10 noob questions about buying your first property, answered
Adulting is hard. You have to hold down a job. You have to pay your bills. And you have to put on pants in the forenoon.
Somewhen, you might fifty-fifty have to start thinking about buying property. At present, that'south when information technology actually gets heed-boggling.
Fret not – we're hither to assist. Hither are 10 questions submitted by millennials, which we've helped to answer.
READ: Resale HDB vs condominium: Are flats a bad investment?
one. Okay, I'thousand gear up to practise some adulting. Where practise I start? How do I make up one's mind on a property?
It should be a balance of 4 master factors: Earth, burn, wind and water. No, just kidding. The four things to consider are: Location, lease, toll and your future plans.
Location: Look at areas with civilities that matter to your lifestyle and modes of transport. If you're a cyclist, a belongings nearly park connectors would exist pretty sweetness. Hate the audio of children laughing? Don't choose a belongings well-nigh schools. But do choose one most schools if y'all have children.
If you program to rent out the apartment, choose a property that ticks all of the of import requirements (MRT, schools, hawker centres, markets) for your target demographic. This ways identifying beforehand who the tenants are likely to be, and so picking someone to fit. For example, affluent expatriates are more likely to drive, and may exist less bothered nearly MRT access than, say, students. Working this out will increase your rentability.
Lease/Age of holding: For condominiums, you tin choose betwixt freehold property (which means you lot own the flat forever) or leasehold (yours for 99 years, like HDB properties). Each has its benefits.
The remaining lease tin also affect your eligibility for a loan. For you to go the maximum HDB loan, the property must have enough lease for it to final the youngest buyer until they are 95. For banks, a short lease will result in a lower Loan-to-Value (LTV) ratio and therefore more cash needed to finance your property.
Some good news:
• Older HDB flats also hateful a mature estate with readily available amenities
• Condominiums with 50 to sixty years remaining on their lease might take en-bloc potential
• Resale condominiums are generally priced much cheaper than newer ones at the time of purchase
Toll per square feet (PSF) and Breakthrough price: The quondam is the amount you are paying per square pes, while the latter is the total cost you are paying for the domicile. Though many utilise PSF as a barometer, a low PSF does not always hateful a good deal; PSF is most useful when comparing properties that are highly similar (East.g. two units in the same condo cake, with relatively similar layouts). PSF becomes irrelevant when comparing significantly different properties, such as a landed property in Eunos versus a condo in Bugis.
Time to come plans: Requirements for own-stay and investing can be completely different, every bit elaborated in our offset pointer. Also consider if you are starting a family unit, and what URA has in listen for the location you are interested in.
2. Why is information technology so hard to get a BTO in mature or metropolis locations?
Information technology but is about the availability of unused land. Mature estates – we are guessing your desired location is a place you are familiar with and has plenty of amenities – don't have much of it. It's why at that place are more BTOs in places like Punggol, Bidadari and Tengah. They may be unfamiliar but definitely not undesirable – if y'all are patient enough. In fact, Punggol has transformed into a pretty cool town and Bidadari has a nature-inspired theme and car-calorie-free plans. Alternatively, there may also be affordable resale, Executive Condominium or condominium units for sale in the locations you want.
The government is also trying to avoid the "lottery upshot" with public housing. Take The Top @ Duxton, which had a launch price of S$345,000 to Due south$439,000 in 2004. Thank you to its desirable location, the average price of five-room flats here today is in the range of Due south$943,000; some units accept fifty-fifty transacted above the million dollar mark! The "lottery effect" describes the unfair advantage that these homeowners get, compared to those who got a apartment in, say, Punggol.
three. Why is the 'single age' 35?
Our theory is that the government wants to incentivise and prioritise married couples and families, and someone out at that place must have researched that about Singaporeans get married and accept babies by historic period 35.
READ: Is it really that bad an thought to purchase a 40-year-old resale HDB flat?
iv. Why are HDB flats getting smaller?
We are running out of land. If you want a big flat, y'all demand to find a flat built before the 1990s. Information technology was then that flat sizes became smaller.
