For HDB homeowners here in Singapore, selling your flat can be quite an exciting experience. Whether it’s to upgrade to a larger flat/condo, or simply to move to a new neighbourhood, it’ll perhaps be safe to say that most HDB homeowners typically move at least once in their lifetimes.
While it might seem intuitive, selling your home isn’t as easy as it sounds. Well, at least not as easy as listing it, meeting the buyer, and collecting your cash. In fact, there are quite a few things to take note of, which could impact not only the sale of your current property, but your subsequent purchase of a new one as well.
If you’re looking to sell your property in the near future, here’s what you need to know – as well as some neat tips and tricks along the way to make the process a smoother one.
Check if your flat has hit the Minimum Occupancy Period (MOP)
Before you even begin the process of selling your home, you first have to check if you can actually sell your home.
For the majority of us living in public housing, our homes would be subject to what is known as the MOP, or Minimum Occupation Period. For HDB flats, the MOP is 5 years from the date you collect your keys, and so you can only sell your property after that duration.
Of course, the one exception are flats under the Prime Location Public Housing (PLH) model, in which the MOP is actually 10 years. However, since the scheme was only introduced in October last year, homeowners of PLH flats won’t have to worry about selling their flat just yet.
If you’re staying in an Executive Condominium (EC), you’ll also be subject to a 5 year MOP, but note that it begins on the date of the Temporary Occupation Permit (TOP) rather than during key collection. After 5 years, you can sell your EC in the open market to Singaporeans and PRs. Only after a period of 10 years, when your EC rolls to private property status, will you be allowed to sell your property to foreigners.
Register your Intent To Sell
To formally kickstart your selling journey, you first have to head over to the HDB website and login to the HDB Resale Portal to register an Intent To Sell. Do note that this step is mandatory whether or not you’re working with an agent, and is just an interim ‘status’ that’s valid for 12 months.
In a nutshell, the Intent To Sell is just a preliminary checklist to confirm that you’re able to sell your flat. For instance, you’ll be informed of when you can start to sell your flat and grant an Option To Purchase (OTP) to a buyer, as well as other information such as Ethnic Integration Policy, relevant quotas, and other information such as recent sales transactions of flats in the vicinity.
Decide whether or not to engage an agent, & list your property online
Once you’ve confirmed that you can sell your flat, the next step would be to advertise to list your home for sale. At this juncture, you can choose to sell your flat on your own without the help of an agent. But for the time-strapped and uninitiated, engaging an agent can greatly reduce any complications in the sales process.
After all, they are the ones who would be in the best position to advise you on the most reasonable price, and help to advertise your property through their own channels if they’re a part of a real estate agency.
In addition, a real estate agent will step in to aid you through liaison with potential buyers, not just in terms of scheduling viewings, but also negotiating with them for a more favourable price. You’ll also find them quite handy when it comes to dealing with all the relevant paperwork and documentation, not just between you and HDB, but the buyer as well.
As for how much you’d have to pay to engage an agent, this varies from house to house, as well as the relationship you have with them. Based on rough market estimates, a typical commission amount would be 2% of the property value for selling a HDB, and between 2-4% for all other property types such as condos.
Image adapted from: PropertyGuru
The next most common step would be to advertise your home. You can use a wide variety of methods, such as through your own contacts, chatting with your friends, and of course, social media. That being said, the best platforms would be dedicated property listing platforms such as 99.co, PropertyGuru and OhMyHome.
However, take note that some platforms, such as PropertyGuru, require you to be a CEA-licensed agent in order to put up listings.
Prepare the necessary documentation
Assuming that you’ve done all the above and have been successful in snagging a buyer for your flat, the next step would be to issue the OTP to the buyer. Once they’ve exercised it, you and the buyer have to submit a resale application and all supporting documents to the same HDB Resale Portal we mentioned earlier, either personally or through your respective agents.
Bear in mind that this process has to be done within 7 days, else it will lapse and both parties have to restart the application process and pay the application fees.
After which, you’ll have to wait around 3 weeks for HDB to notify you of its acceptance of the resale application. Thereafter, it’s another 8-week period for the sale to be processed.
Plan to move out
While all this is taking place, you should also be concurrently planning and working out your next steps – be it buying a new property to live in, or just collecting your sales proceeds and moving into an existing property (e.g. moving in with your parents).
If you are moving into a new property, you have to factor in how long it’ll take for your new home to be ready, and how long you’ll need to move items over. Depending on how smooth the timelines are for both processes, you may have to ask your property’s buyer for an extension for your stay at your current home, until your next home is ready.
Check out these home moving services to make the move easier.
