Resale HDB Flats Vs New BTO, Which Should You Choose?

Resale HDB flats vs new BTO flats, which should you choose?

By PropNex Research

Are you looking to buy your own HDB flat but are not quite sure whether a resale unit or a brand-new Build-To-Order (BTO) one is more suitable? Here’s a quick checklist that will help you decide between the two.

Why BTO flats are attractive?

If you are super tight on budget and are looking for the cheapest housing option available in Singapore, then it is a no-brainer – BTO is the way to go. Why are BTO flats generally cheaper than resale ones? Well, that is because you are buying a highly subsidised flat directly from the HDB rather than in the open market, where sellers are most likely hoping to turn in a profit from the sale of their flat.

For example, in the August 2020 BTO exercise, a 4-room BTO unit in Tampines GreenGlade has a selling price starting from $311,000 (excluding grants), while comparable resale flat options in the area would cost $385,000 to $575,000.

Another reason why BTO has an edge over resale lies in the fresh 99-year lease. The general wisdom is that newer flats will hold their value better than older ones, and if you are thinking of passing down the flat to your children, then getting a brand new flat with a 99-year lease may be a more suitable option, rather than buying a resale flat with a remaining lease of below 60 years.

Once you have fulfilled the 5-year Minimum Occupation Period (MOP), you are eligible to sell your flat on the resale market. Having bought the flat at a much-subsidised rate from the HDB, you will potentially enjoy some capital gains from reselling your unit. However, do note that the MOP starts only when you take possession of the flat, so you are technically “locked-in” for more than 5 years, if you include the waiting time for the BTO flat to be completed.

Why resale flats rock?

Going for a resale flat lets you take control of where exactly you want to live in, right down to the preferred floor – there is no need to ballot and hope that the unit you are after is still available when it is your turn to select a flat.

With resale flats, you also have a pick of locations from all over Singapore. If you want to live near your parents who are residing in a mature estate, the resale market may be an easier avenue. While the BTO exercises do offer units in selected mature towns, the competition for these flats are usually stiff and there is no guarantee that you will get a unit. There are other perks of being able to freely choose your desired location - you can pick an area that you are familiar with, near your work place, or near your favourite amenities.

Another big plus for resale flats: higher grants. In particular, first-time buyers can receive housing grants (Enhanced CPF Housing Grant, CPF Housing Grant, and Proximity Housing Grant) of up to $160,000 to finance their resale flat purchase – that is twice the amount of housing grants for the purchase of new flats.

If you have more urgent housing needs and cannot wait, then buying a resale flat is the clear option, as it has a much shorter waiting time. You will be able to move into your new home in a matter of months if you go for a resale flat, compared to some 3 to 5 years wait for a BTO project to be completed.