Standard , Plus, Prime HDB Flats : What are the difference and its implication on future prices of HDB?

Say goodbye to Matured and Non-Matured estate.

From the 2nd half of 2024, Build-to-Order (BTO) will have a new classification scheme-Standard, Plus or Prime. Under the new categories, different resale conditions will be attached to each housing type.

The primary purpose of this reclassification is to rein in the trend of ever-increasing HDB resale prices. With these new classifications, restrictions regarding Minimum Occupation Period (MOP), subsidies clawback, BTO eligibility of future resale owners and rental restrictions are in place. All these terms limit the pool of prospective buyers and aim to stabilise prices by demand and supply. 

Standard, Plus, Prime: What's the difference?

Standard Flats

Most Locations

This would be the usual flat classification for BTO in most cases.

MOP of Five years 

It will have a standard 5 years MOP. 

Standard Subsidies

Standard subsidies as per current BTO. 

The subsidies can be found on the HDB website.

Resale Condition 

After that, you could sell to anyone without needing them to qualify under existing BTO eligibility. This means future buyers do not require an income ceiling. Thus, you have a bigger pool of buyers. 

Rental Restrictions

Cannot rent out whole flat during MOP. However, can rent rooms if it is 3 rooms or larger during MOP. No restrictions after MOP.

Plus (From H2 2024)

Source: URA

Choice location within regions

If your BTO is built near MRT or town centres, it would likely be classified as Plus from H2 2024. The upcoming Bayshore precinct, which is close to the MRT station, community club, and East Coast Park, will be under Plus when launched.\

MOP will be increased to 10 year

MOP will be increased to 10 years. During this period, you cannot sell your flat or purchase private property. After MOP, you can sell to those who meet specific BTO eligibility. The full details still need to be released. There may be similar MOP restrictions for resale buyers. 

Subsidies will be increased.

There will be more subsidies for such housing. This is to offset the price and make it more affordable.

Subsidy Clawback

Some Subsidy clawback will be introduced for Plus BTO resale.

Resale Condition

There will be some resale conditions. Future buyers would require to meet some of the BTO restrictions. An income ceiling base on BTO eligibility (currently 14K)  will be imposed. 

Rental Restrictions

Rental of the whole flat is not allowed even after MOP. Renting of spare rooms is permitted. With this restriction, owners will have to stay in the flats even if they purchase private property in the future. The private property purchased would be used for investments instead.

Prime (Since Nov 2011)

Source: URA

Currently known as Prime Location Public Housing (PLPH). It will be known as Prime from henceforth.

Choicest and most central locations

This would apply to the city centre and surrounding towns. An example is the Greater Southern Waterfront precinct.

MOP will be increased to 10 year

MOP will be increased to 10 years. During this period, you cannot sell your flat or purchase private property. 

Subsidies will be increased.

There will be more subsidies for such housing. This is to offset the price and make it more affordable. These subsidies will likely be fixed for each project and not affected by your income.

Subsidy Clawback

A percentage of the resale price will be clawed back. The subsidy recovery percentage is commensurate with the extent of the additional subsidy provided. Details will be provided when the projects under PLH are launched for sale.

Resale Condition

Resale buyers who buy Prime HDB must fulfil BTO Eligibility criteria (e.g. income ceiling, citizenship). Resale applicants must not own or have interest in private property and disposed of any in the last 30 months ( instead of the current 15 months for those under 55)

Rental Restrictions

Rental of the whole flat is not allowed even after MOP. Renting of spare rooms is permitted. With this restriction, owners will have to stay in the flats even if they purchase private property in the future. The private property purchased would be used for investments instead.

Pot of Gold disappearing?

Given the higher restrictions on Plus and Prime BTO, the lottery effect for Plus and Prime may be reduced as the pool of buyers for such properties would be restricted by eligibility and income. The windfall may be smaller than before.

Two significant factors would create a dent in demand. The 10-year MOP would be too long for most buyers. For first-time BTO buyers, this may equate to a wait of almost 15 years from application to the end of MOP before the chance of getting a private property. This would restrict future planning due to geographical immobility.  

The second factor to consider is rentability. Without the ability to rent the whole unit, owners would have to stay in the hdb even after MOP. As rental could be a major source of income to fund future property upgrading, this would restrict financial options for the buyers.

Conversely, those holding on to existing or standard properties near plus or prime areas may benefit. Without the same restrictions, future buyers may opt for such flats instead.

Regardless, if affordability is the impetus for these changes, having this classification could achieve that goal. After all, the idea of public housing is to put a roof over one's head rather than using it as a stepping stone to increase one's wealth. Exchanging a pot of gold for some for the stability and assurance of future generations of having an affordable place to stay would be wise in the long run.