Your search results

Here Are 6 Interesting Facts About The Minimum Occupation Period (MOP) That Not Many People Know About In Singapore

Posted by Jayson Ang on May 1, 2024

| 0

TLDR

When it comes to understanding the Minimum Occupation Period (MOP) set by the Housing Development Board (HDB) in Singapore, there are several key points to consider before purchasing your HDB flat or Executive Condominium (EC). These include extensions to the MOP when renting out your flat, rules related to the Proximity Housing Grant (PHG) and Married Child Priority Scheme (MCPS), limitations on renting out rooms in 3Gen flats, extended MOP for Prime Location Public Housing (PLH) flats and HDB Plus flats, the longest MOP of 20 years for flats under the Fresh Start Housing Scheme, and the recent changes in MOP requirements for SERS residents and 1-room HDB buyers. Each of these factors plays a crucial role in determining your options when it comes to buying, selling, or waiting in the Singapore real estate market.

The Housing Development Board (HDB) stipulates a Minimum Occupation Period (MOP), which is essentially the time duration one must reside in a flat before considering resale. Currently, the MOP spans five years, commencing from the date of key collection from HDB. This implies that owners can consider selling their HDB flats only after living in them for at least five years.

The MOP is a regulatory measure set in place since 1971 to discourage the usage of HDB flats purely as investment properties. In 1973, the MOP was extended from three to five years for subsidized HDB flats, also known as Build-To-Order (BTO) flats.

Later in 2010, this regulation was expanded to include non-subsidized HDB flats, like those procured from the resale market. Although the regulation remains unchanged for most HDB flats, some exceptions have been made to align with shifts in Singapore’s public housing policy.

Besides restrictions on full flat rentals and buying private property, there are other lesser-known exemptions to the MOP that many Singaporeans might not be aware of. Here we present six pivotal facts about MOP that Singaporeans should keep in mind before purchasing their HDB flat or an Executive Condominium (EC).

#1 When You Rent Out The Entire Flat For Special Reasons Or When You Go Overseas, The Minimum Occupation Period (Mop) Gets Extended

If we find ourselves unable to reside in our HDB flat, we do have the option to rent it out, but only with HDB’s consent. Be aware though, that the period of our Minimum Occupancy Period (MOP) will be stretched out by the time we’re away, leasing our place. Let’s say we shift overseas for advanced studies or job opportunities during MOP, and secure permission to lease the flat. In this case, our MOP gets a two-year extension.

Despite all this, if the flat is left vacant for a reasonable amount of time, we’re not obliged to include this duration in our MOP. So, yes, we can head out for a well-deserved break without fretting about adding the holiday period to our MOP.

#2 When You’re Vying For The Proximity Housing Grant (PHG) Or Trying To Qualify Under The Married Child Priority Scheme (MCPS), Remember, Folks! Keep Track Of The Distance Rule During The Mop. Parents And Kids, You’ve Got To Stick To It, No Exceptions!

Initiated in 2015, the Proximity Housing Grant (PHG) is a beneficial scheme developed to promote closer living arrangements among family members. The grant facilitates either shared living or proximity living within a 4km radius. This could result in a $30,000 or $20,000 deduction from your resale flat price, depending on your choice of living arrangement.

However, there are certain conditions attached. If you purchase a resale flat close to your parents’ residence, they must remain in the same vicinity, i.e., within 4 km of your property, for the duration of your Minimum Occupation Period (MOP). While they can sell their current property, their new residence must also be within a 4km range of your HDB flat. This policy underlines the core objective of the grant – to keep families united.

In addition to this, the Married Child Priority Scheme (MCPS) provides an additional advantage to newlywed couples aiming for BTO flat allocations. This benefit applies if they choose to move within 4 km of their parents’ home. However, to maintain eligibility, their parents must continue residing within the same 4km radius throughout the MOP.

If you’re contemplating applying for either the PHG or MCPS, it would be wise to discuss your parents’ future residential plans. Given the 5-year MOP and potential 4-5 year wait for BTO readiness, this could affect your plans for the next 5 to 10 years.

#3 Unlike Other HDB Flats or ECs, 3Gen Flat Cannot Rent Out A Room During MOP

Unveiled in 2013, the 3Gen flats are second only to the Executive Flat in terms of size. They offer a slightly larger living space compared to the regular 5-room HDB flats. What differentiates them, however, is the presence of not one, but two luxurious master bedrooms, as opposed to the solitary master bedroom found in 5-room flats.

