There will come a time when homeowners start asking themselves; Am I living in my forever home? Is it time to think about upgrading? Would staying in this current property benefit me and my family in the long run?
These are pretty huge committal decisions to make, and truth be told, the circumstances are different with every homeowner. Eventually, some homeowners will come to the conclusion that selling their homes will be the right thing to do, but they will need to consider these 2 things before they do so:
- The timeline they have to plan to sell their home
- The reasons they are selling their home for
So what are the 2 questions that you should be asking yourself?
1. When is the best time to sell my home?
A simple answer for this can be post-MOP.
For those who aren’t familiar with the term, the Minimum Occupancy Period (MOP) refers to the minimum period of time that is required for a homeowner to live in a flat before he or she can sell/rent it out.
This duration is usually 5 years, and it applies to most HDB properties such as Build-to-Order (BTO) flats, and Executive Condominiums (ECs). In addition, homeowners can only purchase another property after completing their MOP.
For private homeowners however, there is no MOP that they need to adhere to, but they still need to consider the Seller’s Stamp Duty (SSD) that’s payable within a 3-year holding period. We will get into that a little later in this article.
For now, let’s get back on the MOP. The MOP is implemented so as to prevent investors from quickly selling a newly-purchased unit and making a profit, and driving up the prices of public housing. This technically makes it a little easier to plan towards a timeline for when you decide to sell your home, and it is always good to know what you can do prior to reaching MOP.
Ask yourself questions like;
Should I sell immediately after MOP? Or wait a few more years?
We might understand why this might require some pondering over. You might be considering this:
- Is my property going to appreciate in the years to come?
- Would it be better to sell then?
It may seem the case for newly built flats like BTO units, as further development plans in the area could indicate an increase in the properties’ value. The table below shows the comparison made between some of the sale transactions of BTO estates between 0 to 3 years after the MOP had been reached.
|Name of BTO estate||Est psf based on Price Range||Avg psf <1 yr post MOP||Avg psf 1 yr post MOP||Avg psf 2 yr post MOP||Avg psf 3 yr post MOP|
To get a better understanding of the market prior to post-MOP, you can approach property agents for their input too. Some can advise you on the optimal times to sell your property in the year, considering festive periods when some families would avoid purchasing or selling houses.
Now that we have covered the MOP for HDB flat owners, what about private homeowners? As touched on earlier, the SSD is the property tax to look out for.
|Date of Purchase||1 yr||2 yr||3 yr||4 yr|
|On and after 11 Mar 2017||12%||8%||4%||N/A|
|Between 14 Jan 2011 and 10 Mar 2017||16%||12%||8%||4%|
For example, let’s say as a private homeowner, you purchased your property on 1st June 2017. You then decide to sell the property less than 2 years later due to personal circumstances, on 20th April 2019, at $2,200,000. Since your SSD payable is now 8% into the second year of stay, the tax you then need to pay would be:
$2,200,000 X 8% = $176,000
Since 11th March 2017, the SSD payable has been adjusted till the 3rd year. On the 4th year onward homeowners need not pay the tax when they decide to sell their homes. The SSD is applicable to all homeowners, but for HDB flat owners who are looking to sell your flat after reaching their MOP of 5 years, they are usually unaffected by the stamp duty.
A few quick points to note when you decide to sell your home:
For HDB flat owners:
- Is your MOP ending soon?
- Is there a need to sell your home when MOP ends?
For private homeowners:
- Do you need to pay the SSD when you sell?
- If so, how much will it be?
2. Why am I selling my home?
As mentioned earlier, the MOP and SSD can act as timelines for homeowners to plan for when to sell their property should they decide to. Since this will be a crucial time for such decisions, the next thing homeowners should consider are the reasons they choose to sell their homes for.
Some homeowners may decide to sell their homes and upgrade to a bigger one, and it’s not uncommon for many Singaporeans to target condominiums as their next home to purchase for reasons such as;
More accessible amenities
For some families, having access to compound facilities such as a gym, tennis court, or swimming pool adds to the attraction of staying in condominiums.
More spacious homes
The idea of having more space is always attractive too. For a growing family, privacy is important and getting a bigger home can be a way to plan for that.
Depreciating Property Value
Some people assess a property’s value to decide whether it is worthwhile to hold on to it, and if it’s not, homeowners can find it better to sell it and perhaps set schema 'the' proceeds to fund the downpayment on their future home.
We took a look earlier at the psf select of HDB flats post MOP, and it can be observed that they tend to depreciate in just a 3-year window. This of course can’t be said for all HDB developments in Singapore, but many believe that even if their prices go up, they do not appreciate much over time, and this is because HDB flats in Singapore will always be affordable housing for the masses.
A Change in Priorities in Life
This can occur quite frequently too, for a variety of reasons. Some homeowners decide to sell their flats and get one closer to their elderly parents. Some may sell to get a home closer to their workplaces, or their children’s primary schools.
For new parents, their child may be attending school in a couple of years, and therefore priorities may shift towards giving their children the best chance to enroll in a popular school, so they may choose to stay in a location closer to the school in order to win the education ballot during their child’s Primary One registration.
Working backwards, some parents may take this time to explore their options and research upcoming developments, before they commit to selling their current home.
To Sum it Up
Selling a home can be a huge step to take, and especially so for first time homeowners. It’s crucial to know when you can start planning to sell, and also be clear of the reasons you are doing so.
Finding out when your MOP ends is a good first step, as it lets you know the timeline you can work with should you choose to sell your property, and it also allows you to explore your options for the reasons you are deciding to sell.
If you need more information, always feel free to approach a property agent. They can advise you on a good time to sell your home based on your needs and interests in mind. With these factors being considered, you can put yourself in a position to make an informed decision for you and your family when it comes to selling your property.