With the construction of several BTO projects delayed for up to five years due to the COVID-19 pandemic, you may be relooking at other housing alternatives such as Sale of Balance Flats (SBF), Open Booking of Flats, or resale HDB flats, especially if you have an urgent need of a home.
So, which one should you pick, and what are the pros and cons of each? Let’s take a look.
Pros and cons
Sale of Balance Flats
Pros: More affordable than resale flats, fresh 99-year lease, grants available, flexible downpayment, can get a higher LTV amount, more flexible CPF usage, higher capital growth, shorter waiting time compared to BTO flats
Cons: Harder to secure a flat, don't know what the flat looks like, may not have good amenities and transport facilities around, takes longer compared to resale flats and Open Booking of Flats
Open Booking of Flats
Pros: Shorter waiting period compared to SBFs, HDB grants available, flexible downpayment, fresh 99-year lease
Cons: Limited flat choices, don't know what the flat looks like, tighter EIP restrictions
Pros: Generally larger than newer flats, more flat types, higher CPF Housing Grants, available in more locations, no income ceiling restrictions, you know what the flat looks like
Cons: More expensive, older, Tighter CPF and LTV limits, higher renovations costs, EIP quota restrictions, may need to pay COV
What are Sale of Balance Flats (SBFs)?
HDB Sale of Balance Flats, or HDB SBFs, 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, where construction usually takes three to four years to complete, HDB SBFs are either already completed or have begun construction. Therefore, getting a SBF is quicker and is also a great option for those who don’t fancy a resale HDB flat. Also, since HDB SBFs are unsold flats in past BTO sales, you have more areas to pick from as compared to BTO launches, which are limited to three to four areas each time.
Pros of Getting a SBF:
New flats with fresh lease: As with new BTO flats, HDB SBFs come with a fresh 99-year lease. Since it’s new, you don’t have to worry about any damage done by the previous owner.
Flexible downpayment: Besides CPF Housing Grants, there’s also the HDB’s Staggered Downpayment Scheme, which allows you to pay the downpayment of your flat in two instalments; the first when you sign the Agreement for Lease, and the second instalment will be paid 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.
More loan-to-value (LTV) and CPF flexibility: Since the lease is fresh, you can expect to borrow a higher amount and also don’t have to worry about CPF withdrawal limits.
More affordable: While SBFs are slightly more expensive than BTO flats, they’re still subsidised by the government and are therefore usually cheaper than resale flats. For example, a 4-room SBF in Hougang in Nov 2020 starts from $236,000. Meanwhile, the cheapest 4-room resale flat in Hougang is currently $350,000.
Higher capital growth: Since SBFs have a fresh lease and are bought at a subsidised price, there’s a chance for capital growth if you decide to sell it after the Minimum Occupation Period (MOP). If you bought a unit at a non-mature estate, your home would also likely fetch a higher value as the area develops further.
Shorter waiting time for a new flat: As previously mentioned, HDB SBFs are either already completed or have begun construction. So you can get a new flat quicker.
Cons of Sale of Balance Flats:
Harder to secure a flat: Compared to resale flats, which are widely available, there are fewer SBFs up for selection. Hence, securing a flat is not only harder, but you would also have fewer unit choices to pick from as the ‘best’ ones are taken during the BTO launch.
You don’t know what the flat looks like: While there’s more information compared to BTO flats, you still can’t pop by to view the actual unit. Therefore, it’s harder to tell what the flat is like, be it the house’s direction, your neighbours or how the unit looks.
Limited amenities and transport options: Unless you manage to get a SBF in a good location, it’s likely that you would not get to enjoy conveniences and amenities around such as eateries, schools, parks, malls and MRT stations.
Takes longer to get a flat: While the process is much faster than BTO flats (you can get a flat as fast as three months), it’s still slightly slower compared to resale flats as you can collect your keys within two months.
What is Open Booking of Flats?
If there are any leftover flats from SBF exercises, they would be pooled together and re-offered again via Open Booking of Flats.
Previously, any unsold SBFs were offered through the Re-Offer of Balance Flat (ROF) Scheme. Just like how SBFs are leftover flats from BTO exercises, ROFs consisted of balance flats from previous SBFs.
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.
However, the ROF scheme was scrapped in March 2020 to make the process more efficient; unsold SBFs 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.
Pros of Open Booking of Flats
Shorter waiting period: Compared to SBFs, you can apply for a balance flat via open booking throughout the year and 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.
Flexible downpayment: Also like SBFs, buyers may also use the Staggered Downpayment Scheme to pay for the downpayment (if eligible).
Fresh 99-year lease: Since you're buying a new flat, Open of Booking Flats come with a fresh 99-year lease.
Cons of Open Booking of Flats:
Limited flat choices: As Open Booking of Flats are the ‘balance flats’ of ‘balance flats’, unit choices are even more limited. As such, you may not be able to select a flat that you prefer, such as the unit type or direction of the flat.
You don’t know what the flat looks like: Like SBFs, intricate details such as the direction of the unit, wind direction and how the unit looks like, won’t be available to you.
