essential occupier vs co-owner of hdb pros and cons

*Editor’s Note: Article updated to answer readers’ questions

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 (DBSS) flat or an executive condominium (EC), must continue to be listed, and physically and continuously occupy the flat during the five-year Minimum Occupation Period (MOP).

He or 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.

How to apply for HDB Essential Occupier?

I recently applied to change my HDB co-ownership status to occupier. Now, if you’re looking to do the same, here’s how my spouse and I did it.

Be mindful that this is not legal property advice, but a sharing of how we navigated this elusive essential occupier concept. A friend managed to change her ownership status to essential occupier, and our fellow BTO neighbours successfully did so too in 2022.

Everyone has different reasons for doing so: some farsighted couples plan to avoid ABSD for future properties, while others may just want an easier divorce (if it happens).

Note that essential occupier and “decoupling” are often used interchangeably but seem to be different concepts. In layman terms, decoupling happens when a spouse “sells” his or her stake in the property to the other spouse – and that is no longer legal in Singapore between married persons. Under this essential occupier transfer, no “selling” is involved.

Change status before key collection: Easier, apply online via HDB

Change status after key collection: At HDB Branch, may be more difficult

Step 1: Email HDB

Write in to HDB to request for ownership transfer from owner-owner to owner-occupier. There are no automated HDB forms on the HDB website for you to do this. You will have to manually email HDB via the MyRequest@HDB portal (linked).

  • Select your property
  • Update a change in family nucleus

Since HDB’s response time is notoriously slow, I waited for almost 2-3 weeks to receive a reply.

Step 2: Reassessment

HDB will inform you that, by changing ownership status, any HDB grants that you have received will be reassessed (and taken away in my case), and you will be charged Buyer’s Stamp Duty (BSD) again.

For me, I was charged $5+k to make this change. In fact, all HDB ownership transfers and changes will be charged BSD. It’s reportedly a new charge. The BSD is tiered (just like tax), and you can check and calculate it on the HDB and IRAS website based on your property’s value.

If you have received significant amounts of grant, you may want to reconsider your ownership status change.

Step 3: Redo Paperwork

Prepare both of you and your spouse’s salary pay slips and CPF contributions once again, email it to HDB again for income and eligibility reassessment. Wait for reply and reassessment.

Step 4: Visit HDB Hub

Arrange appointment for both owner and essential occupier to visit HDB Hub to sign the papers and pay BSD. Factoring 3 weeks between each reply, 2 months for change, estimated total timeline 3-5 months.


As an applicant for a flat with your spouse

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.

As an applicant for a BTO flat with family or parents

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 (SBF) 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.

essential occupier HDB pros and cons

Divorced parents listing children in flat applications

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.

Being a HDB Co-Owner Instead of Essential Occupier

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.

*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.