For those of you wondering, yes, it is possible to buy a new launch condo before selling your flat. But because the condo will technically be your second property, there will be limitations on your loan amount as well as additional levies to pay.
If you’re a home buyer and you find yourself in this situation, fret not. There is still a way to find a home that fits your budget, location, and living needs affordably. You don’t have to let your dream home slip by!
In this article, Ohmyhome’s Senior Real Estate Advisor Louis Tay details the steps that you should follow to ensure a smooth transition from an HDB flat to a new launch condo.
8 simple steps to buying a new launch condo before selling your HDB
Step 1: Ensure that you have met your Minimum Occupation Period (MOP)
Introduced by HDB in 1971, the MOP is designed to prevent property flipping among investors looking to make a quick buck, which in turn prevents HDB flat prices from ballooning out of control.
The MOP requires homeowners to physically occupy their flats for a minimum period of time before they are permitted to sell it in the open market or invest in private property (including overseas property).
Most HDB flats have an MOP of five years from the date of key collection. The five-year period would exclude any duration when the flat was not occupied, such as time periods when the flat owner was residing overseas.
Exceptions to the five-year MOP include HDB flats purchased under the Prime Location Public Housing (PLH) scheme, the Selective En bloc Redevelopment Scheme (SERS) and resale flats bought without CPF Housing Grants:
|Mode of Purchase||MOP Period|
|Flats purchased under PLH||10 years|
|Flats purchased under SERS||7 years from the date of selection of replacement flat OR 5 years from date of occupation, whichever is earlier.|
|1-room resale flat purchased without using CPF Housing Grant||No MOP|
|2-room or larger resale flat purchased without using CPF Housing Grant||1 to 5 years depending on application date and whether or not flat owner registered for an HDB loan|
|Flats purchased under the Fresh Start Housing Scheme||20 years|
Step 2: Start your financial planning for home loans and CPF payments
Unless you have enough cash on hand to purchase your new property, you’re most likely going to have to take out a loan. Knowing the maximum home loan amount you’re eligible for will help paint a better picture on whether your new home fits comfortably into your budget.
- The TDSR refers to the percentage of an individual’s gross monthly income that goes towards servicing their debts. It is capped at 55% of the home buyer’s gross monthly income. Car loans, credit card loans and existing HDB loans also factor into this equation.
- The LTV refers to the maximum bank loan homebuyers can take as well as the minimum downpayment that must be made in cash. LTV limits are tagged to a person’s age when the loan tenure ends and the number of outstanding housing loans.
|Number of Outstanding housing loans||LTV lower limit||LTV upper limit||Minimum cash downpayment|
|0||55%||75%||5% if borrower’s age is below 65 when loan tenure ends10% if borrower’s age is 65 and above when loan tenure ends|
Most homebuyers in this scenario will not be able to pay off their HDB loans before selling their HDB flat. It would therefore be prudent to mentally prepare yourself to qualify for a significantly lower home loan sum.
There’s also the option of tapping into your CPF Ordinary Account (OA) to service your new launch condo. However, keep in mind that money from your CPF OA can only go towards the downpayment, monthly loan instalments, stamp duties and legal fees relating to the condo purchase.
It is also important to check the latest updates to CPF regulations to prevent yourself from falling short during payment.
You should also take note of the payment schedule for a new launch condo, also known as a Building Under Construction (BUC).
- Payment Schedule for Building Under Construction (BUC)
A BUC refers to any property that is still in the process of being built and has not received its TOP, such as a new launch condominium.
|Stage||Percentage of Payment|
|Booking Fee (cash only)||5%|
|Within 8 weeks from date of option to purchase (Cash or CPF)||15%|
|BSD (Within 2 weeks from signing the S&P Agreement)(On or after 20 Feb 2018)|
*Buyer’s Stamp Duty is computed based on the purchase price or market value of the property, whichever is higher.
|First $180,000: 1%Next $180,000: 2%Next $640,000: 3%Remaining Amount: 4%|
|ABSD (Within 2 weeks from signing the S&P Agreement)(ABSD rates from 6 July 2018)||Singapore Citizen1st residential property: N.A2nd residential property: 12%3rd residential property: 15%Singapore PR1st residential property: 5%2nd residential property: 15%|
|Foundation work (Est. 6-9 months)||10%(5% Cash or CPF)(5% from Bank loan)|
|Reinforced concrete framework (Est. 6-9 months)||10%|
|Partition walls (Est. 3-6 months)||5%|
|Roofing (Est. 3-6 months)||5%|
|Door, window frames, electrical wiring (without fittings), Piping (Est. 3-6 months)||5%|
|Car park, roads and drains serving the housing project (Est. 3-6 months)||5%|
|Building, roads and drainage and sewerage works in the housing estate, connection of water, electricity and gas suppliesOhmyhome platform allows you to list your flat in the open market. Once the right buyer makes an offer, you can go through the HDB resale process.||25%|
|Final Payment Date and/or Completion (might be staggered further depending on when the Certificate of Statutory Completion is issued) (Est. 1-12 months)||15%|
Due to the short turnaround time, buyers will be required to pay for BSD and ABSD in cash first. They will later be reimbursed via the CPF board.
Step 3: Shortlist new launch condos and visit show flats
Now that restrictions are finally easing up, prospective new launch buyers can visit showflats to check out the units in person. This can give you an idea of what your new home could look like and the possible renovations you’d like to do to really make it your own. Keep in mind, though, that there are interior decoration treatments and furniture that will not be present when you move in. The good thing is that developers have indicated all the I.D. treatments in the showflat unit, so you won’t be misled.
