HDB Built-to-Order (BTO) vs Sale of Balance (SBF) Flats: 4 Pros & cons to know!

Despite Singapore’s reputation as one of the most expensive property markets globally, the housing sector remains fiercely competitive, creating challenges for first-time buyers.

Acquiring their first home can be an arduous task, with daunting odds such as competing against over 10 families for a unit or even having to attempt multiple times before finally securing their dream home.

In the face of challenging circumstances, let’s explore the benefits of BTO and SBF and how they can help you progress towards property ownership.

How does HDB Built to Order (BTO) work?

A Build To Order (BTO) flat refers to a HDB flat that is newly constructed and launched for sale before its actual construction takes place.

In the usual process, buyers typically submit their applications during the sales launch, and construction of the flat commences only after a certain percentage (usually around 65-70%) of the apartment units have been booked.

Subsequently, buyers are required to wait for a minimum period of 3 to 5 years for the completion of the flat.

On a yearly basis, HDB releases new batches of BTO flats in the months of February, May, August, and November. The upcoming BTO launch scheduled for August 2023 will introduce flats in five different estates, namely Choa Chu Kang, Kallang/Whampoa, Queenstown, and Tengah.

For those seeking flats in mature or popular estates, the competitive pricing of BTOs can make the balloting process a challenging ordeal.

Back to top

Pros and cons of BTO

As shown above, although BTOs are highly sought after by Singaporeans for housing, there are several drawbacks that can make it challenging to successfully obtain one; the most significant challenge arises from the substantial number of applicants, making the balloting process highly competitive.

Fortunately, there are multiple schemes accessible that can bring you closer to realising your dream home, provided you meet the eligibility criteria.

Considering the significance of each balloting opportunity, effective from August 2023, first-time BTO applicants who successfully receive a BTO ballot but do not choose a flat will be classified as second-timers for a duration of one year.

If they fail to select a flat during their second BTO application, they will be ineligible to apply for a BTO flat for one year.

Back to top

Are you eligible for BTO?

Before proceeding with your BTO application, it is important to review the eligibility criteria outlined below.

To be eligible for the purchase of a BTO flat , you must meet one of the following requirements:

• You must be a Singapore citizen applying with at least one other citizen or permanent resident (PR) as a family nucleus. This family nucleus can consist of your spouse and children (if any), parents and siblings (if any), or children under your legal custody (applicable only for widowed or divorced applicants).
• You must be applying with your fiancé(e) and be ready to register your marriage before acquiring your flat if you are applying for additional or Enhanced CPF Housing Grant, or within 3 months of taking possession of the flat.
• You must be a single citizen aged 35 and above (only applicable for 2-room flats in non-mature estates)
• You must be a citizen with a spouse who is a non-citizen on a visit pass or work pass (only applicable for 2-room flats in non-mature estates)
• You must be a single citizen aged 35 and above, and you can apply for a flat with up to three single citizen co-applicants (only applicable for 2-room flats in non-mature estates)

Back to top

Income Ceilings for HDB BTO flats

In addition, the following are the income ceilings for different types of flats:

• 2-ROOM FLEXI FLAT: $7,000, or $14,000 for short-lease flats (max 45-year lease)
• 3-ROOM FLAT: $7,000 or $14,000 depending on balloted project
• 4-ROOM FLAT OR BIGGER: $14,000, or $21,000 if you’re purchasing the flat as an extended/multi-generation family

It is essential that you do not possess any other property, whether it is an HDB flat or a private property, in Singapore or abroad. If you are currently a property owner, you will be required to divest your ownership within 6 months from the date of key collection.

Back to top

What is Sale of Balance Flat (SBF)?

The Sale of Balance Flats (SBF) HDB scheme essentially involves a process of gathering unsold flats from previous BTO launches, surplus flats from Selective En bloc Redevelopment Scheme (SERS) projects, and any flats repurchased by HDB.

Back to top

Pros and cons of SBF

You may be wondering - what stigma can there be when it comes to housing? As suggested by its name, SBF is the sale of remaining units that are sometimes perceived as undesirable or unwanted by prospective buyers. This perception can make some individuals hesitant to apply for this type of flats.

If you are reluctant to purchase a resale flat due to the current record-high prices and are seeking an alternative to BTO flats, you might want to consider an SBF flat. Contrary to negative perceptions, SBF flats are not as unfavorable as they may initially seem.

As opposed to BTO launches where you apply for a specific project, HDB SBF launches necessitate applying for a specific flat type within the estate.

This implies that you have a wider selection of HDB estates and BTO launches to choose from, compared to the limited projects released during the quarterly BTO launches. Additionally, there is more readily available information about balance flats and the respective developments they are a part of.

With the opportunity to select from various past BTO projects, you have the additional advantage of choosing your preferred completion time for your ideal home.

