Essential occupier of a HDB unit: what are the pros and cons?

essential occupier vs co-owner of hdb pros and cons

Any person who is listed as an essential occupier in a new flat purchased directly from the Housing Board (HDB), a resale flat under the CPF Housing Grant scheme, a Design Build and Sell Scheme flat or an executive condominium, must continue to be listed, and physically and continuously occupy the flat during the five-year Minimum Occupation Period (MOP). He/ she cannot own foreign or local private property until after the five-year MOP, and HDB must be notified before the Option to Purchase for a private property is exercised.

Wait. Doesn’t this sound familiar, like the rules applied to HDB flat owners? What is the difference between an essential occupier and an owner, then?

An essential occupier, as defined by HDB, “is a family member who forms a family nucleus with the applicant to qualify for a flat from HDB”. This can be a spouse, child, parent or sibling. He/she does not have any share in the flat, even if he has paid cash for it. An owner or co-owner, on the other hand, has full rights to the flat, regardless of whether he/ she paid any money.

Being an essential occupier can have wide-reaching effects on one’s life. In extreme cases, it can lead to expensive consequences.

(Read: What happens to the HDB flat after the owner passes on?)


essential occupier vs co owner of HDB


While it is common for couples to buy a HDB flat together under the Joint Tenancy scheme, where both own equal shares of the property, some prefer to buy it under one party’s name. For example, a flat may be bought solely in the husband’s name, if he is the main breadwinner, especially if the wife does not hold a full-time job with CPF contribution to service the housing loan. Some women are listed as “essential occupiers”, even though they may have contributed with cash.

In one sad case we heard about, a father included his son’s name as co-owner of the flat, reasoning that it would be his inheritance anyway. When the father passed away, the son wanted to sell the flat immediately to fund his new home. However, his mother, who had helped to pay off the loan, refused. As she was only an essential occupant, she did not have any legal rights to the flat. She felt she was being chased out of her own home, leading to estranged ties.

On the other hand, the essential occupier role carries heavy weightage, too. In a 2011 case reported by The Online Citizen, a Malaysian, who is a permanent resident of Singapore, and her son bought a replacement flat together, when their old home was chosen to undergo Sers (Selective En Bloc Redevelopment Scheme). Her husband worked in Malaysia and stayed with them only occasionally. She told the Sers officers about this, and was allegedly advised to list him as an occupier – even though it was unnecessary, as her application had already met all requirements.

When collecting the keys to their flat, they truthfully answered that her Malaysian husband had bought a property in Malaysia 2005. Deemed to have breached the condition that no listed occupier is allowed to own a private property in Singapore or a foreign country, this family had to give up their new flat, even though they were awarded $192,000 for their previous home. The father allegedly gave up his Malaysian property, but their appeals to HDB were reported to be in vain.

(Read: What is ABSD and BSD?)


Having the right essential occupiers in your application can make a difference in successfully balloting for a Build-To-Order (BTO) flat. For example, the Parenthood Priority Scheme allocates up to 30 per cent of BTO units and 50 per cent of Sale of Balance Flat units to applicants whose essential occupiers include at least one Singaporean child aged below 16, whether the child is one’s offspring or adopted. Even better if the applicant has three kids, as the Third Child Priority Scheme will be applicable to them.

Some singles face this dilemma: Should they list themselves as an essential occupier or a co-owner, when their parent(s) buy a subsidised flat? If you have the cash and do not mind not enjoying any legal ownership or sales proceeds in future, it is wiser to be an essential occupier. Otherwise, should you want to buy another subsidised flat in future, you will be considered a second-timer.

Take *Lynn’s conundrum as a lesson. “I preferred to be an essential occupier but Mum couldn’t qualify for a loan on her own when we bought our three-room BTO flat. We had to use my CPF funds to help pay for it, so I had to be a co-owner,” she explained. However, after she got married, her husband moved in and could not get along with her mum. As Lynn’s name was tied to the flat, they could not buy another subsidised flat and move out. Her mum could not afford to buy over her share, either.

“Even though I am willing to forgo the CPF money that I’d already paid, that is not allowed as all CPF funds used have to be returned with interest.” Lynn’s options: Raise enough money for her mum to “buy over” her share and return the funds to her CPF; persuade her mother to sell and move into her own smaller flat; or the couple save up for a private property and move out eventually. Meanwhile, the stress has already caused a strain in her relationships with her mother and husband.

(Read: What to know if you are buying your first property as an investment)

essential occupier HDB pros and cons


When *Felicia’s divorce from her husband was finalised, her immediate concern was to sell their matrimonial home and buy a subsidised HDB flat with her five-year-old daughter, *Jessie. As the court had granted both parties shared care and control of their child, they faced a problem. Only one parent can list Jessie as an essential occupier, in order to buy a subsidised flat.

In July 2018, Members of Parliament Louis Ng (Nee Soon GRC), Rahayu Mahzam ( Jurong GRC) and Alex Yam (Marsiling-Yew Tee GRC) urged the Government to ease the rules for divorced parents who share care and control of their children – about 4 per cent of divorce cases in Singapore – and allow both parents to list their children’s names in their applications.

Rahayu, a lawyer who handles family law and divorces, explained that HDB’s policy “does not gel with the principle of a shared care and control arrangement, because parties have actually been ordered to allow the children to live with them”. This archaic rule also defeats the Government’s recent resolve to better support divorced families, when it removed the time bar for divorcees having to wait three years before they can apply for a second subsidised flat, Ng pointed out.

Although Senior Parliamentary Secretary for Home Affairs and National Development Sun Xueling assured that the HDB would “exercise flexibility” to help couples who cannot agree on a solution, she argued that this rule was to be “consistent and fair to all HDB flat owners, where each person can be listed in only one HDB flat”.

While HDB is trying to do the right thing, is every iron-clad rule really – well – essential? Why can’t essential occupiers be allowed to use their CPF funds if they want to, even if they don’t own the flat? Is it fair that they cannot buy private property, when he/she doesn’t even own the flat his name is listed in? After all, this essential occupier is not depriving a needy family of public housing. Perhaps it is time to reconsider the weight that essential occupiers shoulder.

(Read: Common hidden costs of owning a condo unit)

Being a Co-Owner

PROS: Being a co-owner means both parties’ CPF funds can be tapped into and you can protect your interest, if you’re already co-paying in cash. Otherwise, should the sole owner pass away without a will, you will not inherit the flat automatically. Instead, the Intestate Succession Act kicks in. If you don’t have children but your late spouse has surviving parents, you get only half of the property, while they get the rest.

CONS: If both co-owners’ names are bonded to a HDB flat and you want to buy a private property for investment, you will be subjected to Additional Buyer’s Stamp Duty (ABSD) of 12 per cent imposed on a second property. By leaving one party’s name free, he/she can avoid the taxes plus take up a bigger bank loan of maximum 75 per cent for a first property loan, instead of the maximum of 55 per cent granted for a second loan. Of course, the person applying for the bank loan for the private property must also have enough cash and a big enough salary bracket to qualify for the loan quantum!

The Expert Says...

Be sure to read up on the latest regulations and proper procedures on changing ownership or essential occupier/s of your flat, so you are aware if you meet the criteria laid out by the Housing and Development Board. Visit this link for the details.

*Not their real names

Home & Decor’s property columnist since 2011, Stella Thng is a polytechnic lecturer-cum-writer with over 25 years of experience in publishing. She bought her first home at 21 and loves sniffing out good property deals.