Tighter ethnic quota restrictions: With fewer flats available, certain ethnic groups may find it difficult to get a flat if the ethnic quota is maxed out.
What are resale HDB flats?
While SBFs and Open of Booking Flats are new flats sold by HDB, resale HDB flats are sold in the secondary market by their previous owners. These flats have reached their 5-year MOP and are older.
Pros of resale HDB flats:
Larger: Due to increasing land constraints, the size of newer HDB flats are smaller than those built 15 to 20 years ago. Though newer HDB flats have more efficient layouts to maximise space, older HDB flats have more floor space and larger rooms.
More flat types: Apart from their bigger, there are also more flat types to pick from in the resale market. From spacious jumbo flats and DBSS flats to two-storey maisonettes and HDB terrace homes, these flats are more suitable for bigger families who need more space.
Higher CPF Housing Grants: Resale flat buyers are also eligible for CPF Housing Grants. In addition to the EHG, there’s also the Proximity Housing Grant (up to $30,000) and Family Grant (up to $50,000). In total, resale flat buyers are eligible for a maximum of $160,000 in grants, which is more than what you would receive from buying new/balance flats.
Located in various parts of the country: Resale HDB flats are found in most areas, including in mature estates that already have amenities readily available.
Shorter waiting time: Since resale flats are already completed, there’s no need to ballot and book for a unit, or wait for it to be built. The process of getting a resale flat is also faster as you can collect the keys as fast as two months.
No income ceiling: Unlike SBFs or Open Booking of Flats which have a ceiling cap of $14,000, there’s no income limit for resale flats.
You can visit the unit: It definitely helps that you can pop by the unit to get a sense and feel of the house, as well as the neighbourhood.
Cons of resale HDB flats:
More expensive: SBFs and open booking flats are subsidised by the government, so they’re cheaper. Resale flats are sold by individual sellers who’re looking for capital gains and are therefore more expensive. On top of that, you may also need to pay cash-over-valuation (COV) for highly-desired units.
Older: It goes without saying that resale flats do not come with a fresh 99-year lease and this will affect two things: 1) the amount of CPF funds you can use for the flat, and 2) 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.
Tighter CPF and LTV limits: As mentioned, the flat’s remaining lease will affect the maximum loan-to-value (LTV) if you’re getting a loan. If the flat’s remaining lease isn’t enough to cover the youngest buyer till 95 years old, then the maximum loan that you can get will be pro-rated.
Additionally, the maximum LTV for resale flats is based on the lower of the resale price or value of the flat. So unlike new HDB flats, the maximum loan amount you can borrow depends on the valuation or price of the flat (whichever is lower).
Likewise, CPF usage is also limited; the flat’s remaining lease must be at least 20 years and is enough to cover the youngest buyer till the age of 95, or it will be pro-rated. You may want to read our HDB valuation guide to learn more.
Higher renovation costs: Well technically, you don’t need to do any renovation (or just give it a small touch-up) if you’re happy with the condition of the flat, which will not incur much renovation cost.
However, if you choose to renovate the house, then it’s likely that you have to spend more to repair/replace existing fixtures and fittings or overhaul and remove previous installations.
Ethnic quota restriction: If the ethnic quota for your block is met, then you won’t be able to buy the unit, even if you offer the highest price.
Cash over valuation (COV): When buying a resale flat, you may also need to cough up COV. 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.
So, which home is right for you?
Whether you’re getting a balance flat via SBF or Open Booking, or a resale flat, they’re all faster alternatives compared to BTO flats.
If your priority is to get a home as soon as possible, then resale flats are for you. Not only is the waiting time shorter, but you also don’t have to spend extra time to renovate 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 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 SBFs and Open Booking of Flats may be better for you. Not only will you get a flat with a fresh lease, but you have more flexibility to pay the downpayment. Other than that, there are also fewer restrictions on CPF usage and LTV limits.
While you may not get as much CPF Housing Grants compared to resale flat buyers, SBFs and Open Booking of Flats are still typically cheaper.
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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Other FAQs related to Sale of Balance Flats and Open Booking of Flats
1. What Is a Sale of Balance Flat (SBF)?
HDB Sale of Balance Flats, or HDB SBFs, 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).
2. Who is Eligible For Sale of Balance Flats (SBF)?
Buyers must be a minimum of 21 years old and at least one of the applicants must be a Singapore citizen. You must also apply under one of the HDB schemes, and must not own any property previously. Your household’s gross monthly income must also not exceed $14,000 per month. Find out more here.
3. Can PRs Buy Sale of Balance Flats (SBF)?
No, Singapore permanent residents (PRs) are only eligible to buy resale HDB flats.
4. Can Singles Apply for Sale of Balance Flats?
5. What is Open Booking of Flats?
Open Booking of Flats are unsold flats from SBF exercises. Buyers can apply for a flat at any given time of the year and can book an appointment as early as the next working day.
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This article was written by Victor Kang, Digital Content Specialist at PropertyGuru. When he's not busy churning out engaging property content* or newsletter copies, he's busy being a lover of all geeky things. Say hi at: firstname.lastname@example.org.
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