The Ministry of National Development (MND) and The Housing & Development Board (HDB) released details of the Prime Location Public Housing Model (PLH) in October 2021. The central idea behind this new model is to ensure that public housing built in prime locations such as the City Centre and Greater Southern Waterfront remains affordable, accessible, and inclusive for all Singaporeans.
Local surveys depict that approximately 4 out of 5 Singaporeans live in HDB flats, of which 90% own their own homes. The core of Singapore’s public housing program revolves around the key values of affordability, accessibility, and inclusivity. Therefore, it is imperative that all public housing programs in prime locations adhere to the same values. However, without the presence of Government intervention, the market will only favour those with greater financial stability. It is necessary that models such as the Prime Location Public Housing Model (PLH) be developed in the best interest of the society at large.
As a prospective buyer, it is important to understand the key issues that the Prime Location Public Housing (PLH) model envisions addressing and tackling. Most Singaporeans will agree that buyers who are fortunate enough to secure a Build-to-Order (BTO) flat at a prime location are more likely to benefit from high profits following a sale of their property – after completion of the Minimum Occupation Period (MOP). Having said this, we therefore witness increased market demand in purchasing HDP flats at prime locations for purely investment purposes.
Hence, the PLH model was developed after extensive engagements with the public, market experts and industry stakeholders. Prospective buyers looking to secure BTO flats under the PLH model must take into account the following key factors:
1. Additional Subsidies Recovery – Applicable Upon Sale Of PLH Flat
As highlighted by The Ministry of National Development (MND), flats located in prime locations have a higher market value. They tend to receive additional subsidies above prevailing ones to ensure their affordability across the board throughout Singapore.
To level off and maintain market stability, a subsidiary recovery is applicable against Prime Location Public Housing (PLH) flats upon the first sale of the said property. In easier terms, the initial buyer is required to pay a percentage of the sale price to The Housing & Development Board (HDB) in the event of the sale of a property. The subsidiary recovery rate for the PLH Project at Rochor Estate is fixed at 6%. The same subsidiary recovery rate of 6% is also fixed for the King George’s Heights PLH Project.
It is important to understand that subsidiary recovery is not a capital gain tax. It is, in fact, a recovery of the subsidies given during purchasing BTO flats as approved by HBD. Subsidiary recovery is only applicable upon the First Sale of the respective property.
2. Subsidiary Recovery Rate – Different For All PLH Projects
The subsidiary recovery rate is NOT fixed and differs for every scheme under the Prime Location Public Housing (PLH) project. Rates are usually announced before the launch of the PLH project and remain fixed for the specific project.
It is advisable for prospective buyers to educate themselves regarding the subsidiary recovery rate and process prior to applying for respective PLH projects.
3. Minimum Occupation Period (Mop) – 10 Years
Most Singaporeans believe that public housing should have a strong focus on family housing needs, and stricter laws should be imposed to minimize investor buying. While taking into account the prime locations and availability of additional subsidies for PLH projects, there is a great need to protect the interests of genuine family housing buyers and develop means for long-term owner-occupation periods.
Hence, as per new regulations, the Minimum Occupation Period (MOP) is 10 years. This means that PLH owners are required to occupy their flats for a minimum of 10 years before they can make this property available for sale in the market.
4. Strict Rental Conditions – Complete Flat Rental Disallowed
Renting out complete flats is not allowed under the Prime Location Public Housing (PLH) project. This rule is applicable even after the completion of the 10-year MOP requirement. On the contrary, buyers of regular HDB properties can rent out their entire flats after a period of 5 years, which is the Minimum Occupation Period (MOP).
Ownership Conditions For BTO Model Versus PLH Model
5. Strict Eligibility Conditions – Applicable To Buyers Of PLH Flats
The strict criterion has been developed to ensure that the PLH project remains inclusive and accessible to the broader market. Subsequent flat buyers are required to meet prevailing eligibility conditions to be applicable for purchase.
