If you are a Permanent Resident (PR) in Singapore, and you dream of owning an HDB flat, there are a few things you should know before taking the plunge. In this guide, we will walk you through the rules you need to know—ensuring you are well-prepared before you sign any papers.
Need help with your PR application? Get in touch with SIC through WhatsApp or fill out the contact form for more information!
What Is HDB?
HDB stands for Housing and Development Board, a government agency in Singapore that is in charge of public housing development.
It is responsible for the planning, construction, and management of HDB flats, which are affordable, high-rise residential units available for sale or rent to Singapore Citizens and Singapore Permanent Residents (PRs).
HDB also manages policies regarding housing loans, eligibility criteria, and ownership rules for these flats.
HDB provides different types of flats, such as BTO (Build-to-Order) flats and resale flats. These flats cater to various needs and budgets, offering options for first-time buyers, upgraders, and those looking for an immediate move-in.
What Singapore PRs Need to Know Before Buying an HDB Flat
Singapore PRs are eligible to buy and own an HDB flat, but there are some requirements that you need to meet in order to do so.
1. Age Requirement
- You must be at least 21 years old to apply for an HDB flat as a PR.
- There is no maximum age requirement to buy an HDB flat; however, if you are applying for a bank loan to finance your HDB flat, banks may set an age limit for the loan which varies depending on the bank’s policies.
2. Family Nucleus Requirement
To apply for an HDB flat, you must have a family nucleus. This can include:
- A Singapore Citizen (SC) spouse or children.
- Parents or siblings (if they are also Singapore Citizens or PRs).
- Single PRs are not eligible to buy an HDB unit.
- However, if you have a fiancé/fiancée with a PR status, you may buy an HDB unit together under the Fiancé/Fiancée scheme.
3. Types of HDB Flats You Can Buy
- PRs can only purchase resale flats, which are flats that have been previously owned and are sold on the open market.
4. Ethnic Integration Policy (EIP)
- The Ethnic Integration Policy (EIP) is a policy ensuring a balanced ethnic mix in HDB neighbourhoods.
- Your eligibility to buy a flat may depend on the ethnic quota of the flat you are interested in. Some flats in specific areas may have restrictions on who can buy them, based on your ethnicity.
5. Singapore Permanent Resident (SPR) Quota
- PR buyers are also required to comply with the PR quota for HDB flats, which is in place to ensure a balanced mix of residents in different neighbourhoods.
- This policy is designed to help SPR families integrate more smoothly into the local community, fostering a sense of inclusion and belonging.
6. Minimum Occupation Period (MOP) for Resale Flats
- HDB unit owners are not allowed to sell or rent out the entire flat during the Minimum Occupation Period (MOP) of 5 years.
- This rule applies to all HDB flat buyers, including PRs, and is enforced to ensure that these flats are used as homes and not for short-term investments.
What to Expect During the HDB Buying Process as a Singapore PR
As a Singapore PR, buying an HDB flat comes with specific financial aspects that you should be aware of.
1. Financing Your HDB Flat
No HDB Housing Loan/Housing Grants for PRs
- As a Singapore PR, you are not eligible to apply for an HDB housing loan. Instead, you will need to rely on a bank loan to finance your flat.
- PRs are also not eligible for government housing grants.
Downpayment
- The down payment varies depending on whether you are taking a bank loan or not.
- The down payment is generally 25% of the flat’s purchase price. At least 5% to 10% must be paid in cash, with the rest covered by your Central Provident Fund (CPF) savings or other savings.
- The down payment is paid in 2 stages, during the signing of Agreement of Lease, and during the collection of keys.
Using CPF
- You can use your CPF savings for both the down payment and monthly mortgage payments.
- However, keep in mind that the amount of CPF you can use will depend on the flat’s purchase price and your CPF balance.
2. Buyer’s Stamp Duty and Legal Fee
- SPRs are required to pay the Buyer’s Stamp Duty and legal fee when purchasing any property in Singapore.
- Buyer’s Stamp Duty (BSD) is a tax you pay when buying a property in Singapore. The tax amount depends on the flat’s purchase price.
- For the first $180,000, you will need to pay 1% of your flat’s purchase price.
- For the next $180,000, you will need to pay 2% of your flat’s purchase price.
- For the next $640,000, you will need to pay 3% of your flat’s purchase price.
- Any remaining balance will require you to pay an additional 4% of your flat’s purchase price.
- Legal fee is the cost for hiring a lawyer to handle the paperwork when buying a property.
- Similar to BSD, the legal fee amount depends on the flat’s purchase price.
- For PRs, legal fees can differ depending on the solicitors you appoint to act on your behalf.
- You may appoint a solicitor from HDB or outsource your own.
Additional Guidelines for PRs on HDB Flat Purchases
Apart from the major guidelines, there are other important rules that Singapore PRs need to consider when purchasing an HDB flat.
1. Renting Out Your HDB Unit
- If you are thinking of renting out your HDB unit after the Minimum Occupation Period (MOP), you will need to obtain an approval from HDB.
- There are specific rules and regulations to follow, including eligibility criteria for types of flats, tenants, rental periods, and obligations to ensure compliance with HDB’s guidelines.
2. Selling Your HDB Unit
- If you are looking to sell your HDB flat, the process involves:
- Meeting the Minimum Occupation Period (MOP)
- Verifying your eligibility
- Listing the flat for sale
- Submitting the resale application through the HDB Flat Portal
- However, if you are going through bankruptcy, you will need to obtain approval from the Official Assignee, who will ensure that the sale complies with HDB’s rules and regulations.
3. Property Ownership for Singapore PRs
- As a PR, you are restricted to owning only one HDB flat/private property at a time.
- If you, your spouse, or anyone listed in your HDB flat intend to acquire a private residential property, you must notify HDB and sell your HDB flat within six months of acquiring the private property.
4. Divorce
- If you and your spouse are going through a divorce, you must inform HDB as soon as possible.
- Both of you are required to sell the HDB flat, given that you have met the MOP. If MOP is not met, then you will need to consult with HDB for them to assess the situation.
- There are several documents required by HDB that you need to provide:
- Order of Court (if any)
- Writ for Judicial Separation;
- Interim Judgment and Certificate of Making Interim Judgment Final; or
- Divorce Certificate (for Muslims); and
- If the documents are not in one of Singapore’s four official languages, an official English translation by an interpreter from the Supreme Court or Family Justice Courts is required.
- If one of you wants to keep the flat, you will need to meet the eligibility criteria (e.g.: The family nucleus requirement and being able to finance it).
Conclusion
Buying an HDB flat as a Singapore PR might seem a bit complicated at first, but once you know the basics, it is much easier to handle. Just make sure you are clear on the rules, your financing options, and any extra costs that might come up. If you are ever unsure, you can always seek help and advice from HDB.
Need help with your SPR application? Get in touch with SIC through WhatsApp or fill out the contact form for more information!
