HDB BTO projects hitting MOP in 2023: Should you sell your flat right after MOP?

One of the key aspects of buying an HDB flat is that after completing the flat purchase (aka the key collection), you’ll need to occupy the flat for a certain number of years.

This period, known as the Minimum Occupation Period (MOP), usually lasts five years. (For Prime Location Public Housing (PLH) flats, it’s 10 years.)

When the MOP ends, you’re allowed to:

• Sell the flat on the resale market
• Put the whole unit for rent
• Apply for an HDB flat through one of its sales exercises (BTO, SBF or open booking)
• Buy private property

With that, we’ve used Prospector, one of our agent tools, to compile a list of BTO projects that are set to MOP this year.

As these projects were expected to TOP in 2018, they should be completing their MOP in 2023.

Should you sell right after MOP?

For many homeowners, completing the five-year mark means that it’s time to sell the flat. More often than not, you can sell it for a tidy profit, especially given that the flat was initially priced with subsidies.

What’s more, by selling the flat right after the MOP, you’re more likely to get a higher gain out of the sale.

This is because the flat is only five years old, with around 94 years of remaining lease and is still in good condition. It makes the flat much more desirable to buyers, as they probably don’t have to spend much on renovation.

For instance, back in November, we reported that a 5-room BTO flat in Canberra that recently completed its MOP was sold for $745,000. At that time, it was a record price for a 5-room resale flat in Sembawang.

What’s notable about the transaction is that its price during the BTO launch ranged from $315,000 to $373,000. This means that the owners made a paper gain of $372,000 to $430,000, or around 100 per cent to 137 per cent.

(As of writing, this record has been broken by another recently MOP-ed 5-room flat, when it was sold earlier this month for $760,000.)

We’ve also come across resale flat transactions of recently MOP-ed flats that sold double their BTO price.

But more importantly, don't rush to sell off your flat

At the same time, before you put your HDB flat up for sale, take a step back and think about the next step in your homeownership journey.

Ask yourself why you’re looking to sell. Is it solely because of the high paper gain or the need to move closer to your kid’s primary school? Are you looking to move to a bigger flat or a condo?

For instance, if you’re planning to upgrade to a condo, ensure it’s within your financial means. Unlike HDB flats where you have the additional option of an HDB loan, the only financing option available for condos is bank loans.

Compared to HDB loans, the maximum financing you can take for bank loans is 75 per cent of the purchase price or valuation, whichever is lower.

This means that with a condo purchase, you’ll have to contend with the higher price and down payment of 25 per cent, of which 5 per cent has to be paid in cash.

Aside from the housing loan, don’t forget to make arrangements for temporary accommodation, especially if you’re looking to sell your BTO first before buying your next home, or if the next home isn’t ready yet.

ALSO READ: Which property types should you upgrade to after selling your first BTO?

This article was first published in 99.co.