How Will the Prime Location Public Housing (PLH) Model Affect Me as A Potential Buyer or Seller?

In a joint announcement, MND and HDB announced the development of the Prime Location Public Housing (PLH) model in Oct 2021, after comprehensive discussions with the public, industry experts, and industry stakeholders.

The key features of the PLH model is the doubling of Minimum Occupation period to 10 years, and increased restrictions on who can buy, sell or rent these flats.

In addition new PLH flats will be priced with additional subsidies than regular Build-to-Order (BTO) flats, so that these PLH flats remain affordable despite their prime locations.

Why is the PLH model necessary?

This new model ensures that new public housing built in prime, central locations like the city centre and the future Greater Southern Waterfront will remain affordable, accessible and inclusive for Singaporeans both at the initial purchase and for any subsequent transaction on the open market.

In Singapore, nearly 4 out of 5 people live in HDB flats, of which about 90% own their homes. At the heart of Singapore’s public housing programme is affordable, accessible, and inclusive. Therefore, it is imperative that public housing for residents in prime locations reflect the same values.

Due to their attractive locations and attributes, these downtown flats are consistently breaking the million-dollar barrier, and would likely only be affordable to the well-off if left exclusively to market forces.

These charts show that in 2021, Singapore has hit a record number of million-dollar HDB transactions, and many of these are located in prime locations such as Pinnacle@Duxton (in Tanjong Pagar). These deals can also occur outside prime areas, such as the The Peak at Toa Payoh, and other similar projects in Bishan.

The BTO launch site at Rochor will be the first project under the PLH model during the Nov 2021 sales exercise. HDB estimates that there could be an average of 1 PLH project each year from 2022 onwards.

How will the PLH model affect sellers and landlords?

Because PLH flats are in prime locations and additionally subsidised to meet affordability standards, flat owners will see their Minimum Occupation Period (MOP) doubled to 10 years before they can sell.

In addition, while they may rent out their spare bedrooms, they will not be allowed to rent out the whole flat after MOP. These conditions, outlined in the table below, will apply to those who buy PLH properties from HDB or on the open market.

However, the government intends to require resale of PLH flats only to buyers who can meet prevailing eligibility conditions for BTO flats. This can be in the form of an income ceiling, which is currently set at $14,000 monthly household income. This is because, without the eligibility conditions, the resale prices of these prime location flats may rise beyond the reach of many Singaporeans. 

HDB also intends to recover the additional subsidies upon the sale of PLH flats as a means of evening out with BTO flat owners who are not entitled to these additional subsidies. The subsidy recovery percentage will be proportional to the level of the extra subsidy provided, but exact figures have not been released yet.

How will this affect future buyers?

The eligibility conditions for buying flats under the PLH model are mostly the same as those prevailing for the purchase of BTO flats. However, the quotas for the Married Child Priority Scheme (MCPS) will be revised and adjusted depending on the location of the sites. Currently they have not announced the new quota of flats that will be reserved under MCPS.  

This allows public housing in prime central locations to be more inclusive, providing more opportunities to Singaporeans whose family members do not live near the area, to also live in these neighbourhoods.

Unfortunately for singles, the PLH model has completely cut them out of both the BTO and resale market. Based on present rules, only those in a family nucleus can purchase a PLH flat on the resale market, whereas normal flats do not have such a restriction.  

On the BTO front, singles can usually ballot for 2-room flexi units. However even if these units were to be available in future PLH projects, singles will not be able to ballot for them.

Outlook: will the PLH model affect regular flats?

With the implementation of the PLH model only applicable for future HDB projects and not retrospectively to existing public housing flats, it remains to be seen if these new measures will have any direct impact on the resale market.

But as more HDB flats are built in the prime areas in future, we could see prices acclimatize for existing and newer flats in those regions. Future BTO projects not in prime areas could also see higher take up rates as prospective balloters could be turned off by the 10-year MOP.

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Frequently Asked Questions on the Prime Location Public Housing (PLH) model.

1. Is there a different criteria to ballot for PLH flats?

In terms of eligibility to ballot for BTO projects, the same eligibility criteria apply to both regular and PLH flats.

2. How do the extra subsidies for new PLH flats work?

PLH units will be priced with additional subsidies, on top of current BTO flats as flats in these prime areas tend to command higher market values.

However, future owners of such flats will pay a percentage of the unit’s resale price to HDB, allowing authorities to “fairly recover the extent of the additional subsidies” initially given. More details, including the subsidy recovery percentage, will be announced in November’s BTO exercise.

3. Will the PLH rules apply to my existing prime HDB flat?

No, the PLH model will only apply for new prime HDB flats launched from November 2021 onwards.

4. Can second-timers apply for PLH BTO flats?

Yes.

5. When can I sell my PLH flat?

Future owners of PLH flats will have to fulfil a 10-year minimum occupation period (MOP) compared to the current 5-year MOP for current flat owners. Also, they can only sell to resale buyers who meet the prevailing BTO eligibility conditions. All subsequent owners will also follow the 10-year MOP ruling. 

6. Does the HDB resale levy apply to PLH resale flats?

Yes. If you are the first owner of the PLH flat and you resell the flat after MOP, and proceed to buy another subsidised housing such as a BTO flat or EC, you must pay back the additional subsidy recovery as well as the resale levy for your PLH.

7. Can I rent out my PLH flat?

Those who buy PLH flats in prime areas will not be allowed to rent out the whole flat, even after the MOP. They will only be allowed to rent out spare bedrooms. This will apply to all owners of a PLH flat.

8. Where will these flats be built?

Currently, the PLH model will apply to “selected” public housing projects in prime and central locations, such as the city centre and surrounding areas, including the Greater Southern Waterfront. In future different estates may be added into the list of “prime” locations.