Should you apply for HDB BTO at Bukit Merah under the prime area model?

By Guest Contributor • 30 Aug 2022 • 0 min read

The HDB has just launched 4,993 flats for sale under its August BTO exercise. Here's what you need to know about applying for a flat under the Prime Location Public Housing (PLH) model.

HDB BTO August 2022

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What happened?

The Housing and Development Board (HDB) launched 4,993 flats for sale under its August Build-to-Order (BTO) exercise on 30 August 2022.

A total of 7 projects have been released in this exercise but many of you are probably focused on two particular projects under the Prime Location Public Housing (PLH) model located in Bukit Merah.

For those of you keen to apply for a BTO flat but not sure what the HDB Prime Location Public Housing scheme is, let’s take a deeper look. 

HDB Prime Location Public Housing scheme
Source: HDB

What is the Prime Location Public Housing (PLH) model?

Let’s recap a little on the HDB PLH model. The model ensures that new public housing built in prime location remain affordable and accessible for Singaporeans.

Key features of the PLH model
Source: HDB

What are some of the advantages of the Prime Location Public Housing model?

#1 – Seen to be in a better location

The new PLH projects are seen as “plum sites”, according to Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie. 

The Alexandra Vale is located next to the Redhill MRT station while the Havelock Hillside is less than 5 minutes’ walk to the upcoming Havelock MRT station.

Seen to be in a better location
Source: HDB

With the good location, OrangeTee expects both new HDB PLH projects to be oversubscribed like in previous projects under the model. 

As a recap, the two HDB PLH projects launched during the May 2022 BTO exercise were oversubscribed with an application rate of between 3.3 and 4.0. 

This means that for every HDB unit that was put up for sale, there were more than 3 applications received. 

The application rate was even more astonishing at above 13 for the 393-unit King George’s Heights in Kallang/Whampoa area earlier this year. 

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#2 - Additional subsidies

Under the PLH model, PLH flats are priced with additional subsidies on top of the substantial subsidies that are already provided for all BTO flats today.

This was intended to allow the HDB units to be priced in a very affordable range.

Furthermore, eligible families buying an HDB unit for the first time can benefit from the Enhanced CPF Housing Grant (EHG) of up to S$80,000 to help with their new or resale flat purchase.

With its location and price tag, it is not hard to imagine why we think that competition will be stiff. 

But before you get too excited, you should note some of the disadvantages of PLH.

What are some of the disadvantages of the Prime Location Public Housing model?

#1 - Have to return to HDB a percentage of the resale price or valuation upon the sale of their flats, whichever is higher

There’s no free lunch in the world!

Upon the sale of their homes, PLH flat owners will pay a percentage of the resale price* of the flat to HDB, as a means to recover the additional subsidies and ensure parity with other BTO flat owners.

#2 - Longer minimum occupation period

There is a 10-year minimum occupation period before you can sell the property and be allowed to invest in a private residential property.

#3 – Renting out of whole flat is not allowed even after Minimum Occupation Period (MOP)

It might be worth noting that renting out the whole flat is not allowed, even after the MOP. But the good news is that you can still rent out your spare bedrooms (yay to passive income!)

What would Beansprout do?

Check if you are eligible! 

The eligibility conditions are the same as the ones for the usual BTO flats.

  • Household must comprise at least SC applicant and one SPR;
  • Must have an eligible family nucleus, e.g. married couple;
  • Household income does not exceed $14,000, or $21,000 if purchasing with extended/multi-generation family;
  • Must not own or have an interest in a private property and have not disposed of any in the last 30 months

Take into consideration estimated project completion timelines

According to HDB, the waiting time ranges from three to 5.7 years for the BTO projects launched in August 2022. 

If you are eager to move out and have a private place, then these projects may not be meant for you.

Think about your opportunity costs

You are only allowed to apply for one flat type/category in one town under the BTO exercise.

As we saw earlier, the previous PLH projects were all oversubscribed.

You can consider looking at the other projects to have a higher probability in securing a flat.

Trust the experts. According to HDB, you’d have a higher chance of success in securing a BTO flat in non-mature towns. 

Making a house purchase is one of the most important decisions we’d make in our lives, so it is good to be prudent in considering the benefits and disadvantages. This is the same philosophy we’d hold for selling our HDB flat. 

Read our article about “Why we’d not sell our HDB flat to buy a single stock (eg Singpost). 

How to apply?

If you are interested in applying for the BTO exercise, do not “gan cheong” as it is not done on a first-come-first-served basis. 

Applications can be completed online on HDB InfoWEB from today, 30 August 2022 (Tuesday) to 5 September 2022 (Monday).

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