5. Which is better for young couples (financially, in the long run): Buying a BTO or HDB resale flat?
Ah, the age-old question. We've always encouraged start-timers and young couples to become for BTOs. Though they have at least two years to complete and are smaller, they are more affordable than resale flats and therefore the platonic buy for young couples who have simply started working. And you get tons of grants as a first-time bidder for a BTO apartment. (Notation: If both parties are Permanent Residents, resale is your only option.)
However, in September 2019, the regime introduced the Enhanced CPF Housing Grant (EHG). It has a higher income ceiling and is applicable to both BTO and resale flats of all sizes and estates. Previously, those in mature estates got lower grants.
Now, the total amount of grants available for first-timers ownership resale flats – which include the EHG, Proximity Housing Grant and Family Grant – is a whopping S$160,000, and BTO, South$80,000. This means that although resale flats are still more expensive, the grants have made them more than accessible to young couples.
Therefore, the departure mainly lies in lease. For healthy capital appreciation, nosotros suggest choosing BTO flats or "young" resale flats (such as those with a remaining 95 or 90-year lease).
Resale flats with shorter leases, on the other mitt, can be bought at a very affordable price, freeing upwardly your money for other investments. If yous are planning to buy a condominium, you tin can also apply this flat to collect hire until it expires.
You can likewise become a resale near your parents, utilise the Proximity Grant and persuade your parents to take intendance of your kid while you work. This fashion, you do non accept to spend on childcare centres or a helper.
It really depends on what you desire. Nearly homeowners who buy property for own-stay simply cull the holding they tin can afford in a location they similar.
READ: A 'castle' foodcourt, a clock playground and other surprises at Bishan-Ang Mo Kio
6. Do I get any housing subsidies if I buy my 2nd HDB home near my parents?
Yes. In fact, the Proximity Housing Grant is the only one you can become as a not-commencement fourth dimension applicant. Couples or families that live inside 4km of their parents are eligible for S$20,000 in grants.
Other things you demand to know:
• Couples who live with their parents get S$30,000
• Singles who alive with their parents go S$15,000
• Singles who live near their parents become S$10,000.
vii. What happens to a apartment when the 99-year charter is upwards?
For HDBs, the apartment will be returned to HDB and somewhen to the state. They will then most probably demolish the flat. You tin can also hope for Selective En bloc Redevelopment Scheme (SERS), a government initiative that allows SERS residents to become a payout, movement into a new 99-yr lease home at a subsidised rate and other cool benefits.
Condominiums with expiring leases tin undergo collective sales, too. However, unlike HDB SERS, it is not compulsory and owners get to vote for or against the property existence bought over. Owners will demand to find some other abode on their own, merely this shouldn't be a trouble as the payout for condominium SERS is at market rate.
In that location's too the Voluntary Early Redevelopment Scheme (VERS), simply we've actually never seen VERS happen, and so no one is entirely sure of its nuances.
viii. I heard nosotros need to render the money we used from our CPF once we sell our flat. Is this true?
Yes, it's true, though not equally scary as information technology sounds. The CPF monies you lot used for the downpayment or for financing your electric current apartment – plus the interest you could have accrued had you left it in the account – needs to exist returned to your account. But, you can then use whatever y'all accept in your Ordinary Account to offset your next purchase.
9. Should I sell my HDB first before buying another, or buy the HDB offset and and then sell?
Yous cannot have two HDBs under your name at the same time. You volition definitely accept to sell off your HDB earlier signing the papers for the next i.
10. Do we have to declare it to HDB if we rent out a room or an entire unit?
Yes, you have to declare it to HDB. Once you lot do that, you tin keep things organised past using the Tenancy Understanding forms prepared by the authorities agency Quango for Estate Agencies (CEA). They item the names, NRIC numbers, addresses and whatever additional terms such as whether the tenant or landlord should pay for utility bills. This is to protect all three parties, including the amanuensis brokering the deal.
By the way, if y'all lock up one room and then rent the remaining space, it is not technically considered an unabridged unit, but the HDB will still take action.
This story first appeared in 99.co.
Source: https://cnalifestyle.channelnewsasia.com/entertainment/buying-your-first-property-175426
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