'I ended up a tenant of my old home': How 3 Singaporean homeowners are dealing with the new cooling measures

The 15-month wait-out, from the September cooling measures, was one of the most stunning last-minute shifts we encountered.

Several Singaporean homeowners were caught unprepared; these range from those who had just sold their condo units (and are now forced to rent), to flat sellers who had almost sealed the deal at a good price.

We spoke to home buyers, sellers, and realtors on the current solutions:

Some news on the 15-month wait-out

The Sept 30 cooling measures require a 15-month wait-out, for current and former owners of private residences to buy a non-subsidised resale flat.

The only exception is for seniors aged 55 and above, who are buying a four-room or smaller flat. 

Prior to this, the only requirement was that you sell your private property, within six months of acquiring a resale flat. 

Due to the suddenness of the cooling measure, many buyers and sellers found themselves caught in the interim stages. The worst off were those who had just sold their condo units, but hadn't yet secured a resale flat. 

On the flip side, some flat sellers have complained that they were in the final stages of negotiations, when the buyers were forced to back out due to the wait-out period; this has put a crimp in their own plans to upgrade. 

At present, HDB has received 450 appeals, of which around half involve buyers who secured the Option to Purchase (OTP) for a resale flat before Sept 30. We understand that all cases are being reviewed on individual merit. 

Some sellers may have to refund the OTP 

HDB has said that in cases where the buyer is no longer eligible to buy a resale flat – despite having secured the OTP – the OTP will be voided. This means the seller will have to refund the OTP amount back to the buyer. 

This can be as troublesome to the seller as it is to the buyer, particularly if the seller has already put the Option money to use in some manner. 

The fallout from this also affects realtors – property agents clarified that if there's no transaction, there's no service fee for them. The sudden loss of a buyer means the realtor's efforts are a wash, and marketing for the property needs to start again. 

A risk to flat sellers facing ABSD deadlines 

Upgraders who purchase a new condo before selling their flat must pay the Additional Buyers Stamp Duty (ABSD). This is payable within two weeks of signing the Sales and Purchase Agreement. 

They can apply for ABSD remission later; but one of the requirements for remission is to sell their previous flat within six months. 

With the new 15 month wait-out, these upgraders face a higher risk of missing the deadline. For example: 

Consider an upgrader who has taken three months to secure a buyer, only for the buyer to back out due to the new cooling measures. 

This would leave the upgrader only three more months to find a buyer for their old flat, lest they forfeit the ABSD of 17 per cent (for Singapore citizens). 

They would also see a reduced pool of potential buyers, if they're selling a five-room or larger flat: anyone right-sizing from a private property wouldn't be able to buy due to the wait-out, while first-time home buyers might struggle with their current asking price.

In light of all the uncertainty, we've seen home buyers take on new compromises to cope:

Renting out the same condo unit that you just sold 

Sharon K ended up becoming a tenant in her previous condo unit, due to the wait-out:

"I got married a year ago, and recently I sold my two-bedder with the intention to buy a 5-room flat with my husband. Unfortunately, we hadn't secured any OTP or anything when the cooling measures happened. 

"But we were lucky because the uncle who bought my unit was not intending to buy for own-stay; he was buying to rent out the unit anyway. So it was just right for us to rent the unit from him, until the wait-out is over and we can buy a flat. 

"Losing money to rent is painful. But on the plus side, we can stay on in a familiar location for longer, and we can put off the hassle of moving.

"Now I have more time to slowly sell off my barang-barang (her various things like furniture), so it'll be easier to move when the time comes."

Realtors told us this can be a good solution when it happens – but unfortunately most buyers are homeowners, who intend to move in as soon as they can.

At most, they may be willing to let the sellers rent for short periods like six months; but anything longer is improbable. 

Right-sizing to another condo unit 

One couple, who declined to be named, said they actually could buy a 4-room or smaller resale unit, as they are past the age of 55. However, they found their budget could accommodate a condo unit instead:

"At first, we did think of settling for a four-room flat; but we found an older resale condo at Bayshore for just over $1 million.

"Before the cooling measure, we saw a five-room flat we liked; it was around $860,000, and it would have been about 200 square feet bigger only. 

"After some financial help, we realised we could afford the condo without spoiling our retirement targets too much; and we have grandchildren who like to swim.

"So we dropped the plan for the four-room, which I think is a compromise we wouldn't have been too satisfied with, for something that makes us happy." 

Moving in with others till the measures are over

J, who is currently undergoing financial difficulties, says the cooling measure caused him to abandon right-sizing plans.

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He says he was struggling with condo repayments, as his F&B business was affected by Covid; but the recent cooling measures have disrupted his plans to right-size:

"What's the point of selling my condo now? If I sell it I can't buy a resale flat, and I need to wait 30 months for a BTO flat. And I'll end up having to rent in a super-pricey rental market.

"I'm just grateful that the cooling measure happened right before I was about to sell my unit, otherwise I would really be stuck. 

"For now I've moved in with my fiance's family, but this is temporary and I need to find another solution soon. I've rented out my condo in the meantime; this is barely enough to keep me afloat. 

"I'll consider right-sizing once they lift this cooling measure, which I hope they can do by next year." 

J adds that it's "a little short-sighted to restrict those who are trying to right-size, at the exact same time housing interest rates are rising." 

This article was first published in Stackedhomes.