsequently form a family and buy your second subsidized flat, you only have to pay half the levy amount. The resale levy amount will then depend on the size of your first subsidized flat:

Ultimately, different people have their own unique circumstances and scenarios. Whilst one family can find it more viable to purchase a BTO, another might find more benefits to a resale flat, including the grants available.

We hope this article has helped identify some of the different extensions to factor in when it comes to buying a flat, as well as the grants you might be eligible to apply for. Let us know if you have more burning questions regarding this topic, and feel free to suggest other property-related matters you would like us to cover.

Stay tuned for a brand new Residential Guide coming soon!