Understanding the Resale HDB Process: Step-by-Step Guide for Buyers
Buying a resale HDB flat is a significant financial decision that requires careful planning and preparation. Here is a comprehensive step-by-step guide on the resale HDB purchase process to help you navigate the various procedures and requirements as a buyer.
Step 1: Determine Eligibility and Quota
The first step is to check your eligibility for a resale HDB flat and ensure you have stayed within the quota limits. Some critical criteria are:
- Citizenship: You must be a Singapore Citizen to buy a resale HDB flat. Permanent Residents are not eligible.
- Age: You must be at least 21 years old to apply.
- Income Ceiling: Your average gross monthly household income must not exceed $14,000.
- Ownership: First-timer applicants can only own one HDB flat. Second-timer applicants must sell their existing HDB flat before buying another.
- Quota: First-timer applicants have a quota of 2 subsidized HDB flats (new or resale) in a lifetime. Second-timer applicants have a percentage of 1 subsidized apartment after meeting the minimum occupation period.
Use the HDB eligibility checker to confirm you meet the requirements. Check the quota limits carefully, primarily if you have owned an HDB flat.
Step 2: Prepare Your Budget
Once you determine you are eligible, start preparing your finances. Some costs to budget for:
- Resale Flat Purchase Price: Research recent transaction prices of comparable flats for an estimate.
- Option Fee: An upfront fee of $1,000 is payable upon exercising the Option to Purchase (OTP). This reserves the flat for you.
- Downpayment: Usually, 25% of the purchase price (minus the options fee) is due upon signing the Agreement for Lease.
- Stamp duties & legal fees: Buyer pays for stamp duties and legal fees of about $3,000.
- Renovation & Furnishing: Factor in costs if you plan to renovate before moving in.
- Monthly Mortgage: Budget your loan repayments and ensure they are within your means.
Work out the numbers, take stock of your finances, discuss with your family, and assess how much you can afford.
Step 3: Shortlist Potential Flats
Once you are ready to start flat hunting, shortlist potential units based on your preferences and budget:
- Location: Look for flats near your family, workplace, amenities, schools, etc.
- Flat type & size: Choose based on your needs and family size.
- Remaining Lease: The flat lease should cover you and your spouse up to age 95.
- Flat condition: Preferably well-maintained flat without the need for significant repairs.
- Facilities: Check if lifts, playgrounds, letterbox area, etc, are in good condition.
- Price: Filter for flats within your budget range.
Drive around estates you like and look for "For Sale" signs. Check HDB's resale flat listings site and property portals for more options. Attend open houses for units matching your criteria.
Step 4: Submit E-Application
Found your ideal resale flat? You can now submit an e-Application on the HDB Resale Portal. You will need:
- Login Singpass
- Fill in details of flat listing and purchase application
- Indicate method of finance (HDB loan, bank loan or CPF)
- Upload required documents (identity, income, marital status etc)
- Pay a $10 non-refundable admin fee
HDB will check your eligibility and quota status. The system verifies if you have met the minimum occupation period if you have owned a flat before.
The application results are typically released within three working days on the portal.
Step 5: Exercise Option to Purchase
If your application is successful, you can exercise the Option to Purchase (OTP) within 14 days. This reserves the flat for you.
To exercise OTP, you will:
- Login to the Resale Portal to retrieve the OTP
- Print and fill up the OTP form
- Pay a $1000 option fee (deducted from purchase price later)
- Submit the OTP form and fee in person at HDB Hub
HDB will validate the OTP submission and send the confirmation by post. The flat will be reserved for you for four weeks, within which you must exercise the Sale and Purchase Agreement.
Step 6: Sign the Agreement for the Lease
This legal contract transfers ownership of the HDB flat to you. Both buyer and seller must be at HDB Hub to sign the Agreement for Lease (AFL).
As the buyer, you will:
- Book AFL signing appointment online
- Submit identity documents and income documents
- Pay Option Fee balance (25% purchase price minus $1,000 paid earlier)
- Sign AFL in the presence of an HDB officer
Ensure all information is accurate in the AFL. Pay the downpayment via cashier's order, personal cheque, or cash. HDB will process the AFL signing and transfer flat ownership to you immediately.
Step 7: Apply for Housing Loan
Most buyers take an HDB or bank loan to finance the flat purchase. Start applying for the home loan while waiting for the OTP and AFL signing slot:
HDB Loan:
- Apply online on the HDB website
- Upload documents (income, CPF, identity)
- HDB will process the loan application while AFL signing is in progress
Bank Loan:
- Approach banks for loan pre-approvals
- Submit documents (income, CPF, identity)
- The bank will prepare loan documents and send lawyers for AFL signing
The loan must cover the purchase price and other costs (renovation, stamp duties, etc). HDB loans let you finance up to 85% of the purchase price, while banks offer up to 75%.
