With longer estimated completion times for newly launched BTO flats, many are considering other options for their first home. Especially if they have urgent housing needs, they may consider their options: Sale of Balance Flats (SBF) vs Open Booking of Flats (OBF) vs HDB resale flats.
It’s clear many young Singaporeans are flocking towards the SBF and OBF exercises. Declining rates of young couples obtaining a flat through these means have fallen since 2017. Still, they remain viable alternatives.
The buying procedures of a unit via the SBF and OBF exercises are different from buying an HDB resale flat, making it important for homebuyers to research which type of HDB flats they should pick. In this article, we’ll take a look at the pros and cons of each type of flat.
What are SBF Flats?
SBF flats are unsold flats from previous HDB BTO exercises, Selective En Bloc Redevelopment Scheme (SERS) projects, or any flats repurchased by HDB. SBF exercises happen twice a year (in May and November), along with BTO flat launches in those months.
Unlike BTO flats, which usually take three to four years to complete, flats launched under the HDB SBF exercise are either already completed or have begun construction. Therefore, getting an SBF is quicker and is also a great option for those who don’t fancy an HDB resale flat.
Also, since HDB SBF flats are unsold flats in past BTO sales, you have more areas to pick from than BTO launches, which are limited to three to four areas each time.
What are Open Booking of Flats (OBF) Flats?
You might be wondering: how does the OBF exercise work? Well, the exercise comprises any leftover flats from SBF exercises, they would be pooled together and re-offered again via the OBF exercise.
Previously, any unsold SBF flats were offered through the Re-Offer of Balance Flat (ROF) Scheme. Like SBF flats are leftover flats from BTO exercises, ROFs consisted of balance flats from previous SBF exercises.
Potential buyers also had to apply for a ROF during the specific twice-a-year window. If there were still unsold flats, then they would be available through open booking.
The ROF scheme was scrapped in March 2020 to make the process more efficient; unsold SBF flats would be immediately available for open booking. Buyers can apply for a flat online at any given time of the year and book a flat as early as the next working day.
The upcoming supply of OBF flats will be made available to view on March 2023.
What Are HDB Resale Flats?
While HDB SBF and OBF flats are new flats sold by HDB, HDB resale flats are sold in the secondary market by their previous owners. These flats have reached their five-year Minimum Occupation Period (MOP) and are older.
Open Booking of Flats (OBF) Vs Sale of Balance Flats (SBF) Vs HDB Resale Flats
|HDB flat type||Availability|
|Sale of Balance Flats (SBF) exercise||Released twice a year, in May and November. New from HDB (fresh 99-year lease), but already completed or is undergoing construction, so you can expect a shorter waiting time. Have to ballot for a flat like the BTO launches. More affordable than resale flats.|
|Open Booking of Flats (OBF) exercise||Leftover flats that remain unchosen from previous SBF exercises. Flats under this exercise are available immediately and are based on a first-come-first-served basis, but unit choices are extremely limited. Released twice a year, an upcoming supply of flats will be made available to view in March 2023.|
|HDB resale flats||Available year-round and offers the shortest waiting time. Extensive range of choices and locations. However, they are typically more expensive despite having shorter leases and prices are subject to market conditions.|
2. Affordability and CPF Housing Grants
|Type of flat||CPF housing grants available|
|Open Booking of Flats (OBF) flat||Up to $80,000 for first-timers, and $15,000 for second-timers|
|Sales of Balance Flat (SBF) flat||Up to $80,000 for first-timers, and $15,000 for second-timers|
|HDB resale flat||Up to $190,000 for first-timer families (priority given to couples with children and young married couples 40 and below buying their first house)|
CPF housing grants differ for SBF flats, OBF flats, and HDB resale flats. This is because flats launched under SBF and OBF exercises are already subsidised by the government, while HDB resale flats are priced on a ‘willing buyer, willing seller’ basis. As such, to make HDB resale flats more affordable, buyers, especially first-time homeowners, tend to enjoy higher CPF housing grants.
For instance, buyers of OBF and SBF flats are eligible for CPF housing grants, namely the Enhanced Housing Grant (EHG) (for first-timers; up to $80,000) and Step-up CPF Housing Grant (SUHG) (second-timers; up to $15,000). In total, OBF and SBF flat buyers are eligible for a maximum of $95,000 in CPF housing grants.
Meanwhile, HDB resale flat buyers who are eligible first-timer homebuyer families can apply for the EHG (up to $80,000), CPF Housing Grants for Resale Flats (Families) (for first-timers; up to $80,000), and Proximity Housing Grant (PHG) (up to $30,000). In total, resale flat buyers are eligible for a maximum of $190,000 in CPF housing grants, which is more than what you would receive from buying new and balance flats.
3. HDB Grant Amount Available
Do not be easily enticed by the high housing grants for HDB resale flats, though. Aside from being generally more affordable, the down payment for flats bought from the OBF and SBF exercises can be paid for via HDB’s Staggered Downpayment Scheme. This allows you to pay the down payment of your flat in two instalments: the first when you sign the Agreement for Lease, and the second instalment once you collect the keys for your new flat. This option is great for those who don’t have lots of immediate funds or CPF savings.
