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  • Writer's pictureAaron Lin

Ask Aaron Now: Is BTO HDB A Bad Choice?

Summary

Subsidies for BTO and resale property are one-off.


Planning is key when purchasing a BTO flat because you have to wait for 3-4 years for construction to complete and stay in it for a minimum of 5 years.


Studying the floor plan, site plan and location is important before making a decision to purchase a BTO flat.


Article

First-time buyers and newlywed couples often look at the BTO market instead of the resale market because BTO is new and deemed as cheaper.


If you take a BTO today, you will not be eligible for a resale housing grant after you sell your BTO. Similarly, if you take a resale housing grant today, you will still have to pay a levy when you take a BTO. When you purchase your first BTO, you will also have to pay a levy for your second BTO. As such, the BTO scheme and resale housing grant is almost equivalent in this respect since the subsidy is still one-time. Also, the resale housing grant can actually be quite sizable, especially if you live in proximity to your parents.


In BTO flats, toilets are standardised and flooring is complete, but you will have to renovate the kitchen yourself. For resale property, renovations are not as standardised. From my experience, the tendency for young couples is to go with more renovations or touch-ups even if the previous renovation was decent.


First impressions matter more for the first-time buyer than the second-time buyer. For the second-time buyer, they are usually more concerned about the layout and external factors. As such, first-time buyers will normally not settle for a more run-down house even if it saves on buying price.


Above all, planning is key. Suppose you are 25-years-old and purchase a BTO flat: You will have to wait 3-4 years for construction to complete and stay in it for a minimum of 5 years. By the time you sell your BTO, you will already be 35. On the other hand, if you bought a resale flat at 25, you can simply sell it at 30. This difference in the timeline should be a key consideration. While this may be less of a concern for younger buyers, the full loan tenure extends only to age 65.


In addition, an advantage for resale property is that you can feel your environment and know who your neighbours are before purchasing. BTO is more similar to new launch property in this sense since you have to carefully study the floor plan and site plan.


Many tend to “casually” buy their BTO property because it is subsidised and they usually do not have much choice after receiving their ballot. Still, making an informed decision when buying a BTO is important - this includes understanding the facing, window view, neighbours and amenities.


Some buy BTO simply because of capital appreciation. However, there are cases where BTO buyers can only break even after accounting for outstanding loan, CPF refund and CPF interest incurred. On the other hand, if you purchase a resale flat, you can still receive a housing grant of between S$60,000 to S$80,000,




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