The Dangers of Pulling Out of an HDB BTO Flat Purchase

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Sharon Ang



It was not so long ago when getting allocated an HDB Built-to-Order (“BTO”) flat was as difficult as striking the lottery. Hence, it was not uncommon for dating couples to submit an application for a new flat just for fun, since it was so difficult to get one anyway. And the cost of doing so was pretty negligible, just $10. Stories of friends who were serious about settling down but vexed with failing to get a BTO after 6-7 tries (over 1-2+ years) were not uncommon. If only one could trade options for BTO… you can imagine how hot the market would be.

Fast forward to today, things have improved and the backlog of first-time BTO applicants has largely been cleared. Getting allocated a BTO is no longer so difficult. However, for couples who apply under the Fiance/Fiancee scheme, keeping the BTO or the relationship for that matter hasn’t gotten easier. Statistics show that 22% of those who apply for BTOs subsequently give it up within the next 4 years. 1 in 5 couples is quite a high statistic.

Sometimes, life happens. Despite the best intentions, relationships don’t work out. And due to the peculiarity of our system, many couples do ballot for flats before they get married, some even before the proposal. BTOs take a few years to build, during which time most of these couples do register for their marriages and collect the keys to their BTOs. However, what happens to couples who break up?

There are a few scenarios, depending on when the decision to give up the flat happens.


Scenario 1: You pull out of purchasing your BTO after selecting a flat unit

At this stage, you have gone for your HDB appointment to select a particular unit. The HDB officer briefs you on the procedures and financing options, including applying for an HDB loan. You pay a $2,000 option fee for a 4-5 room flat or $1,000 for a 3-room flat.

Basically, what you have now is the option to a brand new BTO. Substantial consideration has probably gone into choosing your ideal block, floor, facing and unit number for the estate you had initially balloted for. Depending on your queue number, you may have had choice pickings if you are at the front of the queue, one of many average units if you are somewhere in the middle, or if your queue number exceeds the number of units available, you hoped and prayed that people before you would give up on the selection so you would get a unit. Or you may pass on this round and ballot again in the next new launch of BTOs in order to select a choice unit.

It will probably be up to 4 months before your next appointment to sign the Agreement for Lease with HDB.

What happens if you pull out now?

  1. You forfeit your $1,000 or 2,000 option fee, and
  2. You are barred for ONE year from the date of cancellation of your BTO before you can apply for another BTO, including DBSS, EC; or a resale flat with CPF housing grant or which has been announced for SERS.

So you lose some money, and incur a one-year opportunity cost before you are able to select an HDB flat again.


Scenario 2: You pull out of purchasing your BTO after signing the Agreement for Lease before collection of keys

Now, this starts to get serious.

If you pull out of your BTO flat purchase after signing the Agreement for Lease, you stand to lose:

  1. 5% of the flat purchase price,
  2. Any expended legal and stamp fees, and
  3. You are barred for ONE year from the date of cancellation of your BTO before you can apply for another BTO, including DBSS, EC; or a resale flat with CPF housing grant or which has been announced for SERS.
  4. Not to mention, if you have signed on a bank’s letter of offer, you may be subject to cancellation penalties.

So, what do the monetary losses look like?

  3-room flat 4-room flat 5-room flat
Purchase price $200k $330k $400k
5% of purchase price $$10k $16.5k $20k
Stamp fees $600 $4.5k $6.6k
Legal fees $100+ $200+ $200+
TOTAL $$10,700+ $21,200+ $26,800+

Pulling out of an HDB BTO purchase can potentially burn $10k to $30k of your hard-earned money.

Not to mention potential penalties from cancelling any mortgage taken from your bank. Cancellation fees can be a % of your mortgage amount. Assuming a 80% loan, and a 1.5% cancellation fee, this can incur another $2.4k to $4.8k monetary loss for you.

Not a pretty picture. For DBSS or EC, forfeiting a unit would incur even more severe losses of 20% of your purchase price, instead of 5% for HDB BTOs. Of course it would be better to be certain of your relationship before applying for and signing the Agreement for Lease. However, such things are easier said than done. One can only take comfort in the fact that money lost can be earned again. Relationships lost can be built again. Also, if you were to half the losses among both parties, it could make it less painful.

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Image Credits:
Christopher Vu

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Sharon Ang

I love sunshine, adventure, new experiences and outdoor places. I started taking personal finance seriously ever since I became a senior relationship manager at a local bank and later a priority banking relationship manager. I feel gratified to be in a role where I can make a difference in people's lives on a subject close to their hearts. I would love to hear from you at [email protected]

  • Gabby

    From what I know, the penalty you listed in Scenario 1: “You are barred for ONE year from the date of cancellation of your BTO before you can apply for another BTO, including DBSS, EC; or a resale flat with CPF housing grant or which has been announced for SERS” is only applicable for second time buyers after forfeiting twice.

    See below from HDB:

    You may choose not to book a flat in this exercise. However, if you do not book a flat in a BTO / Sale of Balance Flats exercise on two occasions when you are given a chance to do so, the following will apply:

    For First-timer Applicants: Your subsequent flat applications in our sales exercises will be placed in the second-timer category for one year. During the one-year period, if you turn down another two chances to book a flat, the one-year period will be extended, i.e. your subsequent applications will be placed in the second-timer category for one year from the date of your latest flat selection appointment.

    For Second-timer Applicants: You will not be allowed to participate in any of our sales exercises for one year.

    The above measures are to ensure that applicants are serious when they apply to buy a flat, and the non-genuine applicants do not deprive other applicants of a chance to buy a flat.

  • Sharon Ang

    Hi Gabby, thank you for commenting!

    Scenario 1 is referring to people who actually went to HDB to select a BTO and paid the option fee, and subsequently cancelled their BTO purchase, i.e. they did not turn up for the next appointment to sign the lease agreement and to make the downpayment. In which case they are barred from applying for a BTO for one year from the date of cancellation.

    The excerpt you’ve pasted from HDB website refers to people who have gotten a queue number to select a BTO but did not turn up for the appointment to book a flat. If they turn down the invitation to select a BTO twice, they will be treated as a 2nd timer in their subsequent balloting, i.e. lower chance of being allocated a queue number. This is different from being barred for a year like the above scenario as they can still ballot, only their chances are slimmer than a first-timer.

    Hope this clarifies! We look forward to more comments from you on our articles! 🙂

  • Belle Tan

    “You are barred for ONE year from the date of cancellation of your BTO before you can apply for another BTO, including DBSS, EC; or a resale flat with CPF housing grant or which has been announced for SERS.”
    so to say I am still eligible to buy resale but not able to get the housing grant already am I right?

  • Sharon Ang

    Hi Belle, sorry for the late reply, yes still eligible to buy resale, and as for housing grant, best to check with HDB 🙂

  • Lwy Pug

    Stay single and you will stay out of these financial troubles. Stinkapore is NOT a country to start a family. Unless you are ƒreaking rich.

  • Persona

    Hi Just saw this blog, what if we pulled out before selection. Will the 1 year ban be applicable?

  • sadboy

    Hi Sharon,

    Do you know whether if during the phase of before collecting the key, if a couple breaks up, can the owner of the hdb flat change the ownership of the hdb flat to one of his parents?
    if not, what can I do to minimize the damage?

  • sadboy

    hi sharon,

    Please may I ask whether during the phase before key collection day and me and my wife break up, can I change her name to one of my parents so that I can draw the key with my parent to minimize the damage?

    Appreciate if I can get a reply… thanks so much!