Hi,
In short, we wish to go for BTO at the age of 55.
We have taken 1 time subsidy when we bought our first resale 4 room flat in 1998 and sold in 2003, without paying back the levy. We bought our 2nd resale flat subsequently at the same year. We have rent out the flat in 2019 as we moved in to our new condo, and reside till now. My wife and myself are both 51 this year. We are thinking to sell our lake grande condo (2b) and rent a condo unit at Clementi near to NUS, as our daughter is studying there. Our flat will continue to rent out. At age around 54 or 55, after 30 month of disposed our condo, we could apply for BTO. And we only pay a flat levy of $40K to HDB, without the incurred interest at 55. And this new flat will be our retirement flat. I am not sure is this the best option or there is other options we didn’t think of.
Seek your advice and please feel free to contact me if you need further information.
Thank you for your time.
Regards,
(This is part of an ongoing series where we answer reader questions about the property market. If you have one of your own, send it to stories@stackedhomes.com.)
Hi there,
Before diving into the details, do note that if you’re looking to get a BTO, you’ll need to sell the HDB that you currently have as at any one time, you can only own 1 HDB.
Also considering that it will be your retirement home, lease decay won’t be a significant concern, so purchasing a brand-new flat isn’t necessary. In addition as second-timers, your chances of successfully applying for a BTO flat are lower.
Even if you secure a unit on your first try, renting while waiting for the flat to be completed could lead to substantial rental costs. Additionally, to have the interest on the resale levy waived, you’d need to purchase a new 3-room or smaller HDB flat.
With this in mind, let’s look at the numbers to determine if this option is viable. We’ll also explore some alternative pathways you might consider.
Potential pathways
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Lease out your HDB, sell Lake Grande, rent a place near NUS, apply for BTO after a 30-month wait out, and then sell your HDB.
The first option is exactly as you have described.
Since we do not have your exact figures or details about your properties, we will use hypothetical numbers for our calculations. We’ll assume that both of your existing properties are fully paid off and that you do not plan to take out a loan for your next property.
Let’s also estimate that you can rent out your HDB flat at the average rental price for a 4-room flat across all HDB towns in Q1 2024, which is $3,368/month.
Here are the 2-bedroom transactions done in 2024 at Lake Grande:
| Date | Size (sqft) | PSF | Price | Address |
| Jul 2024 | 614 | $1,760 | $1,080,000 | 2 Jurong Lake Link #04 |
| May 2024 | 721 | $1,803 | $1,300,000 | 8 Jurong Lake Link #03 |
| May 2024 | 667 | $1,888 | $1,260,000 | 2 Jurong Lake Link #12 |
| Apr 2024 | 614 | $1,956 | $1,200,000 | 6 Jurong Lake Link #07 |
| Mar 2024 | 721 | $1,942 | $1,400,888 | 8 Jurong Lake Link #06 |
| Mar 2024 | 775 | $1,813 | $1,405,000 | 8 Jurong Lake Link #11 |
| Mar 2024 | 818 | $1,736 | $1,420,000 | 10 Jurong Lake Link #05 |
| Jan 2024 | 818 | $1,711 | $1,400,000 | 10 Jurong Lake Link #04 |
| Jan 2024 | 818 | $1,797 | $1,470,000 | 8 Jurong Lake Link #09 |
Since we do not have information about the size of your unit, we will assume an average transacted price of $1.33M as your selling price.
Let’s now take a look at the 2-bedroom rental rates of condominiums that are in the vicinity of NUS:
| Project | Average 2-bedroom rent (Jan – May 2024) |
| West Bay Condominium | $3,629 |
| Blue Horizon | $3,960 |
| Westcove Condominium | $4,278 |
| The Vision | $4,169 |
| Clementiwoods Condominium | $4,600 |
| Varsity Park Condominium | $6,060 |
To be conservative, let’s estimate that you rent a unit at West Bay Condominium at $3,629/month.
For calculation purposes, we will use a 10-year horizon. We will put the timeline in point form for easier reading:
- Sell Lake Grande
- Sales proceeds (CPF + cash): $1.33M
- Apply for BTO after 30 month wait-out period
- Assuming you get a unit on your first try, wait 4 years for BTO to complete
- Let’s say you purchase a unit at $400,000. This is about the cost of a mature/prime 3-room BTO.
