At the National Day Rally (NDR) on 21 August 2023, Prime Minister Lee Hsien Loong unveiled new HDB flat classifications for Build-To-Order (BTO) flats – Prime, Plus, and Standard.
With these new HDB flat classifications, the application of BTO flats and their subsequent sale after their minimum occupation period (MOP) will come with tiered buying and selling conditions. They will take effect in the second half of 2024.
Effectively, this will end the demarcation of HDB housing estates as mature and non-mature.
This is to better reflect the locational attributes of new HDB flats and price them more equitably while advancing Singapore’s public housing policies to ensure they meet the following three objectives:
- To keep home ownership affordable to all income groups.
- To maintain a good social mix in every town and region.
- To keep the system fair for everyone.
New HDB Flat Classifications Account for Evolving Housing Landscape
These new HDB flat classifications come into effect as the distinction between mature and non-mature estates has gradually blurred over the years, with the latter having evolved into thriving housing estates complete with modern amenities and greatly improved transportation infrastructure.
These towns, which were once considered “ulu” (Malay for being far-flung), have now benefitted from substantial government investments that have significantly improved their overall infrastructure. For example, shopping malls, hawker centres, medical facilities, hawker centres, schools and many other essential amenities are within convenient access.
In addition, the expansion of the MRT network across the island has brought the suburbs closer to the city and key employment nodes.
Distribution of Standard, Plus, and Prime HDB Flats
Unveiling the HDB Plus Housing Model: A Paradigm Shift
Prime Minister Lee’s announcement has effectively redefined the landscape of public housing policies. Due to the scarcity of undeveloped land in Singapore, more public housing will be built within or near existing estates and in more central areas.
As these new flats in choice locations tend to be more popular and would be priced higher, these new HDB classifications seek to ensure homes remain affordable and accessible – both at the initial purchase from HDB and on the resale market.
Below, we will highlight some of their key features:
Standard HDB Flats: A Foundation of Choice
Standard flats will continue to account for the bulk of the supply of HDB flats. They will come with standard subsidies and restrictions for the application of all BTO flats. These flats will come with the standard 5-year minimum occupation period (MOP) and have no restrictions on the pool of resale buyers. These flats will continue to cater for the majority of Singaporean families and eligible applicants.
Plus HDB Flats: Enhanced Accessibility
This new category of flats will be located in choicer locations within each region across Singapore, but not in central locations. For example, they may be near an MRT station, town centre, and major shopping centres. One of the areas where Plus HDB flats will be offered will be in the upcoming Bayshore housing precinct where it will be close to amenities such as MRT stations, a community club and East Coast Park.
Plus HDB flats will be offered with more subsidies – more than Standard HDB flats but less than Prime HDB flats. However, they will be subjected to tighter ownership restrictions compared to the Standard BTO flats.
They will come with a 10-year MOP, a $14,000 income cap for both families and singles, including resale (this is higher than the $7,000 BTO income ceiling for singles), cannot rent out entire flats even after MOP, and only Singaporeans can buy in the resale market. There will also be a clawback in subsidies, but it is expected to be lower than Prime HDB flats as the additional subsidies are less.
Meanwhile, private homeowners who sold their properties will have to fulfil a 30-month wait-out period before they can buy a resale Plus flat. This is twice the time that such owners are currently required to wait out to buy a standard resale flat today.
Prime Flats: Living In Central Regions
Prime HDB flats will have the same conditions as flats currently offered under the Prime Location Housing (PLH) scheme, which was introduced in November 2021.
These include a 10-year minimum occupation period and a subsidy clawback clause when the first owners sell their flats. The percentage of clawback will be commensurate with the extent of the additional subsidy provided.
They can also only sell their flats to buyers who meet BTO eligibility conditions, including an income ceiling of S$14,000 for couples or families and S$7,000 for singles. Additionally, owners of PLH flats may rent out spare bedrooms, but not the whole flats even after the MOP.
| New HDB Flats Classifications | |||
| Flat Type | Location | Subsidies | Restrictions |
| Standard | Majority of supply across all regions of Singapore, except central locations. | Standard amount ($). | 5-year minimum occupation period (MOP).
