When looking for an HDB flat to buy, you’ll probably have noticed one thing: if you want a flat in a desirable, central area, you’re stuck choosing between old, expensive resale flats.
Most of the cheaper flats are in non-mature estates that make a trip to the city area look like a mission to Mars.
But no matter how much you’ve been dreaming of stepping out of a spacious home that’s just 15 minutes from town, refrain from buying that old HDB flat unless you’re sure you can handle the disadvantages.
Here are three reasons you should just play it safe and get a newer HDB flat.
Newer flats are easier to sell
There are many reasons you might opt to sell your flat at some point. You might decide to start a family and realise keeping the kids in the washing machine isn’t an option. You might decide to upgrade to a unit that’s closer to work, or finally realise the Singaporean dream of living in a condo. Or if you have less than a handful of decades left on that lease, you might have to sell it before your property value plummets.
While people are still paying sky high prices for old HDB flats in prime locations, that might change now that the government has sent out repeated warnings not to assume flats will automatically become eligible for SERS (Selective En bloc Redevelopment Scheme).
When it finally becomes clear that the government intends to let HDB leases expire and just take them back from their owners without offering them any kind of compensation or rehoming them, it is likely that older HDB flats will become a lot harder to sell, and that their values will fall even more dramatically after a certain age.
But people are still going to have buy homes, and this demand is likely to be transferred to newer HDB flats, which could see a boost in value.
Newer flats are better as retirement assets
The government insists that HDB flats are still a ‘good store of asset value’, but only those who make wise purchasing decisions. Obviously, buying an old HDB flat whose lease you’ll outlive is not one.
If you’re dropping a large fraction of your cash on your home, you’d better hope it can serve you well in retirement.
Those who eventually wish to sell and downgrade their flats in order to finance their retirement should know that this is much more viable with a newer flat. Good luck trying to sell a flat that’s got 30 years left.
You can participate more easily in Government schemes designed to help you harness your property value for retirement
A newer flat will not only hold its value better, ensuring you can get a better price if/when you eventually sell it, but can also be used to fund your retirement by participation in the Lease Buyback Scheme (only for 4-room or smaller flats).
Under the scheme, you can sell some years on your remaining lease in exchange for cash to tide you through retirement. This is a conceivable solution for those who wish to live in the same flat for the rest of their lives instead of selling and downgrading.
For those with bigger flats, there is also the option of the Silver Housing Bonus, which basically enables you to trade your flat in for a smaller and cheaper flat and then use a portion of the sales proceeds to top up your CPF Retirement Account.
Now, why would you want to do this instead of simply selling the flat and downgrading on your own? Well, the scheme gives you to chance to receive up to $20,000 worth of cash bonuses.
Newer flats make your housing grants work harder
Despite having to wait years for a BTO flat to be built, many Singaporeans choose to take the BTO route rather than buy resale flats for the simple reason that BTO flats are way cheaper compared to their equivalents in the same area.
We’re talking about more than 40% cheaper in some cases. (They’re also tinier, though, so get ready for those small spaces.)
Another thing you should consider is the fact that you might be able to qualify for more CPF Housing Grants by applying for a flat in a non-mature estate, since the Special Housing Grant does not apply to flats from mature estates, where many older flats are located.
Would you consider buying an old HDB flat? Tell us why or why not in the comments!