Step 8: Complete Ownership Transfer & Registration
Once the Agreement for the Lease is signed, HDB will complete the final registration and ownership transfer:
- HDB lawyers will prepare the Assignment document
- HDB will register the Assignment and issue a Notice of Transfer
- Original title deeds will be sent to the buyer's address via post
- CPF Board will deduct the buyer's CPF and pay the seller upon completion
- mortgage will start for the buyer's monthly loan repayment
The entire resale transaction process takes about 8-12 weeks from the e-Application date to the sale's completion. You can track the application status online.
Step 9: Next Steps Upon Collecting Keys
Once you receive the Notice of Transfer, you can collect the flat keys and take possession. Here are some next steps:
- Inspect flat condition and check for defects
- Submit Maintenance of Parents application if applicable
- Apply for parking lots if available
- Apply for utilities account transfer (power, water, gas)
- Engage contractors and plan renovation works
- Apply for moving-in loan from HDB if required
- Inform banks, CPF, IRAS, and employers about a change of address
- Packing, hire movers, settle new home before moving in
Cooling Measure Updates:
HDB regularly reviews and adjusts its housing policies to control the property market. Buyers should check for the latest guidelines.
Recent moves include shortening the MOP, raising the buy-over quota premium, and stamp duties to disincentivize frequent short-term flipping.
Downpayment Amounts:
A 20% minimum downpayment is required if taking a bank loan for a resale HDB purchase. First-time owners enjoy lower rates.
CPF Housing Grant deductions can cover a portion of the downpayment, subject to eligibility criteria.
Subletting Conditions:
The flat can be sublet only if the owner is temporarily abroad for work/studies or facing divorce/family issues.
The subletting period can be, at most, five years cumulative. Rental capped at prevailing HDB rental rates.
Owners are still responsible for maintenance fees when subletting. Cannot sublet to foreigners.
Mortgage Servicing Support:
CPF can service any outstanding housing loan amount for up to 15 years, even after the homeowner dies.
Immediate family members can jointly take over the flat and loan through a housing inheritance scheme.
Rising Property Values:
Resale prices have generally appreciated over time due to land scarcity. Buyers can gain equity when reselling.
However, prices also depend on location, flat conditions, and market cycles—there is no guarantee of continued rises.
CHOOSING A FLAT
Consider location, proximity to amenities, floor level, unit orientation, etc., per lifestyle needs.
Check past transaction prices in the same block to gauge the value and future appreciation potential.
Flats over 30 years old may need more renovations sooner.
North-South lines can affect privacy and noise levels.
AGENT SERVICES
Agents assist with searching, paperwork, conveyancing, and liaising between parties.
Agent fees range from 1-2% of the sale price, paid by the seller as a commission.
Ensure the agent is buyer-oriented and experienced with HDB resales specifically.
Ask upfront about any additional charges for their services.
RENOVATION OPTIONS
Renovate before moving in for convenience or customize as new owners.
Hiring contractors directly or using HDB Selected List of reno firms
Renovate in phases to spread out costs.
Specific item replacements qualify for renovation grants from HDB.
FINANCING ALTERNATIVES
Consider a CPF housing loan if you have a sufficient Ordinary Account balance.
Compare interest rates, fees, and terms of different bank housing loans.
Syndicated loans allow co-borrowers to take higher-valued loans jointly.
DUE DILIGENCE CHECKS
Inspect flat condition and confirm no structural issues before committing to buy
Verify seller ownership details with HDB and check for caveats on the property.
Check town council maintenance history and sinking fund contribution levels.
Here are some common challenges buyers may face when purchasing a resale HDB flat:
Meeting income eligibility criteria: Buyers must submit income assessments for flats near the maximum household income limit, which adds time to the application process.
Arranging for a housing loan - Those with unstable income streams or inadequate CPF balances may need help securing bank financing.
Valuation disputes with the seller: If the HDB valuation comes in lower than expected, renegotiating the price within the given range can be challenging.
Flat condition issues: Last-minute defects discovered during final inspections may unravel the sale transaction.
Seller's financing conditions: Delays can arise if the seller has an existing housing loan to settle before completing the resale deal.
Collector's market flat taxes: Additional non-refundable taxes apply for flats purchased within shorter holding periods to discourage speculative buying.
