Changes in Minimum Occupation Period Rules
Recently, uncle Lee announced a shock changes in minimum occupation (MOP) period for HDB. It rules out that MOP increase from 3 to 5 years , and disallowing concurrent ownership of private property during the MOP. With the new rules, current private property owner (such as condo) must sale their private property within 6 months after buying an HDB. (http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/895204E2295BDC394825778E007FA919?OpenDocument)
So, if you’re property investor type; you have to change the strategy based on current status and plan.
1. Currently own private property and willing to buy HDB
The most important thing is, the private property should not under your possession. So you have to create a legal body to own the your private property. For example, you can register a small company and change the ownership of your private property to that company before you buy the HDB.
2. Currently own private property and willing to buy another private property
Continue with your plan since the rules doesn’t affect to this scenario.
3. Currently own HDB and willing to buy private property
You must wait until the MOP expires (5 years, after completion of the sale process). During the waiting time, you can use your money in other investment instrument – such as gold, stock or unit trust. After MOP expires, you can buy the private property.
4. Doesn’t own any property
You should check your pocket to be able to decide whether to buy private property or HDB. Since buying an HDB requires eligibility status, you may been enforced to buy private property instead of HDB.
I know that some people may choose to buy only private property since they have lot of capital for investment. However, from my point of view, buying HDB should be put in the first option. The reason, HDB price is controlled by the government – and it is “subsidized”. And the more important is, you don’t have a risk of property disposal when you’re ready for the second property.
Finally beyond all the strategies, the government has power above anybody; so beware! Be prepare with contingency plan.