- Initial costs required
| Option fee | $2,000 |
| 10% down payment when signing the Agreement of Lease | $38,000 |
| BSD | $6,600 |
| Total | $46,600 |
- Costs required upon key collection
- Do note that you will still be charged the percentage graded resale levy at 22.5% (minimally $40K) of the sale price or 90% valuation of your first subsidised flat, whichever is higher
- Since we do not know how much you sold your flat for, we will use a resale levy of $40K for the calculation
| Remaining 90% payment | $360,000 |
| Resale levy | $40,000 |
| Total | $400,000 |
Total costs (excluding property value): $46,600
- Rent West Bay Condominium at $3,629/month for 6.5 years (30 months + 4 years)
- Rental cost: $283,062
- Rent out your HDB at $3,368/month for 6.5 years
| Rental income | $262,704 |
| Town council service and conservancy fees (assuming $72/month) | $5,616 |
| Property tax | $36,940 |
| Agency fee (payable once every 2 years) | $11,013 |
| Total gains | $209,136 |
- Sell HDB – Assuming the selling price to be the average 4-room HDB flat price across all towns in Q1 2024 at $616,757
- Sales proceeds (CPF + cash): $616,757
- Stay in BTO for 3.5 years
| Town council service and conservancy fees (assuming $50/month) | $2,100 |
| Property tax | $560 |
| Total costs | $2,660 |
Total costs if you were to take this pathway: $46,600 + $283,062 + $2,660 = $332,322
Total funds (CPF + cash) available (including rental gains from HDB): $1,330,000 + $616,757 + $209,136 = $2,155,893
Total funds (CPF + cash) remaining after deducting cost and value of HDB: $2,155,893 – $332,322 – $400,000 = $1,423,571
Lease out your HDB, sell Lake Grande, rent a place near NUS, sell your HDB and buy another resale flat
This option is similar to the first pathway, but by purchasing a resale flat, you eliminate the construction wait time and thus avoid paying a resale levy. Since your daughter will likely finish her studies in a couple of years, you could rent a place closer to NUS while renting out your HDB. This means that instead of selling Lake Grande immediately, you could rent it out for another 2.5 years before selling and waiting out the 15 months. This would help cover some of the rental costs incurred. For calculation purposes, let’s assume you rent at West Bay for 4 years.
Cost of renting West Bay for 4 years: $174,192
Renting out the HDB at $3,368/month for 4 years
| Rental income | $161,664 |
| Town council service and conservancy fees (assuming $72/month) | $3,456 |
| Property tax | $22,732 |
| Agency fee (payable once every 2 years) | $7,342 |
| Total gains | $128,134 |
Sales proceeds from selling HDB (CPF + cash): $616,757
Renting out Lake Grande for 2.5 years
The average rent of a 2-bedder in Lake Grande from January to May this year is at $4,493. Let’s assume this to be the rental price.
| Rental income | $134,790 |
| Maintenance fees (assuming $250/month) | $7,500 |
| Property tax | $22,740 |
| Agency fee (payable once every 2 years) | $4,897 |
| Total gains | $99,653 |
Sales proceeds from selling Lake Grande (CPF + cash): $1.33M
If you’re buying a resale flat, there are no restrictions on the flat type that you can purchase, but in this scenario let’s say you were to purchase a 3-room flat at the average price of $408,257 and stay in it for 6 years.
| BSD | $6,847 |
| Town council service and conservancy fees (assuming $50/month) | $3,600 |
| Property tax | $1,020 |
| Total costs | $11,467 |
Total costs if you were to take this pathway: $174,192 + $11,467 = $185,659
Total funds (CPF + cash) available (including rental gains): $1,330,000 + $616,757 + $128,134 + $99,653 = $2,174,544
Total funds (CPF + cash) remaining after deducting cost and value of HDB: $2,174,544 – $185,659 – $408,257 = $1,580,628
Remain status quo, rent out both Lake Grande and your HDB, and rent a place near NUS
It could make sense to keep both properties even during retirement, as you can rent out one of them to generate passive income.
Suppose you rent at West Bay for 4 years while renting out both your properties, then move back into Lake Grande for another 6 years while continuing to rent out the HDB.
Renting out Lake Grande for 4 years and staying for 6
| Rental income | $215,664 |
| Maintenance fees (assuming $250/month) | $30,000 |
| Property tax | $45,228 |
| Agency fee (payable once every 2 years) | $9,794 |
| Total gains | $130,642 |
Renting out the HDB at $3,368/month for 10 years
| Rental income | $404,160 |
| Town council service and conservancy fees (assuming $72/month) | $8,640 |
| Property tax | $56,830 |
| Agency fee (payable once every 2 years) | $18,355 |
| Total gains | $320,335 |
Cost of renting West Bay for 4 years: $174,192
Total gains if you were to take this pathway: $130,642 + $320,335 – $174,192 = $276,785
Since you are not selling either property, the cash available to you will be lower, but you will benefit from a steady stream of passive income each month.
Keep Lake Grande, sell your HDB, rent a place near NUS
If legacy planning is a consideration, private property is generally more advantageous since there are fewer eligibility conditions for inheritance. However, even if you leave behind an HDB flat that your daughter cannot inherit, she will still receive a substantial amount from selling the property. So if your goal is to leave a property, retaining the private property is preferable.
In this instance, let’s assume that you rent out Lake Grande for 4 years while renting a place near NUS, then move back into Lake Grande after that.