Calculate your Stamp duties and other fees
Seller’s Stamp Duty, or SSD, is a fee that you’ll have to pay if you’re selling your property in less than 3 years than when you first bought it. It comes in 3 step-down tranches: 12% if you sell within the first year, 8% if you sell within the second year, and 4% if you sell within the third year. After the third year, you won’t be liable to SSD.
While this largely affects those with private property – remember they have no MOP – there are some scenarios that may apply to HDB flats as well.
For example, if you have to let go of your flat for whatever reason before MOP (e.g. separation, divorce), and approval is given by the HDB, then you’ll be subject to the prevailing SSD rate that applies to you.
Otherwise, there are a few other fees and costs that you have to pay for in relation to the processing of your sale, such as conveyancing fees, administrative fees, service & conservancy charges, amongst others.
To get a rough sense of how much these fees are, the resale application fee for 1- and 2-room flats would be $40, and $80 for 3-room flats or larger. For legal conveyancing fees, law firms typically charge between $1.8K-$2.5K. Service & conservancy charges would range between $20-$90, depending on your flat type.
Do bear in mind some restrictions or charges that you may face; for example, if you’re buying a second subsidised flat, you’ll have to pay a HDB resale levy. If you’re downgrading from a condo to a flat, the latest property cooling measures implemented in Sep 2022 will prevent you from buying a non-subsidised HDB resale flat for 15 months.
Before you actually sell your property, we strongly advise doing your homework and also planning your next move, so that you won’t be caught unaware.
What happens after: where does your money go?
Let’s zoom ahead in time and assume that you’ve done all the necessary steps, have found a buyer, agreed on the price, and the process is more or less complete. One of the biggest misconceptions is that you, the seller, get to pocket the entirety of the sales proceeds from selling your property. Unfortunately, it’s a little more complicated than that!
Your remaining loan gets paid off first
If you’ve yet to fully pay off your home loan, that will be the first thing that will be deducted from your sales proceeds, to pay up any outstanding amount.
Depending on your loan terms and conditions, note that you may be subject to early repayment penalties for your loan; HDB loans do not have any early repayment charges, so only those who have taken loans from financial institutions like banks will have to check.
Next, you’ll have to ‘return’ your CPF money back into your account
Next, you’ll have to return a portion of your sales proceeds back to your CPF account, depending on how much CPF funds you utilised for the purchase of your property. This is often the part that trips people up, so here’s a brief explainer on what to expect.
When we first purchase a property, most of us would typically use some portion of our CPF Ordinary Account (OA) to finance the purchase. Usually, this involves paying for the initial down payment, charges like Buyer’s Stamp Duty, and the monthly loan repayments. Of course, if you were baller enough to fully pay everything with cash, then you can skip this segment.
Image credit: Buy Condo Singapore
Upon selling your property, you’ll have to return the total sum of CPF funds you used. This sum consists of 3 main components:
- Funds used to pay for the down payment, stamp duty and other charges (e.g. lawyer fees)
- CPF housing grants that you may have received
- Funds used to finance the monthly home loan repayments
But that’s not all – in addition, you’ll also have to pay what is termed “Accrued Interest”, which is basically the CPF OA interest (2.5%) on the funds that you’ve used above. In short, the accrued interest is the total amount of money that you would have theoretically earned based on the amount you used above, if you didn’t use it and remained in your CPF OA.
And so, even if you’ve snagged a pretty good selling price of, say, $900K on your flat, you won’t actually have $900K cash in your pocket after the sale. More often than not, this sum is considerably reduced, which some sellers are shocked by. Of course the money doesn’t actually ‘disappear’, it just goes back to your CPF OA.
Image credit: Marcus Sia
Pro-tip: There’s actually a pretty easy way to check out how much money you’ll have to return to your CPF OA when you sell your flat. All you have to do is to login to your Singpass app, tap on ‘Finance’, and you’ll be able to find out your Principal Withdrawal as well as the total Accrued Interest.
Simply add the sum up, and that’s more or less how much you need to return back to your CPF OA when you eventually sell your property.
Selling your HDB flat in Singapore
It’s rare that the first home that you purchase ends up being your forever home. And when you do decide to sell your very first BTO or resale flat, this guide will come in handy to guide you through the process.
Check out some of the most remarkable HDB sales transactions we’ve seen in the market:
- A Round-Up Of The Most Expensive HDBs Sold In 2022 From A Geylang Maisonette To A Bishan Loft
- 7 Supersized Woodlands Jumbo Flats You Can Buy From $950,000 To House Your Extended Fam
Cover image adapted from:
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