Tightened rules for non-selection of HDB BTO flats from August

Individuals who fail to select a BTO flat when invited will now be restricted for a year if they decide to reapply for one. The new rules are designed to ensure there are more flats available for those who are in need of them and will take effect from the August 2023 BTO launch. As a result, there may be a rush to apply for flats in the last two BTO launches of the year before the penalty kicks in. It is also hoped that the rule changes will give greater priority to specific groups of first-time flat buyers and more options for seniors and low-income singles.At the end of the day, these are changes are designed to satisfy housing demand and to reduce the pool of first-time homebuyers by increasing the penalties for non-selection of flats. It is expected that this will help more individuals to secure the flats they need more quickly and efficiently.

The government has tightened the rules regarding the non-selection of Build-to-Order (BTO) flats with the new regulations coming into effect from August 2023. This change is being made with the goal of ensuring more efficient allocations and helping those in need of housing to more quickly and securely obtain a flat.

National Development Minister Desmond Lee stated that this new rule will reduce the number of people who decline to pick a BTO flat. In a typical year, around 20,000 BTO flats are launched for sale and up to 60,000 queue tickets are allocated for applicants; the number of those who fail to select a unit is 24,000, or about 40%. By enforcing the new regulations, it is hoped that this number will decrease.

One Global Group’s senior analyst, Mohan Sandrasegeran, explains that the change is aimed at individuals who do not select a flat despite being offered one or those who do not show up for their allotted appointments. Huttons Asia’s senior director of research, Lee Sze Teck, adds that this should help more applicants to book their desired flat.

At the same time, the government is also giving greater priority to specific groups of first-time new flat buyers, offering more options for seniors and low-income singles. First-time (Parents & Married Couples) aged 40 and below, which make up around 10% of all first-time family applicants, are now given three ballot chances for a BTO flat and a higher proportion of BTO and Sale of Balance (SBF) flats is allocated to them. This is to help Singaporeans begin their journey of building wealth and capital through real estate.

ERA Singapore’s head of research & consultancy, Nicholas Mak, explains that this is being done in an effort to reduce the pool of first-time homebuyers who turn down flats despite multiple attempts in past BTO exercises.

The penalties for non-selection may cause some buyers to turn away from the HDB resale market. OrangeTee & Tie’s senior vice president of research and analytics, Christine Sun, mentions that some individuals may use the increased Central Provident The Myst Fund (CPF) housing grants to apply for a four-room or smaller resale flat if they are unable to secure a HDB BTO flat on their first attempt.

At the same time, not all first-time homebuyers desire to apply for a BTO flat due to various reasons, such as wanting to stay in a mature estate, limited availability of choice units, or a sudden change in employment status. Lastly, the current waiting period for BTO flats is longer than what it was before the pandemic, which contributes to some individuals turning to the HDB resale market instead.

By implementing stricter regulations, HDB hopes to discourage individuals who do not have genuine reasons for selecting a flat from taking up available housing units. This way, more flats are available for individuals who require them urgently, who may not have the privilege of waiting for another flat to become available.

Ultimately, the tightened rules for the non-selection of flats by HDB are intended to meet housing demand and improve accessibility to a BTO flat for those in need. It is expected that this will help more individuals to secure the flats they need more quickly and efficiently, and grant them greater priority in the process.