Showing posts with label The Difference Between Private And Public Housing. Show all posts
Showing posts with label The Difference Between Private And Public Housing. Show all posts
The Difference Between Private And Public Housing
According to statistics, 80% of the Singapore’s population are residing in public housing from the Singapore government, the Housing Development Board (HDB). There are two types of residential properties available in Singapore, public housing and private housing. Both private and public housing are distinctive in terms of the property type, ownership, loans and most prominently, the property’s price. Although, it is easily perceived that a HDB in Yishun is priced lower than a private condominium in Sembawang. Here are some differences to identify the private and public housing.
Let’s see what are the property types of public and private housing in this article.
Private Housing
- Condominiums
- Executive condominiums
- Landed houses
- Public Housing
- Studio Apartment
- 2-room flat
- 3-room flat
- 4-room flat
- 5-room flat
- 3Gen flat
- Executive flats
- DBSS
Apart from the type of property, there are other factors that differentiate both category. Let’s start off with ownership.
Ownership requirements
In Singapore, to own a public housing, the citizenship is the first criteria where both husband and wife must be a Singaporean. Sadly, permanent resident may need to wait 3 years after obtaining the PR to finally own a public housing. How about buying a HDB flat while being single? Well, your eligibility starts at 35 years old and above and the income household ceiling is capped at a range. So, you may consider HDB flat in Yishun or BTO flat in Bidadari.
If you’re a foreigner, there are some restrictions for property ownership in Singapore. As a foreigner, you’re entitled to buy and private housing in Singapore, except for landed houses as it is reserved for Singaporean to own a landed property like bungalow or terrace houses
Downpayment requirements
Let’s start off for private housing, you are only allow to borrow up to a maximum of 80% (of the purchase price). With that, you need to be prepared to pay an absolute minimum of 5% in cash. Minimum cash requirements can be substantially higher (up to 25%), after considering factors like your CPF balance, Debt Servicing Ratio (DSR), etc. As for all HDB flats, you can borrow up to 90% (from HDB) with $0 cash down payment (payment via CPF). HDB BTOs are a good example.
Option fees for HDB BTOs are also a flat amount of $2,000 regardless of the unit you are purchasing. Unlike private properties where you need to pay 1% for the option fee. Best of all, the money will be refunded once you exercise your option. Click here for the step-by-step guides to own HDB flat.
Resale limitations
When it comes to resale, both public and private has their own limitations, it depends on your prioritization as well, time and money. For public housing (all HDB flats), there’s a regulation called Minimum Occupancy Period (MOP). This regulation requires owner of HDB flats to reside in their property for at least five years before you can rent or sell the whole house. You will be penalized by the authorities if they ever find out you have been renting or left the house empty over the five years. Even after you have fulfilled the MOP, there will be a resale levy imposed which will reduce the amount of your housing grants (subsidies) when you are buying another public housing unit.
How about private housing? Well, no MOP required but there is Seller Stamp Duty (SSD). If your house is sold within first four years, you will be charged according to the percentage against your selling price, ranging from 4% to 16% as years go by.
Financial gains
You surely hoping that your property will increase it’s value over the years, regardless your intention of buying is for own stay or investment. However, based on recent evidence, capital gains for private condominiums has surpassed HDB flats and this is observed in almost every location. You must be wondering why is this happening? HDB flats are subsidized by Singapore government, that being said foreigners are not allowed to purchase them.
This indicates that the higher gains of private property in a certain period may be because of the wider range of buyers it can cater to. In contrast with HDB flats, you can rent out your private property with no restrictions and no MOP! Hence, this justifies the stronger interest in private property for property investment.
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