No income cap for resale buyers.
|
| Plus | Choice locations across regions near transport nodes, town centres and shopping areas. | More subsidies than Standard flats but less than Prime flats ($$). | 10-year MOP
Subsidy clawback when resold in the open market. Monthly income ceiling of $14,000 for families and singles, even for resale buyers (only Singaporeans are eligible). No renting out of the whole flat, even after MOP. A 30-month wait-out period for private property owners to buy resale Plus flats, double the wait-out period for Standard HDB flats. Can only resell to Singaporeans. |
| Prime | Choicest and most central locations which include the city centre and its surrounding towns, and the Greater Southern Waterfront area. | Most subsidies ($$$). | 10-year MOP
Subsidy clawback when resold in the open market. Full BTO eligibility conditions for resale buyers, including an income ceiling of S$14,000 a month for families and S$7,000 a month for singles. No renting out of the whole flat, even after MOP. Can only resell to Singaporeans. |
More Choices for Single Singaporeans
At the same time, the rules for single Singaporeans applying for a BTO flat or the purchase of a resale HDB flat have been relaxed.
Previously, first-timer singles aged 35 and above were only allowed to apply for new 2-room Flexi flats in non-mature estates or buy resale flats in any estate.
However, with the new HDB flat classifications, these eligible first-timer singles can now:
- Apply for 2-room Flexi BTO flats in all locations across Standard, Plus and Prime housing projects;
- Buy a Standard or Plus flat of any size in the resale market; or
- Buy a 2-room Prime flat in the resale market.
These changes follow feedback that a growing number of singles prefer to buy and live in their own flats instead of with their families. Some have also indicated their preference for flats in mature estates so that they can be closer to their elderly parents for mutual care and support.
Effects of New HDB Flat Classifications
These new HDB flat classifications will likely lead to changes in buying behaviours. The government is clearly attempting to make choice flats affordable to as many Singaporeans as possible, but they would have to reciprocate by committing to stay in their properties for a longer time.
This will help to stabilise the HDB market, with the new HDB flat classifications and stricter ownership criteria a clear signal from the government that public flats are not meant for speculation.
Together with measures like the Mortgage Servicing Ratio (MSR) that capped HDB flat financing to 30% of a household’s monthly income (as compared to 55% for TDSR for private property financing), they will put a restraint on the capital appreciation potential of HDB flats.
Correspondingly, this will also have a price-capping effect on Standard HDB flats.
Hence, this could nudge potential homebuyers towards executive condos and private properties as a preferred investment class due to their less stringent ownership criteria and selling conditions.
Conclusion
Recognising that Prime and Plus HDB flats possess inherent market value due to their premium or more desirable locations, the government is acting proactively to ensure affordability for a larger spectrum of homebuyers. Hence, these new HDB flat classifications aim to prevent social stratification where only the well-off can afford them.
To achieve this, buyers of Plus HDB flats will get more subsidies than those of Standard HDB flats, but less than those of Prime HDB flats. This will help moderate the prices of Plus and Prime HDB flats, making them more affordable for a larger segment of flat applicants.
At the same time, the resale conditions attached to these flats will moderate their prices to help maintain a better social mix in the longer term. But there will be a question mark whether HDB flats can be a viable long-term asset where their potential price growth will be restrained.
Not only will there be a clawback of subsidies and longer MOP, financing for all types of HDB flats is also more restrictive.
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Related Resources
- Guide to Buying a BTO Flat.
- Guide to Buying a Resale HDB Flat.
- Are HDB Flats a Good Investment Option?
- Are Executive Condos Good Investment Properties?
- A Singapore Property Market Overview.
- Singapore Property Policies and Financing Options.
- How to Choose a Home Loan.
