Can I Buy Private Property If I Own HDB? Here's What You Need to Know
Yes, you can purchase and own private property in Singapore even if you currently own an HDB flat. But don’t click away just yet, there are still strict rules, eligibility conditions, and financial considerations that buyers must comply with before being eligible in owning a HDB flat and a private property.
If you are short of time and in need of someone assisting you in purchasing or selling your property, click here to contact us at David & Audrie and let us handle your search. If not, stay around and find out how you can purchase a private property whilst owning a HDB.
There are rules that are primarily designed to ensure that HDB flats, which are a form of subsidized public housing, serve their primary purpose of providing affordable homes for Singaporeans rather than being used as investment vehicles.
1. Minimum Occupation Period (MOP) – The Primary Condition
We will start with the first condition for buyers must meet, The Minimum Occupation Period (MOP). The MOP is the most critical requirement you need to fulfil before you're allowed to buy a private property while owning an HDB. The MOP is a five-year period during which you must physically occupy your HDB flat before you can acquire any other residential property, be it local or overseas.
This rule applies to all HDB owners, whether if you purchased a Build-To-Order (BTO) flat, a resale flat with or without CPF housing grants (although the resale flat without grants has slightly more flexibility). The MOP period starts on the day after you collect the keys to your HDB flat, remember that the MOP excludes any period where the flat is not owner-occupied this includes even if you are renting it out or living overseas
During the MOP:
You cannot purchase any private residential property, either in Singapore or abroad.
You cannot invest in residential property under trusts or company names.
You are not allowed to rent out the entire flat (only rooms are allowed under certain conditions).
Only after the MOP is fulfilled, then HDB will allow you to purchase a private residential property, such as a condominium, landed house, or even an overseas property. However, even after MOP is over, the HDB flat must remain your primary place of residence, unless you get HDB's permission to rent it out fully.
2. Rules for Executive Condominium (EC) Owners
If you own an Executive Condominium (EC), the rules differ slightly but follow the same underlying principle. ECs are a hybrid form of housing that begin as public housing but become private after a certain period.
In the first 5 years, EC owners are under the same MOP requirement as HDB flat owners. They cannot purchase any private property during this time.
After 10 years, the EC is considered a fully privatized property and is no longer subject to any HDB restrictions.
This means that EC owners have slightly more flexibility after year 5, but owners are still required to comply strictly with the initial 5 year MOP.
3. Financial Considerations: ABSD and Loan Restrictions
Owning more than one property in Singapore comes with significant financial implications, most notably the Additional Buyer’s Stamp Duty (ABSD) and more restrictive Loan-to-Value (LTV) limits.
ABSD (Additional Buyer’s Stamp Duty)
If you already own an HDB and decide to purchase a private property, this is considered a second residential property, and you are required to pay ABSD:
Singapore Citizens: 20% ABSD on second property
Permanent Residents: 30%
Foreigners: 60%
Entities (companies or trusts): 65% or more
For example, if you are a Singapore Citizen purchasing a $1.5 million condo while still owning your HDB flat, you will need to pay $300,000 in ABSD alone. This is in addition to the standard Buyer’s Stamp Duty (BSD), which also applies.
One way to avoid ABSD is to sell your HDB flat before purchasing the private property. However, this requires strategic planning, especially if you want to minimize the time without a home. This is where employing professional help can smooth the transition process and reduce anxiety.
Loan-to-Value (LTV) Ratio
The maximum amount you can borrow from a bank for your private property loan depends on how many properties you already own and whether you have outstanding loans:
If you have no outstanding home loan: LTV is up to 75%.
If you have one outstanding housing loan (e.g., your HDB loan): LTV drops to 45%, and you must pay at least 25% in cash.
If you have two or more outstanding loans: LTV falls further to 35% or lower.
This makes financing a second property considerably more demanding, requiring more upfront cash and CPF savings.
4. What Happens If You Sell Your HDB Flat Later?
Some homeowners plan to buy a private property first and then sell their HDB flat later, perhaps to keep the flat as an investment or to transition gradually. However, this strategy comes with caveats.
You are still liable to pay ABSD on the private property purchase if you haven’t sold your HDB flat first.
To qualify for ABSD remission, you must dispose of your first property within a stipulated period (usually six months from the purchase of the new property), but this only applies under certain conditions and typically for married couples who jointly purchase their next home.
Therefore, if your goal is to avoid ABSD entirely, it's generally better to sell your HDB before buying a private property.
5. Can You Buy Private Property First and Then Apply for an HDB?
If you're considering doing it in reverse, by buying a private property first, then applying for an HDB flat this is generally not allowed. HDB regulations require that:
Applicants do not own any private residential property at the time of HDB flat application.
You must dispose of any private property whether it's local or overseas at least 30 months before being able to apply for a BTO or resale flat with a grant.
So, if you already own private property, you cannot apply for a subsidized HDB flat unless you wait 2.5 years after selling it.
6. Renting Out Your HDB After Buying Private Property
Once the MOP is complete and you’ve bought a private property, you may consider renting out your HDB flat to generate passive income. But you must obtain approval from the HDB before doing so. Also, your HDB flat must have fulfilled the 5-year MOP before you can rent out the entire unit.
Keep in mind:
Renting out the HDB flat does not change the fact that you must still meet owner-occupancy rules unless you’ve officially informed HDB and received permission.
You are still required to meet all leasing conditions such as minimum lease periods, tenant eligibility, and registration.
Conclusion
In conclusion, can i buy private property if i own hdb? Yes! But with conditions, it is possible to buy private property if you currently own an HDB flat, but you must first fulfil the Minimum Occupation Period (MOP), and even after that, you must comply with several financial and regulatory constraints. These include Additional Buyer’s Stamp Duty (ABSD), loan restrictions, and occupancy rules. If you plan to keep both properties, you must ensure the HDB remains your main residence unless you have approval to rent it out. On the other hand, if your intention is to upgrade fully to private property and sell your HDB flat, you should plan carefully to avoid unnecessary tax burdens and to ensure a smooth transition.
So if you’re eligible and planning to purchase a private property, let David & Audrie help you find, buy and sell property in Singapore! Let the professionals help you negotiate the best prices and conditions, even if your MOP is still not fulfilled, you can still contact us to plan ahead!
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