Having proposed to Heartland Girl in 2014, the next correct step would be to decide on the roof over their heads. Correct step? Yes, that is because Heartland Girl has firmly entrenched a modus operandi on family formation in Singapore.
Therefore, any Singaporean male who has an intention to settle down would do well to heed the advice of Heartland Girl. Transgress this process at your own peril, as Heartland Boy had painfully learnt.
Only after following the protocol correctly was Heartland Boy finally granted permission to discuss openly with Heartland Girl on the choice of housing. However, things were far from simple as the Heartland Couple soon fell into the classic Singaporean dilemma – buy a HDB Build To Order ('BTO') or Resale? After much consideration, the Heartland Couple chose BTO over Resale and here are the reasons why.
Advantages Of A BTO Over Resale
1. BTO Is Subsidised By The Government
BTO are new flats that are subsidised by the government and meant for Singapore Citizens. Government intervention in the form of subsidy is to ensure that the Singaporean dream of home ownership is always kept alive.
A lower purchase price translates directly to greater affordability and matches the budget of the Heartland Couple. Lenient payment terms such as the Staggered Downpayment Scheme also meant that lower downpayment is required. This was a huge ease on the financial burden of the Heartland Couple as they were young working adults with little CPF savings then. (still are, by the way) In addition, there are other grants such as the Additional CPF Housing Grant (AHG) and the Special CPF Housing Grant (SHG) for couples to defray the cost of a BTO flat. For the Heartland Couple, the opportunity not to stump up any hard cash to purchase a flat was a huge decisive factor that swung the pendulum towards BTO.
2. BTO Has Greater Capital Growth Record
The track record for BTO's capital growth is significantly superior to a Resale flat. Indeed, by being subsidised in the first place, BTO are already in a good stead to command a higher capital value once the Minimum Occupation Period is over. Here is an article by The Edge Property on how some recent homeowners have profited from buying BTO.
In fact, to ensure equality, each Singapore Citizen married couple is only given 2 chances to purchase BTO directly from HDB. Some even see this as their birth-rights; and that it will be a missed opportunity not to buy themselves a ticket to this unique property lottery in Singapore. Therefore, Heartland Couple would also very much like to have their first bite of the property cherry.
Of course, readers may argue that hindsight is 20/20 and that those who purchased BTO in Punggol and SengKang merely got lucky. Heartland Boy is putting his real estate training to good use and foresees that buyers of Bidadari and Tengah New Town will also be able to profit handsomely by buying BTO from the government in these estates.
3. BTO Is New And Comes With Fresh Leases
The other advantage of BTO over Resale is that it has no prior owner and hence potential buyers need not worry about the history of the flat. In addition, home-owners are also given carte blanche in terms of renovation and often let their creativity run wild when designing their love nests. In comparison, there are sufficient horror stories of Resale buyers and their flats. Amongst other potential hidden problems, some Resale buyers found that they have to deal with harassment by illegal moneylenders due to the previous owner's chequered past.
Finally, as a brand new development, BTO comes with the full 99-year leases. A longer lease also makes re-selling easier as the next buyer would have greater access to financing.
Disadvantages Of BTO Over Resale
1. BTO Has A Longer Waiting Time
Besides the issues of eligibility, the single factor that often puts couple off the BTO market is the waiting time. As the name suggests, BTO flats are only built when a sufficient level of demand has been reached. As BTO flats are generally high-rise apartments these days, the wait time for your BTO flat could be an average of 3 to 4 years. During this time, a couple may need to stay with their parents or find alternative housing solutions. Some may find this trade-off unpalatable as they place greater priority to privacy and starting a family etc. A compromise solution may be to ballot for Sale of Balance Flats; the wait time is generally shorter but prices may have increased compared to the original launch.
2. BTO Comes In Smaller Sizes
As land gets scarcer in Singapore, one of the solutions to accommodate a larger population is to intensify the use of land. As a result, HDB flats are built taller and sizes get smaller. For those who have grown up in the older-generation HDB flats, they may find the new flats a tad too small for their liking. Heartland Girl falls into this category. Heartland Boy consoled her by highlighting that new HDB flats are more efficient in their layouts. This is indeed true as HDB would have learnt from design mistakes of the past.
Most importantly, buying a bigger flat that is beyond your short-term needs risks the issue of it becoming an overconsumption.
3. BTO Has A Higher Renovation Cost
It is undoubtedly true that BTO flat incurs a higher renovation cost. Tiles have to be laid over the cement screed and doors have to be installed. These are all essential costs which can be avoided by buying a Resale flat. However, for those who are looking for a complete overhaul of their Resale flats, do not be surprised if the renovation costs surpass that of a BTO. By the way, here is another good tip for those looking at getting greater value from HDB- opt for the Optional Component Scheme (OCS) provided by HDB for BTO flats. These are usually cheaper options as HDB benefits from lower quotation since they are buying in bulk.
Conclusion Of Choosing A BTO Over Resale
Do note that not all factors can be measured in terms of monetary value. For instance, having to delay your family plans because of housing is not a simple quantitative decision per se. Therefore, Heartland Boy is trying to emphasise that the various factors carry different weightage to different couples. What is most important is that a vigorous process had been undertaken and that the decision made was based on the set of circumstances known then.
Of course, the decision had better be mutual!
P.S. Having decided between a BTO or a Resale, you may find that this article may be useful when selecting an unit too.