New BTO projects to be classified as Standard, Plus & Prime from mid-2024
From the second half of 2024, Singapore's public housing will no longer be classified as mature and non-mature estates. Instead, new Build-to-Order (BTO) projects will then be classified as "Standard", "Plus" and "Prime" projects in the new framework.
This was announced by Prime Minister Lee Hsien Loong at the National Day Rally on Aug. 20, 2023.
This new classification should better reflect the locational attributes of BTO projects and will give potential homebuyers access to more affordable BTO flats in attractive locations.
New framework to kick start from second half of 2024
There would be no change to the classification of existing flats and the new classification will come into effect in the second half of 2024, according to a joint release by the Ministry of National Development (MND) and Housing & Development Board (HDB).
This means that current homes or homes that have already been booked will not be reclassified.
HDB will also announce the classification of the BTO projects on offer at upcoming sales launches.
The three types of BTO projects come with different levels of subsidies and varying conditions:
Standard housing projects will come with the standard subsidies and restrictions that are applied to current BTO flats.
Most HDB projects will still be Standard projects, PM Lee noted.
Plus projects will be at choicer locations within different regions of Singapore, with better connectivity and have closer proximity to amenities such as schools and community clubs.
For example, a BTO project at Bayshore in Bedok will likely be a Plus project because it is a short walk to two MRT stations, a community club, and East Coast Park.
Plus flats will come with more subsidies so that more people can afford it but they will also be subject to tighter restrictions compared to Standard flats.
Prime flats will be built in the choicest locations, mostly in central Singapore.
Currently, flats of this type are offered under the Prime Location Housing model. One example is Bukit Merah Ridge.
They will come with the most subsidies among the three categories, but they will also have the tightest restrictions.
Key features of Plus housing model
The new category is the Plus housing model.
Higher subsidies than Standard flats
PM Lee stated that the new Plus flats would be priced with more subsidies, over and above the subsidies provided for Standard BTO flats.
"This will moderate the prices of Plus flats, and put them within reach of more households," he explained.
10-year MOP and other restrictions
However, for the sake of fairness, HDB will also impose more restrictive sale conditions, he said.
Plus flat owners will have to observe a longer Minimum Occupation Period (MOP) of 10 years.
PM Lee said this would favour buyers who are planning to stay there for the longer term, and discourage those who are thinking of "flipping the property" and selling it as soon as they can.
Additionally, if the Plus flat is sold, there will be a subsidy recovery applied on the resale price, to claw back the extra discounts given to the buyer when purchasing the flat.
The subsidy recovery rate for Plus flat buyers will be lower than that for Prime flats.
Lastly, there will be an income ceiling on resale buyers to moderate resale prices and help to maintain a better social mix, PM Lee said. More details will be shared in due time.
Why the need for the new classification?
Evolving housing landscape
PM Lee noted that the "simple framework" of mature and non-mature estates, which HDB has used since the 90s, will not work in the future.
This is because estates considered as "non-mature" like Jurong East, Woodlands and Punggol have become much more developed today, with "excellent connectivity and a full suite of amenities".
"So the distinction between Mature and Non-mature estates is blurring," PM Lee said.
As such, choicer projects in what's supposed to be non-mature estates can be more popular than those in mature estates, which is reflected in BTO applications as discerning buyers look at specific attributes of housing projects.
Furthermore, Singapore has fewer large tracts of undeveloped land left for housing, so increasingly new HDB flats will be built within or near to existing estates.
Need to better reflect locational attributes and reduce "lottery effect"
PM Lee affirmed that HDB will continue to keep flat prices affordable, but noted that projects in choicer locations within a region pose an issue.
He raised the example of the Central Weave BTO in Ang Mo Kio, which is located next to the MRT, bus interchange, and near to other amenities.
HDB raised the selling price to reflect these attributes, but the flats were still oversubscribed likely because many hoped their flats would fetch strong resale prices, PM Lee said.
"This turns the BTO exercise into a lottery. Those who are lucky enough to ballot such a flat stand to gain a windfall upon resale, and this will not be fair to the many more who miss out," he added.
To keep such projects more affordable and attract a better social mix of residents, PM Lee cited the new Plus housing model as a solution to moderate prices.
HDB will build a good mix of projects within and across regions to cater to different needs and budgets.
"And that is how we can fulfil our commitment to keep high quality HDB flats accessible and affordable to you and your children, for a very long time to come," PM Lee concluded.
Top image from HDB / Facebook.
Article published on Mothership.