BTO vs Resale

BTO vs Resale

Written By: Wilfred Wong

Credit: HDB Facebook

And so you’ve come to that stage of your relationship where you and your partner discuss about the *future*.

In another Uniquely SingaporeanTM milestone, you now face a tough choice to make about your future housing. Are you prepared or able to wait three to five years for a freshly built, pristine Build-to-Order (BTO) flat? Or will you instead decide on a slightly older resale flat, available almost immediately? In this article, we break down the differences between the two, the factors to take into consideration and how the choices will affect your future finances as well – right in time for the August BTO launch, rumoured to be announced next week.

Can or not?

First off, you need to determine if you’re actually eligible to get a BTO! You can check out the full details here, but for now we’ll go through the key criteria – citizenship, income ceiling, age and property ownership.

At least one person applying for the BTO has to be a Singapore Citizen, and the other has to be a Singapore Citizen or Permanent Resident. 

For the income ceiling, HDB announced last year a change to the previous limit of $12,000. The revised income ceiling is now a joint monthly income of $14,000 for you and your partner. If you and your partner are fortunate enough to earn higher than that, you will not be eligible to apply for a BTO.

Applicants also have to be at least 21 years old when applying. But under the Fiancé/Fiancée Scheme, applicants who are below 21 years old, but above 18, can apply for a BTO with a writer consent from the applicant’s parents or guardians.

And if an applicants is below 18, a Special Marriage Licence must be submitted during the flat selection appointment, obtained from the Ministry of Social and Family Development.

You and your partner must have only purchased up to one HDB, Design, Build and Sell Scheme (DBSS) or Executive Condominium (EC) in the past, and you and your partner don’t own any other local or overseas property and haven’t disposed of any within the last 30 months of your application 

But you’re applying alone, your monthly gross household income cannot exceed $7,000, you must be a Singapore Citizen, above 35 years old, you’ve only purchased up to one HDB, DBSS flat, or EC in the past, and you don’t own any other local or overseas property and haven’t disposed of any within the last 30 months of your application. Phew, that was a mouthful!

Credit: Seedly

Ka-Ching!

It’s widely known that BTO flats are more affordable than resale flats. BTOs are heavily subsidized by our government, which explains why they’re more often than not cheaper than resale flats!

Case in point: At the BTO launch in November 2019, a 4-room BTO flat in Tampines costs about $394,000, while the average price of its resale counterpart–same size and in the same area–is about $420,000.

And in a non-mature estate like Tengah, a 4-room BTO starts from $302,000; the closest comparison would be a 4-room resale flat in neighbouring Choa Chu Kang, which costs an average of $335,000.

You can check out the resale flat prices at HDB’s portal here. After filling out the form, you’ll find that some resale flats are actually more affordable than BTOs.

But why? Besides the unlikely conclusion that HDB has been jacking up BTO prices, the likelier reason is that HDB resale prices have been declining.

And with resale flats, you might actually get more housing grants than a BTO!

First, check out what grants you’re eligible for here. But here’s the summary for you:

Check out the grant portal linked above to assess your eligibility for all the grants – thank us later!

In summary, if your monthly household income is a bit on the higher side, you’ll be ineligible for many or all grants for a BTO.

But for resale flats, there’s a more flexible income ceiling for the $50,000 the first-timer grant, and also the chance to get a bonus $20,000 grant if you’re purchasing a flat near your parents. The total grant amount would range from $50,000 to $70,000. That’s a lot of money 🤑

Lease Decay

No, it’s not your flat going bad…literally. But its value will naturally depreciate over time, more so for resale flats.

So buying a resale flat is like buying a second-hand car, compared to a new one. You’re able to get it immediately and it works, but with less than 10 years on its COE. As compared to a brand new car, its owner would have to wait awhile to get it, but it comes with a fresh 10-year COE. Pros and cons in both 😬

So… worth it or not?

It depends! You’ll need to discuss with your partner about this. If you’re looking at your home as an investment, then a BTO flat might be the way to go. After waiting the three to five years and after the Minimum Occupancy Period (MOP) of five years, its value will appreciate and you can rent it out or sell it off and walk away with handsome profit.

This is especially if you’re purchasing a BTO in a non-mature estate. Such flats cost much less than BTOs in mature estates, and its price will appreciate nicely after the MOP, once the estate is spruced up with amenities such as malls, recreation facilities and the like, and becomes more accessible.

But if you’re looking for a home to live in, you might want to consider a resale flat instead, especially those with a longer lease. These might be more expensive, but are available almost immediately and located in already bustling neighbourhoods with amenities at your doorstep.

Ultimately the choice is up to you, taking into consideration the factors we talked about above! Whether you’re able and willing to wait the three to five years BTOs take to build, whether you see this as your lifelong home or an investment for the future, and which of these are you better able to afford.