Resale levy amounts - The rising levy based on past transactions increases costs substantially, especially for premium central units.
Maintenance responsibilities: Transitioning to becoming a flat owner involves understanding all duties related to upkeep.
Renovation timelines: Finding contractors, approvals, and actual works extending beyond the OTP window exerts pressure.
High seller expectations: Unrealistic prices and an inflexible negotiation stance make reaching an agreement problematic.
Proper preparation, thorough due diligence, and engaging reliable real estate and legal professionals can help overcome hurdles during the resale home purchase journey.
Tips for buyers to navigate the income eligibility criteria when purchasing a resale flat
Be prepared to submit several months of income documentation like payslips, income tax filings, CPF statements, etc. Have these ready well in advance.
If self-employed, ensure business financial statements are professionally audited to validate your declared income amounts.
Consider looking at flats with maximum household income ceilings slightly above your current income level to account for potential rises over time.
Request your employer to issue an income verification letter confirming your employment status and salary if you are near the income cap.
Consider alternate family members like parents or siblings as co-applicants if combined income helps meet eligibility for a larger flat.
Consult HDB directly and request pre-eligibility checks if you need clarification on qualifying due to a recent job or business change.
Be prepared for additional paperwork and processing delays if your income assessment has to be manually evaluated.
Consider income-averaged amounts over several years rather than just the latest figures to smooth out fluctuations.
Have a financial buffer in case there are temporary pay cuts when eligibility is re-checked again at critical stages.
With diligent planning and documentation, eligible buyers can prove their incomes and secure approval to purchase resale HDB flats within the limits.
Tips for buyers to navigate the income eligibility criteria when purchasing a resale flat:
Be prepared to submit several months of income documentation like payslips, income tax filings, CPF statements, etc. Have these ready well in advance.
If self-employed, ensure business financial statements are professionally audited to validate your declared income amounts.
Consider looking at flats with maximum household income ceilings slightly above your current income level to account for potential rises over time.
Request your employer to issue an income verification letter confirming your employment status and salary if you are near the income cap.
Consider alternate family members like parents or siblings as co-applicants if combined income helps meet eligibility for a larger flat.
Consult HDB directly and request pre-eligibility checks if you need clarification on qualifying due to a recent job or business change.
Be prepared for additional paperwork and processing delays if your income assessment has to be manually evaluated.
Consider income-averaged amounts over several years rather than just the latest figures to smooth out fluctuations.
Have a financial buffer in case there are temporary pay cuts when eligibility is re-checked again at critical stages.
With diligent planning and documentation, eligible buyers can prove their incomes and secure approval to purchase resale HDB flats within the limits.
Exceptions and appeals options available if a buyer’s income is found to exceed eligibility criteria
Income averaging - HDB may consider averaging income over several years rather than just the latest figure to accommodate temporary ups and downs.
Joint application: Including another family member as co-applicants can help if combined incomes meet the threshold despite one applicant being slightly over.
Co-financing options: A smaller loan with other non-occupier family members as guarantors may be acceptable.
Income assessment appeal: Buyers can provide more documents or request reconsideration of their income assessment outcome.
Written justification: Submit an explanation letter for recent income increments due to factors like bonuses and business profits rather than permanent salary hikes.
Housing hardship case: Compelling cases of those with special needs like disabilities get consideration under this scheme.
Rental income exclusion: A portion of the income from legal renting part of the property to tenants may be deducted from the total.
Market factors: Flexibility may be given if income limits were recently revised and property was agreed on earlier in good faith.
Overall, HDB evaluates appeals on a case-by-case basis, focusing on intent, background details, and the ability of buyers to service the property in the long run. Effective communication and providing more context is critical.
Specific documents or evidence buyers can provide to support an appeal regarding their income exceeding eligibility criteria
Payslips for the last 6-12 months to show income fluctuations or recent temporary pay increases.
Employment contract highlighting one-time bonus amounts or commission structures.
Business financial statements for self-employed applicants to verify lump sum profits are not recurring income.
CPF contribution history statements corroborating income declared.
Income tax filings for current and past few years to demonstrate income trends.
Letter from employer confirming temporary nature of recent pay rise or bonus.
Proof of other family members financially supporting household income.
Bank loan documents are approved based on the lower assessed income amount.
Medical documents if income increases due to special needs caregiver deducted.
Rental agreements and tax filings if a portion of declared income comes from renting part of the property.
Valuation reports and advertising materials if property agreed on at a lower threshold before recent income rule revisions.