Back to top

Eligibility criteria for SBF

To be eligible for the purchase of a SBF flat, those applying as a family nucleus, or with your fiance/fiancee/spouse must meet the following requirements:

• Must meet the criteria outlined in one of HDB’s existing eligibility schemes:
  ~ Public Scheme
  ~ Fiance/Fiancee Scheme
  ~ Orphans Scheme
• Citizenship
  ~ At least one of the applicants must be a Singapore Citizen
  ~ At least one other applicant must be a Singapore Citizen or Singapore OR
  ~ Permanent Resident
• Age
  ~ At least 21 years old
• Within the income ceiling of
  ~ $14,000 (families)
  ~ $21,000 (extended families)
• Property ownership
  ~ Neither you nor any other applicants or occupiers listed in the flat application own any other property, whether it is located overseas or within Singapore
  ~ You must not have disposed of any property within the last 30 months.
  ~ All applicants and occupiers listed in the flat application are prohibited from investing in private residential property from the date of the application until after the Minimum Occupation Period (MOP).
  ~ You must not have purchased a new HDB flat, Design, Build and Sell Scheme (DBSS) flat, or Executive Condominium (EC) in the past, nor have received a CPF Housing Grant previously OR
  ~ You should have purchased only one of those properties (HDB flat, DBSS flat, or EC) in the past and received only one CPF Housing Grant thus far.

First-timer single applicants applying must meet the following requirements:

• You must be a Singapore citizen
• If you are unmarried or divorced, you must be at least 35 years of age to be eligible. If you are widowed or an orphan, you must be 21 years of age or older
• You must satisfy the Ethnic Integration Policy (EIP) and Singapore Permanent Resident (SPR) quota for the specific area where your flat is located.
• Your monthly household income doesn’t exceed $7,000

Back to top

BTO vs SBF

What are some of the priority schemes offered?

In order to address the overwhelming number of applicants during each launch, the government has implemented several schemes to assist eligible individuals, some of which includes:

Priority for First-Timers

Couples consisting of both first-time and second- time applicants are treated as first-timer families and receive equivalent priority advantages.

A larger allocation of flat supply will be reserved for first-timer families in both mature and non-mature estates, as well as in projects with shorter waiting times.

If you qualify, you may also benefit from deferred income assessment and the Staggered Downpayment Scheme. These initiatives can significantly alleviate financial burdens associated with housing expenses.

First-time applicants receive two ballot chances, while second-time applicants receive one ballot chance. However, in situations where there is a high demand for flats from first-time applicants, not all first-time applicants will secure a successful ballot outcome.

Back to top

Parenthood Priority Scheme (PPS)

This scheme allocates up to 30% of BTO flats and 50% of SBF flats to eligible applicants.

For this scheme, both you and your spouse must be first-timer buyers, with a citizen child aged 18 years or below. (Adoptive parents applying for a flat must possess the Adoption Order for their child.)

If you or your spouse is expecting and can provide a doctor’s certification confirming the pregnancy, you may also be eligible to apply for the Parenthood Priority Scheme (PPS).

• Starting from the August 2023 BTO exercise, the Parenthood Priority Scheme (PPS) will
  be enhanced to encompass eligible FT(PMC) applicants and will be renamed the Family and Parenthood Priority Scheme (FPPS). Under the FPPS, a maximum of 40% of BTO flats and up to 60% of SBF flats will be reserved for eligible applicants.

Back to top

Married Child Priority Scheme (MCPS)

The Multi-Generation Priority Scheme (MGPS) facilitates married children and their parents to reside together or in close proximity, fostering mutual care and support. Additionally, fiancé and fiancée applicants are also eligible to apply under this scheme.

First-time families are allocated up to 30% of BTO and SBF flats, while second-time families are allotted up to 5% of BTO flats and up to 3% of SBF units.

To qualify for the Multi-Citizen Priority Scheme (MCPS), at least one of your parents (including widowed or divorced parents) or your married child must be a Singapore Citizen (SC) or Singapore Permanent Resident (SPR).

Additionally, if your child is widowed and has children, or is divorced but has children under their legal custody, care, and control, they may also be eligible for MCPS.

Parents/married child MUST be included in the flat application to live together with you. It is crucial to note that once you collect the keys to your new flat, the parents or married child who enabled you to qualify for the MCPS must remain living with you in the new flat for the entire minimum occupation period.

Back to top

HDB Priority Schemes

Priority schemes increase your likelihood of success in the computer ballot for flats available in both Build-To-Order (BTO) and Sale of Balance Flats (SBF) exercises.

You are eligible to apply for these schemes if you and the individuals listed in your flat application meet the required eligibility conditions.

For additional priority schemes that can provide assistance, please visit hdb.gov.sg to access more comprehensive information and detailed eligibility criteria.

Back to top

BTO vs SBF

It is crucial to highlight that the aforementioned article does not aim to sway you towards one scheme or the other. Based on your individual preferences and specific circumstances, there might be a more suitable option available for you.

Choosing between SBF and BTO flats depends on individual preferences, priorities, and eligibility. While BTO offers benefits like priority allocation and customisation, SBF provides more location choices and shorter waiting times. Consider your unique circumstances and consult HDB resources to make an informed decision on the best option for your dream home.

Back to top