SINGAPORE — The new Plus and Prime flats launched on Wednesday (Oct 16) will come with a subsidy clawback clause of between six and nine per cent, said the Housing and Development Board (HDB), as it rolled out 8,573 Build-To-Order (BTO) homes under a new flat classification system.

The new launch will sort BTO projects into the Standard, Plus and Prime categories based on their proximity to the city centre, transport connectivity and amenities. It replaces the system of demarcating estates as either mature or non-mature.

Plus and Prime flats, which are in more attractive locations, come with significant additional subsidies to keep them affordable, said HDB. It has said the subsidy recovery clause is needed to curb the "lottery effect" of owning flats in prime and central locations.

"To maintain parity with other BTO flat buyers who are not accorded additional subsidies, Plus and Prime flat owners will be required to pay HDB a percentage of the resale or valuation price (whichever is higher) of the flat upon selling it, after meeting the 10-year minimum occupation period (MOP)," said HDB on Oct 16.

This launch has seven projects each under the Standard and Plus categories, with 4,988 Standard flats and 3,273 Plus flats on offer.

At Prime project Crawford Heights, prices (without grants) range from $390,000 to $523,000 for a three-room unit, and $568,000 to $759,000 for a four-room flat, making these flats among the priciest at this launch.

The only Prime project in Kallang/Whampoa, Crawford Heights, has 312 units for sale.

The subsidy clawback has been set at nine per cent for the Prime project, and between six per cent and eight per cent for the seven Plus projects.

Besides a subsidy recovery clause, Prime and Plus flats will have stricter resale conditions, such as a 10-year MOP. And when they hit the resale market in the future, those who want to buy these flats must meet a household income ceiling of $14,000.

Standard flats will not have a subsidy recovery clause when they are sold, and will come with a five-year MOP.

For comparison, four-room flats in Kallang/Whampoa transacted at between $890,000 and $938,000, said HDB, noting that there were no comparable three-room resale flats in the vicinity.

For the Plus project Merpati Alcove, located next to Mattar MRT station, near Aljunied Road, the subsidy recovery has been set at eight per cent. Four-room flats in this project are going for $530,000 to $647,000, without grants.

 In Bedok, four-room flats at Bayshore Vista and Bayshore Palms, with a subsidy recovery clause of seven per cent, are priced from $495,000 to $694,000.

Meanwhile, four-room units in Kembangan Wave in the same estate are priced at $453,000 to $592,000, with the subsidy clawback set at six per cent.

HDB said it takes into consideration the extra subsidies needed to keep individual Plus projects more affordable when determining the subsidy recovery percentages.

The two BTO projects in Bayshore are "more favourably located" than the Kembangan project as they are near East Coast Park and a proposed sports and recreation facility, HDB said.

Merpati Alcove's subsidy clawback of eight per cent is higher than Bayshore's as it is located "at the doorstep" of an MRT station and is closer to the city centre, it added.

"As their more favourable locations command higher market values, higher additional subsidies are required to lower their flat prices so that they are more affordable to a wider range of Singaporeans," said HDB.

When the prime location public housing model was introduced in 2021, the clawback was six per cent. It was raised to eight per cent in December 2023, and again to nine per cent in June 2024.

As for whether the subsidy recovery rate will be fixed for subsequent BTO launches, HDB said this will vary at each launch and correspond with the amount of additional subsidies needed to bring the prices of Plus and Prime projects down to more affordable levels.

Spread across nine towns — Ang Mo Kio, Bedok, Bukit Batok, Jurong West, Geylang, Kallang/Whampoa, Pasir Ris, Sengkang and Woodlands — October's exercise makes up more than 40 per cent of new flat supply for 2024.

In this BTO launch, eligible flat buyers can also tap the higher Enhanced CPF Housing Grant (EHG), which was raised to up to $120,000 for families and $60,000 for singles in August. 

Buyers will be subject to a tighter loan-to-value limit of 75 per cent — a cooling measure implemented in August to encourage prudent borrowing and dampen demand in the HDB resale market.

Those who pick flats at Crawford Heights can opt for open-concept 'white flats', which are being piloted for the first time in this sales exercise.

Home buyers that opt for this will pay $6,000 less for a three-room flat, and $8,600 less for a four-room flat as inner partition walls and some electrical points are not provided.

The October sales exercise also marks the first time singles can apply for two-room flexi flats in all locations, with more than 1,900 such flats on offer. Previously, they could apply for such flats only in non-mature estates.

Ismail Gafoor, chief executive of real estate firm PropNex Realty, said the subsidy recovery rates for Prime and Plus flats are relatively modest and may still be palatable to flat buyers.

He said that if a buyer purchased a four-room Prime flat at $650,000 and resells it for $1.2 million in the future, the 9 per cent subsidy clawback works out to $108,000.

"The owner may still be able to enjoy gross gains of more than $400,000," said Gafoor, who pointed out that resale buyers of Prime flats are subject to a household income ceiling of $14,000 and the 30 per cent mortgage servicing ratio, which would limit the size of the loan they can take.

Lee Sze Teck, senior director of data analytics at property firm Huttons Asia, said some of the Standard projects are priced "very close" to Plus projects.

For instance, four-room flats in Costa Riviera I and II, a Standard project in Pasir Ris, are priced similarly to those at Central Trio @ AMK, a Plus project. They are also priced higher than four-room flats in Plus project Kembangan Wave.

"This may entice some buyers to consider Plus BTO projects, because for a similar price, buyers get to stay in a centrally located area. It... may in fact draw more demand to centrally located flats," he added.

Priscilla Sim, 25, plans to apply for a four-room flat in Kallang/Whampoa, and is gunning for Crawford Heights.

"I hope to get a good queue number as the location is very convenient and there are a lot of amenities and good food in the area," said the research assistant.

She added that the 1 percentage point difference in subsidy clawback between the Plus and Prime projects in the estate will not sway her decision to pick a Prime flat. The two Plus projects in Kallang/Whampoa, Kallang View and Towner Breeze, come with an 8 per cent subsidy recovery rate.

Elijah Jordan, 27, who works in the shipping industry, has applied for a four-room flat in Bedok, and hopes to secure a unit in either of the Bayshore projects.

"Bayshore is near my girlfriend's parent's home, and it's also a short walk to East Coast Park where I can go for jogs. I would live here for the long term so the 10-year MOP is not an issue," he said.

HDB said applicants who wish to improve their chances of securing a flat are encouraged to apply for Standard flats, where at least 95 per cent of the four-room and larger flats are set aside for first-timer families.

Flat applications close at 11.59pm on Oct 23 on the HDB Flat Portal. The new homes will be allocated through balloting.

The October exercise takes the number of BTO flats launched in 2024 to 19,637.

In the next BTO exercise, in February 2025, HDB will offer about 5,000 flats in Kallang/Whampoa, Queenstown, Woodlands and Yishun.

ALSO READ: October BTO launch: HDB to offer first flats under Standard, Plus, Prime classifications

This article was first published in The Straits Times. Permission required for reproduction.