Have you been questioning yourself when is a good time to exit your HDB flat?
If you are a HDB homeowner, this will interest you. Since 2018, the demand for resale flats has continued to remain resilient. HDB has provided homes for many Singaporeans. Comfortably housing approximately 80% of Singapore’s population. Maybe you have outgrown your flat, had thoughts to move closer to your child’s school or have the intention to upgrade your home for a better lifestyle.
The question still remains, when is the right time to exit?
The truth is, there is no one-size-fits-all exit window. Instead, you should assess your opportunities based on these 3 quality checks.
#1: Think your flat has an en-bloc opportunity?
Not all HDB flats will have automatic eligibility for the Selective En-bloc Redevelopment Scheme (SERS). If you are a homeowner who would like to profit from your HDB flat, you must ensure your lease is not less than 60 years.
But why? A flat with a lease of less than 60 years will face significant competition in the resale market. Older flats tend to be less attractive relative to the newer ones. Furthermore, the CPF Board has stated that financing a resale flat with your Ordinary Account (OA) will be prorated if the flat has a remaining lease of less than 60 years. Effectively placing restrictions on the potential buyers for your flat.
#2: Are you trapped with the CPF accrued interest from your HDB loan?
You might not be aware that the interest from your CPF Ordinary Account (OA) is eating into your cash proceeds.
Based on a compound rate of 2.5%, the accrued interest is simply the amount you would have received as interest returns on your OA funds (if you didn’t use it to pay for your home). If you have done so, a good portion of your sale proceeds will be used to pay off that interest. This means the longer you hold on to your flat, the lesser the amount of cash you will receive from your sale proceeds. This has affected many HDB homeowners who rely on sale proceeds for retirement or to upgrade to a dream property.
#3: Has the price of your flat stagnated?
Have you looked up the recent valuation of your flat? If the price index for your property has stagnated, should you continue trapping your money in the same unit?
Not all HDB homeowners want to realise profits from their flat. Most are not willing to leave their comfort zone or the place they grew up in to upgrade their home. However, if the 3 quality checks are applicable to you, and you would like to find out how to realise your exit window, write to me.
My name is Jen Tan, don’t be afraid to ask me any questions! I would love to hear from you soon.