I’m Retired And Own A Freehold Condo — Should I Downgrade To An HDB Flat?

Hi there Stacked Readers. In most Saturday newsletters, I use this space to talk about something in the property market. Looking back over the past few years, and the sheer number of things I’ve said, the realisation hit me: I am being like that weird uncle at parties who monopolises one part of the sofa, and loves the sound of his voice way too much. It’s time for a change. 

This week, as I’ll be doing occasionally over the next few weeks, I’ll instead do what disgruntled people call “your job, Ryan, for once.” I’ll be answering your property questions to the best of my ability, with what information is made available to me. 

Wait a second, though, doesn’t Stacked already have a Q & A section? 

We do, and every week we answer some questions with the intensity of a Poly lecturer who still hasn’t given up hope. This will carry on as usual. The difference is that, in those full multi-page reads that could last all the way from Tampines to Jurong on the MRT, we tend to need a lot of in-depth information. 

There are also time constraints that prevent us from answering every single question to that level of depth. And we want to engage with as many of our readers as possible, and be as useful to you as possible. 

As such, I’ll be covering the responses to more general or quick questions, which don’t require the page count of a Russian novel to answer. Do feel free to write in if you just have a quick query, or prefer not to disclose too much detail about your situation (and for more in-depth responses, do reach out to us here or email us at stories@stackedhomes.com)

Q1: I’m 65, my Executive Apartment is fully paid, and I intend to buy a BTO in Tampines. What should I know about the $97,000 resale levy?

Because your Executive Apartment (EA) was originally a subsidised HDB flat, you will be considered a second-timer if you sell it and then buy another subsidised flat (e.g., a BTO flat). In this situation, HDB will require you to pay a resale levy.

This levy is imposed to reduce the housing subsidy on a second subsidised flat, making for a fair share of housing subsidies. However, the $97,000 amount you mentioned is surprising. 

HDB uses fixed resale levy amounts. These are based on the type of your first subsidised flat, and if that’s an EA, the levy is $50,000. 

If you have sold your first subsidised flat from 3 March 2006 onwards, you will pay a fixed amount resale levy as follows:

It’s possible that, when you were told about the $97,000, it may have been inclusive of other obligations or costs besides the levy itself, such as the refund of any used CPF monies, conveyancing fees, etc.

A quick note on how and when you pay the levy

Under HDB rules, the resale levy must be paid in cash or from the sale proceeds of your existing flat. It cannot be paid using CPF savings or financed with a housing loan.

The timing depends on when you sell your EA:

• If you sell your flat before collecting the keys to your BTO, the resale levy must be paid in cash when you collect the BTO keys.
  
• If you sell your flat after collecting the BTO keys, the resale levy will be deducted from your sale proceeds, with any shortfall made up in cash.

One final point: the resale levy only applies when you buy another subsidised flat. If instead of a BTO you buy a resale flat without housing grants – or a private property –  there would be no resale levy.

Q2: Our BTO will reach MOP this April. We work in the city and want to move closer, possibly to Tanjong Pagar. Should we choose an older but larger resale flat, or a newer but smaller one?

The “correct” answer to this varies between individuals. But from personal experience, I find that layout can matter more than size. 

Even a “large” resale flat in the central area can feel tighter than some newer flats, despite what the square footage suggests. For example: older flats may technically be bigger, but they’re also more likely to have long internal corridors that don’t receive natural light. Or they may have segmented spaces that reduce the versatility of the layout (e.g., executive maisonettes often put all the bedrooms on the top floor, which is problematic for older folks who need to climb up to the bedroom.) 

This tends to matter more over time, especially if you have work-from-home arrangements, children, or visiting parents who stay over. 

That said, older flats do tend to be larger. This is somewhat balanced out by being older, and of course having a higher quantum. But you should also consider that older flats tend to need more extensive renovation: this could add a cost of time as well. 

If your primary goal of moving is just reducing commute time, and improving day-to-day convenience, then a newer flat near Tanjong Pagar can be a rational choice. It’s probably quicker and cheaper to renovate, and you won’t need to worry about lease decay. 

But if the main goal is to have a more comfortable, long-term family home – one where you might stay for all of your life, with no concern over resale value (because you’re unlikely to ever sell), then a larger unit may be more important. 

Q3: I am a retiree and am considering downgrading from a freehold private condo to an older HDB of my preference. Should I do that, or should I hold on to the condo for passive rental income and rent a unit instead?

A big part of this answer unfortunately falls outside of my purview: that’s the realm of retirement planning. However, I can give you an example of why different retirement strategies will treat this differently. 

Some retirees prioritise cash flow above all else. For this group, selling the condo and downsizing into a flat might be sensible. The freed-up capital can be converted into a predictable income stream, which fits their overall strategy. They also don’t need to deal with things like rogue tenants, property market cycles, vacancies, etc. 

Others care more about preservation. They’d be comfortable holding on to the freehold condo as a long-term store of value; and the rental income as a way to partially monetise the property while keeping it. Quite likely, they already have income from elsewhere and don’t need the rent, but it’s a nice-to-have. 

It is your chosen retirement strategy that determines the right choice – over and above concerns like the rental yield, or the potential appreciation. It also has to be in line with how much you can actively manage the property in retirement. 

As a personal opinion, I would opt to remain a landlord only if I have reliable hands helping me (e.g., trustworthy family members.) I don’t really see myself inspecting properties, vetting tenants, or chasing down late rental payments when I’m in my 70s or older. If I don’t have the help I need, I’d rather liquidate the rental asset and reinvest in something else. 

Meanwhile, in other property news…

• Freehold doesn’t always mean guaranteed performance. Here’s what we learned from looking at the worst performing freehold condos in Singapore. 
• Would you like to buy a $300 million bungalow? Too expensive? How about just one-seventh of it? Because you can totally do that now, with this famous bungalow at Oxley Rise. 
• Why are some Central Area resale flats able to resist lease decay better than others? Find out with our Stacked Pro readers. 

Weekly Sales Roundup (09 – 15 February)

Top 5 Most Expensive New Sales (By Project)

Top 5 Cheapest New Sales (By Project)

Top 5 Most Expensive Resale

Top 5 Cheapest Resale

Top 5 Biggest Winners

Top 5 Biggest Losers

Top 5 Biggest Winners (ROI%)

Top 5 Biggest Losers (ROI%)

Transaction Breakdown

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