Is HDB BTO Or Executive Condominium a Better Investment?
Whether you are looking to buy a new home or are planning on investing in a BTO or Executive Condominium, there are a few things to keep in mind. These include what you can expect from a BTO or Executive Condominium, and what regulations the government has put in place.
Buying a flat is a big milestone for many couples. Depending on the circumstances, the price of a property can vary greatly. However, knowing the different types of flats available will help you decide which is best for you.
If you are looking for an immediate home, then you should consider buying a resale HDB flat. These flats are referred to as preloved properties because they have already been lived in by a previous owner. The price of these flats is usually higher than that of a bto flat, because the flats are subsidized by the HDB.
In comparison, an EC is a flat that is built by private developers. The flat is subsidized by the HDB and comes with a $16,000 income ceiling. The flat is more expensive than a BTO flat, but has a higher appreciation potential.
High rental yield
Buying and renting out an HDB BTO or Executive Condo can be a good way to make money. This is because the government subsidises the sale of these properties. These properties are located in less populated areas and come with amenities such as private condo facilities. In addition, the rental income from these properties is secure.
In the past two years, there have been over 266 HDB flats sold for over $1 million. This is nearly 1% of all resale transactions during this period. In addition, the resale price index shows that the current resale price is very close to the market value.
The average rental yield for an HDB 4-room flat is about 4%. This equates to S$60,000 a year. However, this number can increase significantly if the property is renovated for rental purposes.
Buying a property in HDB BTO or executive condominium can be expensive. Depending on your location, the prices vary. There are several housing grants available from the government. But you need to know the rules and eligibility to ensure that you can afford the property you’re interested in.
A first-time applicant must have a monthly household income of no more than $12,000 and a total household income of no more than $15,999. They can also receive a housing grant of up to $80,000 for singles or $160,000 for a family.
Executive Condominiums like Parc Central are subsidised by the government. In exchange, they offer the amenities of a private condo, like swimming pools and gyms, but at a lower price.
Executive Condominiums like Parc central are also eligible for CPF Housing Grants. The government gives CPF housing grants to first-time applicants who fall within the eligibility criteria.
Minimum occupancy period
Whether you are planning to move to a HDB BTO or Executive Condominium, you will need to consider the Minimum Occupancy Period (MOP) before you make any moves. The rule was introduced in 1971 to limit the quick turnover of public flats.
During the MOP, you can’t sell your HDB flat or EC, nor can you rent it out. Instead, you can register your room rental online. However, it is illegal to lock up your bedroom while renting out the entire flat.
The HDB MOP rules limit other real estate purchases as well. In order to safeguard the subsidy, you cannot buy or sell an EC or BTO flat within the first 30 months. In addition, you are limited to purchasing a second flat, with the exception of 1-room flats.
Regulations by the government
Whether you are buying an executive condominium or a BTO flat, there are certain regulations by the government. The government aims to keep housing affordable for the masses, and to ensure that HDB is accessible to everyone.
If you are buying an EC, you will have to follow HDB regulations before you can sell it. You can rent it out, but you will not be allowed to rent the entire EC within the 5-year Minimum Occupancy Period (MOP).
If you are buying a BTO flat, you will have to wait a few years before you can apply for a BTO. If you are buying a second property, you will be subject to the ABSD (Additional Buyers’ Stamp Duty) rules. You will also be governed by TDSR (Third-party Discretionary Rental Scheme) rules.