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What Can We Expect From BTO Cooling Measures?

Build-To-Order (BTO) flats might take 3-5 years to be completed, and ready for the new owner(s) to move in, but it is much more affordable compared to getting a resale flat in most cases. However, the affordability of BTO flats comes along with its downside too – the time taken for the flat to be ready for move-in and the future resale price.

Cooling measures for BTO flats

National Development Minister, Mr Desmond Lee, said on a Facebook post that new BTO flats which are located in prime locations (i.e. Greater Southern Waterfront, part of the Central Business District (CBD)) may have cooling measures implemented to keep resale BTO flats affordable. One of the cooling measures to be implemented is to construct 2-room flexi units for seniors and rental blocks, wherever possible. This will improve inclusivity as well as diversity in the prime area.

The second measure which we can expect is an imposed limit on the price of resale flats and implementation of pricing measures. Despite that said, the Housing Development Board (HDB) will survey the population for a couple of months before any measures are implemented.

Why are cooling measures needed?

BTO flats are subsidised by the government to ensure that citizens will be able to have their own place when they are starting their own family or over the age of 35. After the Minimum Occupation Period (MOP) is met, some owners will sell off their BTO flat at a higher price to make a profit from the sales. In some cases, it can even go up to 30% higher than the original price.

As such, Mr Desmond Lee considered implementing new measures to even out the resale BTO property market, especially for those flats in the prime locations. This helps to prevent the prime location with BTO flats from being an estate for the wealthy.

What can we expect from the cooling measures?

The measures implemented aim to keep the resale BTO flats prices affordable for Singaporeans, encourage an inclusive community, and a diversified one.

With the limit on future resale prices, Mr Desmond Lee mentioned that BTO flats in the prime locations will be able to enjoy more subsidies as compared to those in the non-prime locations. After the MOP is met, it can be expected that the property will appreciate much more, as compared to properties in other districts. Therefore, by having the proposed cooling measures of limiting resale price in place, it will prevent BTO owners from making a huge profit from the sale of their flat and ensures fairness among all BTO flat sellers.

Before the cooling measures are implemented, we can anticipate BTO flat owners who have met the MOP to sell their property, if they are looking for a property upgrade. By doing so, it prevents their flat from being limited to a resale price.

This is similar to the cooling measure which was introduced in 2018 – the raise of Additional Buyer’s Stamp Duty (ABSD) by 5%. Upon hearing the news of the increase in ABSD, there was an increase in buyers in that year, before the implementation.

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