Sales proceeds from selling HDB (CPF + cash): $616,757
Cost of renting West Bay for 4 years: $174,192
Renting out Lake Grande for 4 years
| Rental income | $215,664 |
| Maintenance fees (assuming $250/month) | $12,000 |
| Property tax | $36,384 |
| Agency fee (payable once every 2 years) | $9,794 |
| Total gains | $157,486 |
Staying in Lake Grande for 6 years
| Maintenance fees (assuming $250/month) | $18,000 |
| Property tax | $8,844 |
| Total costs | $26,844 |
Total costs if you were to take this pathway: $174,192 + $26,844 = $201,036
Total funds (CPF + cash) available (including rental gains): $616,757 + $157,486 = $774,243
Total funds (CPF + cash) remaining after deducting cost: $774,243 – $201,036 = $573,207
Sell Lake Grande, rent out your HDB, rent a place near NUS
This will be the same situation as the above just that you’ll be keeping the HDB instead.
Sales proceeds from selling Lake Grande (CPF + cash): $1.33M
Cost of renting West Bay for 4 years: $174,192
Renting out the HDB for 4 years
| Rental income | $161,664 |
| Town council service and conservancy fees (assuming $72/month) | $3,456 |
| Property tax | $22,732 |
| Agency fee (payable once every 2 years) | $7,342 |
| Total gains | $128,134 |
Staying in the HDB for 6 years
| Town council service and conservancy fees (assuming $72/month) | $5,184 |
| Property tax | $2,520 |
| Total costs | $7,704 |
Total costs if you were to take this pathway: $174,192 + $7,704 = $181,896
Total funds (CPF + cash) available (including rental gains): $1,330,000 + $128,134 = $1,458,134
Total funds (CPF + cash) remaining after deducting cost: $1,458,134 – $181,896 = $1,276,238
What should you do?
Let’s do a quick summary of the various pathways:
| Potential pathways | Properties held | Costs incurred | Funds available (CPF + cash) |
| Lease out your HDB, sell Lake Grande, rent a place near NUS, apply for BTO after a 30-month wait out, and then sell your HDB | 1 HDB | $332,322 | $1,423,571 |
| Lease out your HDB, sell Lake Grande, rent a place near NUS, sell your HDB and buy a resale flat | 1 HDB | $185,659 | $1,580,628 |
| Remain status quo, rent out both Lake Grande and your HDB, and rent a place near NUS | 1 HDB, 1 condo | $174,192 | $276,785 |
| Keep Lake Grande, sell your HDB, rent a place near NUS | 1 condo | $201,036 | $573,207 |
| Sell Lake Grande, rent out your HDB, and then rent a place near NUS | 1 HDB | $181,896 | $1,276,238 |
Which pathway to take depends on two key factors:
- Cash Flow Preferences: Would you prefer to cash out and have funds readily available for your retirement, or would you rather generate a monthly passive income? If you opt for the latter, you can still choose to cash out from the property/properties at a later time.
- Legacy Planning: Are you planning to leave the property to your daughter? If so, private properties have fewer eligibility requirements for inheritance.
Options 1, 2, 4, and 5 allow you to cash out from one or both of your properties. If you prefer having liquid funds over receiving monthly passive income, these options are worth considering.
Option 1 (which you initially considered) is feasible, but it comes with uncertainties. As a second-timer, your chances of securing a unit are lower. Additionally, to waive the interest on the resale levy, you’d need to opt for a 3-room or smaller unit. Otherwise, there’s a 5% interest accrued per annum on the percentage graded resale levy which will be a large sum over 21 years. Also, waiving that is on a case-by-case basis, and they’re applied to those with financial hardships so this may not be applicable in your case. Moreover, unless you move back into your existing HDB flat, you’ll incur significant rental expenses while waiting for the BTO to be completed.
Given that this will be your retirement home and you do not plan to sell it, there’s no need for it to be brand new. Therefore, you could consider Option 2, where you purchase a resale flat, over Option 1.
Options 4 and 5 involve less hassle as you are only offloading one property. However, the property you retain must meet your living needs.
With Option 3, since you won’t be cashing out from either property, you’ll have fewer funds available immediately but will benefit from passive income to support your retirement. This may be preferred if you have no real need to unlock the cash right away, and having a monthly passive income could serve you nicely. If you ever require more cash later on, you could always sell one of them too.
Ultimately, the best pathway depends on your retirement goals and plans and this is quite personal, but we hope the numbers and pathways illustrated above will help you better make a decision.
If you ever wish to have a more personalised consultation including which developments to consider and its unit/price analysis, feel free to reach out to us here.
At Stacked, we like to look beyond the headlines and surface-level numbers, and focus on how things play out in the real world.
If you’d like to discuss how this applies to your own circumstances, you can reach out for a one-to-one consultation here.
And if you simply have a question or want to share a thought, feel free to write to us at stories@stackedhomes.com — we read every message.
1 Comments
As usual, over analysis. Answer is NO. The couple now has one HDB and one condo. Why sell 2 properties to buy only 1 hdb.? Do nothing.