As per the HDB, “The priority quotas for flat allocation under the Married Child Priority Scheme (MCPS) will be reviewed and adjusted depending on location for sites launched under the PLH model. This allows public housing in prime central locations to be more inclusive, providing more opportunities to Singaporeans whose family members do not live near the area to also live in these neighbourhoods”.
Prime Location Public Housing (PLH) flats now require an income ceiling of $14,000, while resale flats remain free on the income ceiling cap.
Without the eligibility conditions, the resale prices of these prime location flats may rise beyond the reach of many Singaporeans. With passing time, only those with sound financial stability will be able to afford them. Therefore, MND and HDB intend to require the resale of PLH only to buyers who can meet prevailing eligibility conditions.
6. Key Eligibility Conditions for Purchase (Three-room and Larger Flats)
7. Locations For The Prime Location Public Housing (PLH) Project
The PLH project is set to cover prime locations such as City Centre and surrounding areas such Greater Southern Waterfront.
Keeping the lower-income households in consideration, public rental flats will also be built at these sites. This will ensure inclusivity, with HDB towns becoming home to people from all walks of life.
8. Applicable To New HDB Flats In Prime Locations
The new Prime Location Public Housing (PLH) model will not be retroactively applied to existing flats and owners. Similarly, BTO projects launched previously, which are in prime locations and are still in the process of being completed, will not be affected as well.
The pilot project under the Prime Location Public Housing (PLH) model will be located at Rochor in the Central Area along Kelantan Road and Weld Road. A total of 960 units consisting of 3 and 4-room flats will be available for sale. In addition to this, the project will also include 40 units of 2-room rental flats.
The second project under the Prime Location Public Housing (PLH) model is King George’s Heights, located near Lavender MRT Station. This project will hold a total of 398 units consisting of 3 and 4-room flats.
9. Other HDB Regulations – Applicable To PLH Flats
It is important to understand that in addition to the stringent conditionalities and regulations, all other exiting HDB policies will also be applicable to the Prime Location Public Housing (PLH) project.
In the event that the initial buyer of a PLH flat wishes to sell the property after completing the MOP and buy another flat from HDB as a second-time purchase – understanding the HDB Resale Levy is also pertinent to the process.
10. Prime Location Public Housing (PLH) – Affordable, Accessible & Inclusive
The development of programs such as the Prime Location Public Housing (PLH) model paves the way for better opportunities for Singaporeans at a broader level. The goal is to ensure means of fair access and ownership of affordable housing at prime locations for people from all walks of life.
The MND and HDB released details of the Prime Location Public Housing (PLH) project following extensive public engagements and via feedback and suggestion analysis. During a 10-month period between November 2020 and September 2021, more than 7500 Singaporeans (which includes exiting homeowners, first-time home buyers, market, industry experts etc.) shared their views and preferences.
While the majority of Singaporeans believe that PLH projects should be made available and accessible to people under all income levels, they also agree on the development of stringent regulations and tighter conditions to be imposed in the housing market.
These conditions include:
- Additional Subsidies Recovery – Applicable upon Sale of PLH Flat
- Subsidiary Recovery Rate – Different for all PLH Projects
- Minimum Occupation Period (MOP) – 10 Years
- Strict Rental Conditions – Complete Flat Rental Disallowed
- Strict Eligibility Conditions – Applicable to Buyers of PLH Flats
- Shorter Lease Periods for Sale of Flats
- Sell Back Options to Government Only
The members of the MND and HDB remain committed to their values regarding public housing. They are dedicated to ensuring that all Singaporeans should be able to enjoy the benefits of Prime Location Public Housing (PLH) projects.
Prospective buyers, on the other, must develop a deep understanding of the regulations and requirements before considering the purchase of flats under the PLH model. The idea is that everyone should be given the opportunity to benefit as homeowners and enjoy living in prime locations of Singapore.
