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When You Can Legally Start Making Money Out of Your HDB Flat and How

Joanne Poh

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For many homebuyers in Singapore, purchasing an HDB flat isn’t just about owning a dream home. It’s also about making a good investment, one that will hopefully be able to give you a decent rental income or sale profits in future.

But HDB regulations are designed to ensure Singaporeans buy HDB flats first and foremost as homes rather than investments. These rules impose restrictions on how you can earn money from your flat in the first few years of ownership.

 

What is the Minimum Occupation Period (MOP)?

From the day you pick your keys, you are subject to a Minimum Occupation Period which usually lasts five years. Before the Minimum Occupation Period is up, you’ll be forbidden to do the following:

  • Sell your flat on the open market
  • Rent out your whole flat
  • Invest in private property, whether in Singapore or overseas

While the MOP is generally 5 years, there are some exceptions. This table helps you to figure out how long your MOP will be.

Purchase Mode

Minimum Occupation Period

Flat purchased directly from HDB / BTO flat

5 years

DBSS flat purchased from developer

5 years

Flat purchased under Selected En  bloc Redevelopment Scheme (SERS)

Either 7 years from date of flat selection, or 5 years from date of occupation

Flat purchased under SERS with Portable SERS Rehousing Benefits

5 years

Resale flat purchased on open market with CPF Housing Grant

5 years

1-room resale flat purchased on open market without CPF Housing Grant

No MOP

2-room or larger resale flat purchased from open market without CPF Housing Grant on or after 30 Aug 2010

5 years

 

Renting your rooms before your MOP is up

Before the MOP is up, you are required to live in it. That means you may not rent out the entire flat.

You ARE, however, allowed to rent out rooms in your flat, provided you continue to live there. Effectively, that means you need to occupy at least one bedroom in the flat.

But be careful not to rent out your rooms for periods of less than 6 months. HDB rental must be of a duration of at least 6 months, otherwise you risk having your flat confiscated (!) for breaking the rules. And don’t even think of putting your rooms on Airbnb, as the consequences are graver than for private property owners who flout the rules.

Also note that if HDB officers decide to inspect your flat, you must be able to prove you’re living there. So at all times, make sure there is a room you can show is your own.

 

Start renting out your entire flat when the MOP ends

Once the MOP is over, you can start putting up your entire HDB flat for rent. This is an option if you’re fine with moving back in with your parents or in-laws, or if you have another property you plan to move into.

Note that renting out your entire flat to one tenant will not necessarily earn you more than renting out rooms separately if you have a fairly large flat, although it will certainly be more convenient since you will only have to deal with one rental contract.

For instance, if you have a 4-room or larger flat and are renting out at least 3 of the rooms separately, you could well have earned the same amount or more than you would renting out the entire flat.

Also note that HDB subletting is forbidden for tenants. That means that unlike private property tenants, your tenants are not allowed to further rent out your flat to others.

 

Sell your flat on the resale market when the MOP ends

Despite the fact that the property market has been in the doldrums for a while, BTO flat buyers are still likely to see their property values rise significantly in the first five years of occupation.

That’s because BTO flats are not just heavily subsidised through grants but also much cheaper at the time of purchase due to the waiting time when they’re being built.

So if you’re hoping to make some money by selling your flat, start monitoring resale prices in your area once the MOP ends.

Do you see your HDB flat more as a home or an investment? Share your views in the comments.

 

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You Might Get into Trouble For Doing These 5 Things in Your HDB Flat

Applying for HDB Loans in Singapore – The Ultimate Guide to How Much It Will Cost You

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.