Suppose you reside in an HDB flat and contemplate earning additional income by renting out a room during your MOP. In that case, you certainly have the green light. However, for those occupying 3Gen flats, regrettably, this option is off the table.

#4 There Is A 10-Year MOP For Prime Location Public Housing (PLH) Flats & HDB Plus Flats

In the October of 2021, Singapore unveiled an innovative housing scheme known as Prime Location Public Housing (PLH). The objective of this initiative is to construct Housing and Development Board (HDB) flats in prime city locations such as the Greater Southern Waterfront. The inaugural PLH development was established in Rochor.

To qualify for a PLH flat, prospective homeowners must adhere to specific regulations. For instance, they are required to complete a minimum occupation period (MOP) of ten years as opposed to the traditional five years. Furthermore, when PLH flat owners decide to sell their property, a Subsidy Recovery fee is levied to recoup the additional subsidies that initially facilitated affordable purchase. The exact amount of this recovery fee varies according to the specifics of each PLH project.

While a decade-long MOP may appear daunting, particularly to young families, it’s crucial to remember the construction period of the flat, which can add an extra three to four years to the wait. This ten-year MOP requirement applies not only to first-time Built-To-Order (BTO) buyers but also to those purchasing resale properties within PLH projects.

One noteworthy restriction for PLH homeowners is that they are prohibited from renting out their entire flat even after the completion of the 10-year MOP. They are, however, permitted to rent out any spare bedrooms.

By 2023, a new breed of flats, known as HDB Plus flats, will be introduced. These properties will be strategically located across Singapore in popular neighborhoods like Ang Mo Kio, Bishan, Clementi, Toa Payoh, Bedok, Queenstown, Bukit Merah, and Kallang-Whampoa. Compared to Standard flats within the same estate, these Prime flats offer more desirable locations, often near public transportation hubs or town centers.

Similar to PLH flats, Prime flats come with a 10-year MOP rule, which applies to both the initial buyer and all subsequent resale buyers.

#5 Flats Bought Under The Fresh Start Housing Scheme Has The Longest MOP – 20 Years

Launched in 2016, the Fresh Start Housing Scheme was introduced as a lifeline for families that have experienced homeownership before but are currently residing in public rental flats, particularly those with young children. This program serves up a balance of financial aid and incentives for personal accountability, such as grants, to help these “second-timers” purchase an HDB flat.

As a unique aspect, HDB incorporated a 20-year minimum occupation period (MOP) into the scheme, setting a record for the lengthiest duration so far. The rationale behind this move was to ensure that genuine homeowners genuinely benefit from the scheme. To put things into perspective, a 20-year MOP is quite substantial, especially when considering a 2-room Flexi flat’s lease period is shorter by 34 to 54 years compared to the typical 99-year lease.

#6 SERS Residents And 1-Room HDB Buyers Now Also Have To Serve 5-Year MOP

In the past, individuals residing in SERS apartments were showered with numerous benefits and financial support. A standout feature was the ability to sell their new HDB homes a mere 7 years after their acquisition, a time frame shorter than that of their peers living in the neighboring estates who had to endure a 5-year MOP term. However, following April 7, 2022, this distinct advantage was eliminated, ensuring all new HDB flat owners adhere to the same 5-year MOP.

There was a time when purchasing a one-room flat from the resale market without utilizing the CPF housing grant did not necessitate any MOP obligations. This is no longer the case. An examination of the HDB website reveals no mention of this rule, suggesting that these buyers are now encompassed within the mandatory 5-year MOP as well.

Here’s a crucial point: even after completing the MOP, owners of one or two-room flats aren’t allowed to lease out their properties partially. Their sole option lies in renting out the entire flat to a maximum of four tenants. And for those considering a one-room resale flat, it’s a challenging endeavor. These flats are practically non-existent as HDB hasn’t constructed them in a long while.

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

Buying Tips Mandarin Top 5

Why Chinese Investors Should Not Be Deterred by ABSD: 5 Reasons

Jayson Ang – June 26, 2023 –

Why Chinese Investors Should Not Be Deterred by ABSD: 5 Reasons Here are the top 5 reasons why Chinese investors...

All Buying Tips

Apply Your HDB HFE Letter in 5 Easy Steps: A Simplified Guide for 2023

Jayson Ang – December 18, 2023 –

TLDR The HDB Flat Eligibility (HFE) letter has experienced delays since its introduction alongside the HDB Flat Portal in May...

