Choose or lose your BTO spot: HDB tightens rules on flat selection

Applicants who decline an offer to book a new flat with HDB will be bumped down; first-timer families and married couples will get higher priority in booking a flat

Mar 03, 2023

THOSE who turn down their first chance to choose a flat in the HDB’s Build-To-Order (BTO) exercises will be bumped down the BTO queue, in a rule tightening designed to shorten the long lines for new public housing flats.

While BTO application rates are likely to fall as a result and flat allocation will improve as intended, some buyers may then turn to the resale market, analysts said.

Queue drop-outs would include those who had applied multiple times targeting popular mature estates or specific flat types that are deemed to yield better returns, said Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie.

PropNex Realty chief executive officer Ismail Gafoor said the new non-selection regime “sends a clear message to (homebuyers to) take their BTO or SBF flat applications more seriously, rather than applying just to try their luck or to take an opportunistic shot”.

Since 2017, about 40 per cent of applicants who have been invited to book a BTO flat failed to do so – either by declining the offer or missing their flat selection appointment. This amounts to around 10,000 applicants per year.

“For some, the remaining flats may be out of their budget. For others, they might be considering other housing options, or prefer flats with specific attributes,” said Minister for National Development Desmond Lee, announcing the policy change at his ministry’s Committee of Supply debate on Thursday (Mar 2).

“But whatever the reason, such applicants do crowd out other homebuyers who may have more pressing needs. This is why we encourage applicants to apply for flats only if they really intend to purchase one.”

Still, those with “genuine reason” will feel aggrieved by the tightened rules, said Huttons senior research director Lee Sze Teck. “Since they intend to stay there for many years, they would want to choose the best unit in their view.”

Such homebuyers are also likely to move to the resale market, said Tan Tee Khoon, Property Guru country manager of Singapore. “That said, the market will likely recalibrate and stabilise by next year after some volatility as home seekers grow accustomed to the new regulations,” said Tan.

Under current rules, those who decline to book a flat when invited to are issued a non-selection count, and are given up to two non-selections before they are bumped down the queue.

From August 2023 onwards, first-time homebuyers who register one non-selection will be relegated to second-timer status for a year. If they then still decline to choose a flat, they will be blocked from HDB sales exercises for a year. The change will also apply to the Sale-of-Balance-Flats (SBF) programme.

Second-timers have much lower priority and fewer opportunities to book a flat. Almost all – at least 95 per cent – of BTO flats are reserved for first-timers.

The non-selection count will be waived for those with 10 or fewer BTO flats to choose from at their flat selection appointment, or five or fewer SBF flats to choose from.

The HDB will also give more priority to first-timer parents and married couples looking to buy a new flat.

This group of homebuyers currently gets two ballot chances, compared to second-timer families who get one shot, and an additional ballot chance for every subsequent BTO application in non-mature estates, should they have two or more unsuccessful BTO attempts in these areas.

The new priority category will be a subset of this, specifically for families with at least one Singaporean child aged 18 and below, or married couples aged 40 and below. They must also have never owned or sold a residential property and not have a chance to book a new flat in the past five years.

These households account for 10 per cent of all first-timer family applicants, said Minister Lee, and will now be given three ballot chances when they participate in any BTO and SBF exercises.

This will help young families settle down more quickly, said Lee.

This group of first-time home buyers will also now be covered by the Family and Parenthood Priority Scheme (FPPS) – formerly known as the Parenthood Priority Scheme, which sets aside a proportion of flats for first-time married couples who are either expecting a child or with at least one Singaporean child aged 18 and below.

Under the FPPS, up to 40 per cent of three-room or larger flats in each BTO exercise and up to 60 per cent of such flats in every SBF exercise will be reserved for first-timer parents and married couples. This is up from the current 30 per cent and 50 per cent for BTO and SBF flats, respectively.

First-timer parents and married couples will also get first priority when applying for a four-room or smaller BTO flat in non-mature estates “where there is relatively larger flat supply”, said Lee. “This means that they will be shortlisted ahead of all other FPPS-eligible applicants, and stand a higher chance of being invited to select a flat.”

These measures will kick in from the August 2023 BTO exercise.

ERA Realty head of research and consultancy Nicholas Mak said the new priority category might drive more first-timer parents and married couples to try their chances for BTO flats in non-mature estates, instead of the resale market.

This is especially so for those who can afford to wait for the BTO flats and “may be more financially constrained”, he said.

Between 2023 and 2025, Minister Lee expects close to 100,000 home completions in both the private sector and public market, with almost 40,000 completions in this year alone.

“This will be the highest number of home completions in the last five years, including the pre-Covid years of 2018 and 2019,” he said, and will help alleviate pressures in the HDB rental market.

HDB is also building “aggressively and on a very large scale”, he noted, overseeing around 100 BTO projects across the island. By 2025, there will be more than 150 concurrent projects.

Addressing proposals to build BTO flats ahead of demand or quicken HDB’s pace of construction, Lee said the land preparation process is long and complex.

“Lots of forward planning and preparation is required before we can even begin construction, about five to 10 years of lead time, or even more in some cases,” he said.

In the case of the Old Police Academy at Mount Pleasant, studies and engagements began in 2018, seven years before the launch of the first BTO project at the site in 2025, said Lee.

“As Singapore recovers from the pandemic, we should also remember that the pace of construction is going up significantly, not just for HDB, but other organisations and businesses too. Resources, manpower and construction capacity are not without their limits.”

On housing options for seniors, Lee announced that another community care apartment (CCA) project with 200 units will be launched in Bedok later this year.

The CCA is a public assisted living development that integrates senior-friendly housing with care services.

This will be the third of its kind, with the latest being launched in Queenstown in November 2022. The first was launched in Bukit Batok in February 2011, with prices starting from S$40,000 for a 15-year lease to S$65,000 for a 35-year lease. Flats have to be paid for fully upfront with cash or with Central Provident Fund monies, although government subsidies are applicable.

Residents pay for a basic service package starting at S$22,000 for a flat with a 15-year lease.

The government has also put up for tender a pilot private assisted living site at Parry Avenue. The tender closes later this month.

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