We have a detailed written explanation of income sources and future financial capacity to service housing loans.
Strong documentation is critical to persuade HDB of unique circumstances and sustain ownership eligibility upon re-evaluation.
Additional context could be helpful include
Payslips: What are some key things HDB looks for in payslips to determine income trends over months/years?
Employment contract: What level of contract detail would convince HDB that an income increase is temporary?
Business statements: What accounting practices or profit metrics would help validate self-employed income amounts?
CPF statements: Are any contribution tiers or withdrawal phases HDB cross-checks against declared income?
Tax filings: Does HDB examine other sections besides assessing income, like capital gains or spousal relief?
Employer letter: What sort of authorized personnel and verbiage would strengthen a letter's credibility for HDB?
Bank loan documents - Do interest rates, tenure, or co-borrower assessments impact HDB's understanding of affordability?
Medical documents: Aside from healthcare costs, are disability benefits or caregiving deductions examined?
Rental agreements: Do rental amounts, property portions, or tenant backgrounds factor into HDB assessment?
Providing practical examples or perspectives from your industry experience could help buyers and agents better understand what satisfies HDB's evidentiary requirements during an appeal process.
HDB verifies the authenticity of documents provided by applicants in support of their income eligibility
Payslips: HDB can check with the employer's HR or payroll department to confirm payslip details.
Employment Contract: For any unusual contract terms, HDB may seek clarification from the employer.
CPF Statements: HDB can access contributors' official CPF records to validate statement information.
Tax Filings: The IRAS portion on the form allows HDB to cross-check reported income figures.
Bank Loan Docs: Banks may be contacted to substantiate loan assessment details.
Medical Records: HDB doctors can assess documents from registered medical practitioners.
Rental Agreements: Lease terms and tenants' backgrounds may be cross-verified.
Letters: HDB can contact signatories like employers to authenticate content as required.
Statements: Accounting practices are scrutinized for self-employed, and professionals may be interviewed.
Discrepancies: If inconsistencies arise, HDB interviews the applicant and requests supplementary documents.
Database checks: Applicant particulars are matched against official records for red flags.
Property checks: Flat details and past transactions are examined from URA and HDB records.
Due diligence helps HDB detect fraudulent claims to uphold public housing allocation fairness and integrity of eligibility criteria. The onus is on applicants to provide only bona fide documents for assessment.
If documents submitted by applicants are found to be fraudulent
Rejection of Application: The housing application will immediately be denied approval.
Police Report: HDB may make a police report to investigate the forgery and misrepresentation.
Legal Charges: Applicants can face legal charges under the Penal Code for providing false information.
Forfeiture of Flat: In some severe wilful cases, HDB may forfeit ownership of the flat back to them.
Repayment of Subsidies: Any housing grants or subsidies received must be fully refunded to HDB.
Blocklisting: Applicants will be permanently barred from purchasing other public housing.
Civil Suit: HDB may also file a civil suit to recover administrative and other court costs.
Tenancy Termination: Rental HDB flats may have tenancy agreement termination.
Media Publication: Extreme housing fraud cases can be published as warnings to other applicants.
HDB has zero tolerance for fraudulent practices, given the important role public housing plays. Fair process and autonomous governance help maintain integrity and public trust.
How HDB handles cases of fraudulent document submissions
Investigation Process: HDB will conduct an internal investigation, which may involve interviewing the applicants, employers, auditors, banks, etc., to ascertain the facts.
Show Cause Letter: If prima facie findings indicate fraud, a show cause letter is issued seeking the applicant's explanation within a stipulated deadline.
Interview: Applicants are called to attend an interview with HDB officers to respond to the allegations and present their side of the story.
Expert Assessment: For complex cases involving company documents, HDB may engage external auditors or government assessors to evaluate.
Hearing: For disputed responses, an internal hearing may be conducted where HDB presents evidence of fraud, and applicants can defend themselves.
Burden of Proof: Ultimately, the onus is on the applicants to convince HDB that documents were not intentionally falsified through transparent cooperation.
Board Decision: All case details are submitted to the HDB board for final determination, which could result in one of the penalties mentioned earlier.
Appeal Options: Applicants can make further representations or appeal to the minister in charge if they dispute the findings.
Ongoing Checks: Approved applicants are still subject to random post-approval income/document verification audits to maintain oversight.
HDB aims for a thorough but fair process when dealing with such serious matters to protect public interests and the rights of affected individuals.
Buying a resale flat is lengthy, but you can now navigate it confidently. Execute each step diligently, and your dream home will be yours soon. Happy flat hunting!