Mandarin Top 5

Top 5 Places to Learn About Singapore’s Diversity

Jayson Ang – August 31, 2024 –

Singapore, a vibrant city-state in Southeast Asia, is well-known for its diverse culture and rich history. A melting pot of...

All Buying Tips Opinion

6 Hot Property Market Trends in Singapore 2024: What Buyers Should Anticipate

Jayson Ang – May 27, 2024 –

TLDR When diving into Singapore's property market, expect a rollercoaster ride as trends shift drastically in 2024. Landlords and tenants...

All Buying Tips

Superstitions in the Real Estate Market : How Does it Impact Resale Value?

Jayson Ang – June 20, 2023 –

TLDR When navigating the Singapore property market, it's crucial to consider various superstitious beliefs that can impact your decisions. From...

All Blog Posts Buying Tips

Downsizing From A Spacious 4-Bedroom Condo To A Cozy 2-Bedder: How I Chose A Condo Over A HDB

Jayson Ang – April 28, 2023 –

TLDR Mdm Sim's decision to trade her four-bedroom house for a two-bedroom condo is explored, highlighting the benefits of right-sizing....

Mandarin Top 5

Top 5 Case Study : The Dark Side of Property Investing in Singapore: Scams, Fraud, and Risks

Jayson Ang – October 1, 2024 –

Singapore's property market has long been considered a lucrative investment sector, attracting investors and speculators looking to profit from the...

All Blog Posts Buying Tips

When Is the Right Time to Sell Your House?

Jayson Ang – December 31, 2022 –

TLDR When deciding to sell your house in Singapore's competitive real estate market, timing is crucial. Selling during a seller's...

All Buying Tips Opinion

I Regret Buying A DBSS: 5 Homeowners Share Their Biggest Regrets

Jayson Ang – January 16, 2024 –

TLDR Singapore's DBSS scheme faced challenges such as design flaws, developer responsiveness issues, and restrictions on selling. Residents reported various...

All Blog Posts Buying Tips

Avoid The Possibility Of Negative Cash Sales: Find Out How Much Your HDB Has To Appreciate To Steer Clear Of It!

Jayson Ang – January 31, 2023 –

TLDR When selling your property, watch out for negative cash sales that could leave you with no money after CPF...

All Buying Tips

5 Smart Techniques That Resourceful Homebuyers Utilize to Overcome Restrictions on Home Loans

Jayson Ang – May 16, 2024 –

TLDR When it comes to navigating the complex world of home loans and property acquisition, it's crucial to be aware...

All Buying Tips Opinion

3 Things You Need to Know if You Are Buying a Second Property

Jayson Ang – August 21, 2023 –

TLDR When considering buying a second property in Singapore, ensure eligibility by meeting the Minimum Occupancy Period (MOP) and understanding...

All Opinion

Budget 2024: What To Expect For The Singapore Residential Market?

Jayson Ang – February 18, 2024 –

TLDR In 2025, owner-occupiers of residential properties can benefit from property tax relief based on the Annual Value Band. Retirees...

Mandarin Top 5

Top 5 Reasons Why Singapore’s Luxury Property Market Is Booming – Expert Analysis!

Jayson Ang – October 17, 2024 –

Singapore's luxury property market has been experiencing a significant boom in recent years, attracting the attention of investors and high-net-worth...

All Buying Tips Opinion

Can You Make the Leap to a Condo Upgrade in 2024?

Jayson Ang – June 12, 2024 –

As the Chinese New Year festivities wind down, folks are once again on the prowl for new homes, and understandably,...

All Blog Posts Buying Tips

Beware! Spot These Warning Signs Before Making a Home Purchase!

Jayson Ang – December 21, 2022 –

TLDR When purchasing a property in Singapore, it is crucial to thoroughly assess various aspects of the home to avoid...

Mandarin Top 5

Top 5 Places to Watch Fireworks in Singapore

Jayson Ang – August 3, 2024 –

Singapore is known for its stunning skyline and vibrant celebrations, especially during events like National Day and New Year's Eve....

All Buying Tips

ANALYSIS: Unveiling the HDB Towns with the Steepest and Lowest Price Surges!

Jayson Ang – August 17, 2024 –

TLDR The real estate market for HDB flats in Singapore has witnessed significant growth, with prices reaching new highs. The...

Mandarin Top 5

5 Most Common Property Investment Scams To Watch Out For In Singapore

Jayson Ang – June 12, 2024 –

Property investment scams are unfortunately prevalent in Singapore, and unsuspecting investors can fall victim to these scams, leading to significant...