Plus, since the lease is fresh for SBF and OBF, you can expect to borrow a higher amount and also don’t have to worry about CPF withdrawal limits.
You may also need to cough up Cash Over Valuation (COV) when buying an HDB resale flat. COV is the price difference between the actual price you paid for the flat and the actual valuation by HDB. The amount typically ranges between $20,000 to $50,000 but can be up to $200,000.
4. Wait Time
|Type of flat||Waiting time|
|Open Booking of Flats (OBF) flat||As early as three months.|
|Sale of Balance Flats (SBF) flat||Dependent on construction progress. Ballot results will be available about 1.5 months after applications close.|
|Resale flat||Around eight weeks after HDB’s acceptance of the HDB resale application|
A key consideration when buying a home in Singapore is the waiting time. After all, many are looking at these HDB housing alternatives to avoid the long wait time for BTO flats. As such, homeowners can expect to move into their units in a shorter period than those balloting for BTO flats. Still, that is not to say there is no waiting time.
As previously mentioned, HDB SBF flats are either already completed, have begun construction, or are close to completion, so you can get a new flat more quickly. However, compared to widely available resale flats, there are fewer SBF flats up for selection. Hence, securing a flat is not only harder, but you may also not get a chance to pick a unit on your first attempt in an SBF exercise.
Here is where the OBF exercise comes in. With OBF flats, successful homebuyers who manage to get a queue number can book a flat as early as the next working day. This allows buyers to book and move into their new homes more quickly (as early as three months) and is especially helpful to those who are in urgent need of a home.
5. Capital Growth
In Singapore’s home-flipping culture, it is common for homeowners to think of the future: Will my home’s pricing appreciate in the five years or more to come?
Since SBF flats have a fresh lease and are bought at a subsidised price, there’s a chance for capital growth if you decide to sell after the MOP is fulfilled. If you bought a unit in a non-mature estate, your home would also likely fetch a higher value as the area develops further.
6. Flat Choices
As flats available under SBF are leftovers of the ‘best’ ones that are taken during the BTO launch, you can expect fewer unit choices to pick from. The choice of flats is even more limited for the OBF exercise, as they are the ‘balance flats’ of the ‘balance flats’, unit. As such, you may not be able to select a flat that you prefer, such as the unit type or direction of the flat.
Additionally, those who apply for the OBF exercise face tighter ethnic quota restrictions. With fewer flats available, certain ethnic groups may find it difficult to get a flat if the Ethnic Integration Policy (EIP) quota is maxed out.
As such, picky homeowners may rather opt for resale flats as there are more flat types to pick from in the resale market. From spacious jumbo flats and DBSS flats to 2-storey maisonettes and HDB terrace homes, these flats are more suitable for bigger families who need more space.
Resale HDB flats are also found in most neighbourhoods, including mature estates with readily available amenities. It also definitely helps that you can pop by the unit to get a sense and feel of the house, as well as the neighbourhood.
BTO, SBF and most OBF flats come with a fresh 99-year lease. Since it’s new, you don’t have to worry about any damage from the previous owner.
In comparison, resale flats will never come with a fresh 99-year lease, which will affect two things: the amount of CPF funds you can use for the flat, and the value of your property due to lease decay. Also, remember that the older the flat, the more likely it will suffer from wear and tear.
Resale homebuyers can also expect to incur some renovation costs, as the home will have existing furnishings from the previous owner that may not suit their sale. If the resale flat is old and in dire need of renovation, then you will likely have to spend more to repair/replace existing fixtures and fittings or overhaul and remove previous installations.
That being said, older HDB resale flats may have more floor space and/or larger rooms than newer flats, which is a plus point for those looking for a bigger house.
So, Which Home Is Right for You?
If your priority is to get home as soon as possible, then HDB resale flats are for you. Not only is the waiting time shorter, but you also don’t have to spend extra time and money renovating the house if it’s already in move-in condition.
Since resale flats are more spread out, there’s a larger pool of available flats and flat types, so you have more choices to pick from, including unique HDB flats that are no longer in production. Furthermore, you also have the option to live in an area that’s well-connected to amenities.
On top of that, resale flats have more CPF Housing Grants. If you plan to live close to or with your parents, then you have up to $80,000 more in grants (in addition to the EHG), which would help to offset the price of the flat.
On the other hand, if getting a brand new home matters more, or if you’re short on funds, then applying for a flat under the SBF or OBF exercises may be better for you. Aside from being more affordable, you will also get a flat with a fresh lease and have more flexibility to pay the downpayment. Other than that, there are also fewer restrictions on CPF usage and Loan-to-Value (LTV) limits.
Since you’re buying a new property at a subsidised price, there is also potential for higher capital gains if you decide to sell it in the future. This is especially true once connectivity and amenities in the area improve over time.
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