Having an unbiased property agent by your side during the viewings can help you compare your options more objectively. If you would like to receive personal advice on fully guided tours, Ohmyhome’s real estate consultants are available for booking at $0 agent fee.
Step 4: Pay the booking fee for your new launch condo unit
Once you’ve zoomed in on the home you’d like to purchase, this is when you can lock in your preferred new launch unit by paying a 5% booking fee of the condo’s purchase price, which must be completely paid in cash.
After the booking fee has been paid, the developer will issue the Option to Purchase (OTP). The OTP is essentially an agreement between you and the property developer on the property’s purchase, written in black and white. It is therefore important to be 100% certain of your decision at this point. Buyers who back out after receiving the OTP risk forfeiting up to 25% of their initial booking fee.
Step 5: Sign the Sales & Purchase Agreement and exercise the OTP
Your property developer will also issue the Sales & Purchase Agreement (S&P) two weeks after you have received the OTP. From here, things will move pretty quickly. Homebuyers will have to sign off on both documents and make relevant payments within a stipulated period of time to ensure a smooth property transaction. The following table breaks down the payment timeline during this period.
|Timeline||What you can expect/need to do|
|2 weeks after receiving OTP||Receive S&P|
|3 weeks after receiving S&P||Sign S&P and exercise OTP before three-week period lapses|
|2 weeks after signing S&P||Pay the Buyer’s Stamp Duty (BSD) and Additional Buyer’s Stamp Duty (ABSD) before two-week period lapses|
|8 weeks after buyer signs OTP||Buyer to foot the 15% downpayment (exercise fee) in cash or CPF before eight week period lapses|
The BSD is a tax that applies to virtually every property purchase in Singapore. It is pegged directly to the property price. Naturally, BSD will be higher on more expensive properties.
BSD is calculated according to the following formula:
- 1% for the first $180,000
- 2% for the next $180,000
- 3% for the next $640,000
- 4% for the remaining amount
To give you an idea of how much BSD can cost, a new launch condo priced at $1,200,000 will fetch a BSD of approximately $32,600.
In addition, homebuyers who purchase a new launch condo before selling their HDB flat will be liable to paying the ABSD. Singapore permanent residents (SPR) and foreigners are required to pay ABSD even if the condo is their first residential property.
|Profile of Buyer||ABSD Rates on / after 16 Dec 2021*|
|Singapore Citizens (SC)|
|1st Residential Property||Not Applicable|
|2nd Residential Property||17%|
|3rd and Subsequent Residential Property||25%|
|Singapore Permanent Residents (SPR)|
|1st Residential Property||5%|
|2nd Residential Property||25%|
|Foreigners||1st and Subsequent Residential Property|
|1st and Subsequent Residential Property||30%|
New laws from 9 May, 2022 with regards to residential properties transferred into a living trust:
Additional Buyer’s Stamp Duty (ABSD) of 35% will now apply on any transfer of residential property into a living trust. ABSD will be payable even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust.
So this new change closes a loophole. This ABSD (Trust) is to be paid upfront when the transfer is made.
Step 6: Start marketing your HDB flat
Marketing your flat can be easily done by posting a listing on the Ohmyhome app (available on Play Store or App Store). While it is completely possible to do this yourself, Ohmyhome’s Super Agents are also available to assist you with your property needs. And we don’t mean to toot our horn, but 70% of properties that we’ve handled have been sold above valuation, in double-quick time, too.
Apart from ridding yourself of a financial burden, selling your HDB flat within six months also grants remission of your ABSD! At 17%, we’re talking about a sum of $204,000 for a condo worth $1,200,000 (applicable to SCs buying their 2nd condo, for SPRs and FRs, the number will be even higher), so it’s definitely nothing to sneeze at.
However, do note that you’ll only be eligible for ABSD remission if you receive the exercised OTP from your buyer within six months after the date when Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of your condo is issued.
Step 7: Hand over HDB flat keys
You will be required to move out of your flat and hand over the keys by the HDB completion appointment date. If your new property is not ready yet, sellers can apply for a Temporary Extension of Stay of up to three months, although this is subject to the new flat owners’ approval. The Temporary Extension of Stay must be submitted along with your resale application.
Alternatively, you might choose to rent a unit temporarily or crash at your friends’ and relatives’ while your condo is being built. This will save you a ton of legal hassle, not to mention property tax and service & conservancy charges.
Step 8: Collect the keys to your new home
The date when you can collect keys to your new property will be indicated on your Temporary Occupation Permit (TOP), a legal document that signifies the government’s approval for a home to be occupied by residents.
Once you’ve collected your keys, you would have successfully completed the process of buying your new launch condo after selling your HDB
On the TOP, you will be informed by the developer and will be assigned a date to collect the keys to your new property. This successfully ends the process of buying your new launch condo before selling your HDB flat.
Want to buy and sell a home quickly?
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We’ll also provide you with complimentary content that you can use to inform your market research. Make every decision with confidence and enjoy a seamless home transaction process without spending hours trawling the internet.
Call us at 6886 9009 to secure an appointment today with any of our Super Agents, or message us right now in the chat box at the bottom right-hand corner of the screen. If you’re on the go, we’re also available on WhatsApp at 9755 1009. At Ohmyhome, we’re always on your side, always by your side.