Can I own a HDB and a private condo at the same time ?

Can I own a HDB and a private condo at the same time ?

Table of Contents

Introduction

Many of us Singaporeans live in HDB and HDB is an unique asset that we will come to possess in our lifetime as real estate owners.

Due to government measures, HDBs are often priced at a reasonable quantum and could be situated in attractive locations.

For those of us that have established our lives around our current HDB, living near our child school and parents home, with low or no outstanding home loan. Keeping our current HDBs while pursuing our aspiration of owning a second private condo would be a challenge that we need to deal with.

In this article we will address the question of whether you can own both a HDB and a private condo at the same time, the challenges you will face and the most effective means to go about achieving it.

Is it possible to own both a HDB and a private condo simultaneously ?

In short, yes, it is possible to own both a HDB and a private condo at the same time.

But this is only possible if you are in a household that comprises at least one Singaporean citizen, then you will be allowed to retain your HDB, while purchasing a second private property.

As a cautionary note, it is not as simple as it seems, there are several criterias and regulatory constraints that we will need to satisfy and overcome in order to achieve our goal. We will specifically touch on this in later sections.

Bad news – for Singaporean PRs, you are not allowed to own both HDB and condo at the same time.

Singapore PRs will not be allowed to own both a HDB and private condo at the same time. If Singapore PRs were to purchase a private condo, they will be required to dispose of their HDB within a 6 months time frame.

The start date for the 6 months time frame will begin as soon as your purchase option exercise date for your private condo and you will need to notify HDB before you exercise your option to purchase.

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Factors that needs to be considered by Singaporean Citizen when looking to purchase private condo while holding onto HDB

As an overview, these are the regulatory factors that a HDB owner would need to consider when purchasing their second private condominium.

  • Minimum occupation period – MOP
  • Buyer stamp duty – BSD
  • Additional buyer stamp duty – ABSD
  • Loan to value limits – LTV
  • Total debt servicing ratio – TDSR

Minimum occupation period – MOP

In order to retain your HDB unit, while purchasing a second private condo, you would first need to fulfil the minimum occupancy period.

Minimum occupancy period is a period in which HDB owners are not allowed to do the following

  • Rent out or sublet the entire unit
  • Dispose of the HDB unit
  • Purchase another private property in Singapore or overseas

The start date for MOP begins the day you receive the keys and take possession of your flat.

The end date considered when calculating your MOP comprises the following.

  • Date at which option to purchase is exercise when you are selling your property
  • Or the sale and purchase completion date
  • Whichever is earlier

It excludes the following period

  • Periods in which there is non occupation, when you did not live in the flat
  • Periods in which you have infringe on lease of the flat, by violating HDB regulations

The MOP duration varies for different HDB flat types, refer to the following table for different MOP durations.

HDB Flat TypeMinimum Occupation Period (MOP)
Executive Condominium5 years
Design Build and Sell Scheme5 years
New HDB flats – Standard – excluding flats purchase under plus, prime location model5 years
New HDB flats – Plus and Prime location model10 years
Resale HDB flats (2-room or bigger, applied on or after 30 August 2010)5 years
SERS flats (Selective En Block Redevelopment Scheme)5 years after receiving keys
Flats bought under the Fresh Start Housing Scheme20 years

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Buyer Stamp Duty – BSD

Most of you would be familiar with the buyer stamp duty, it is a tax levied by IRAS on all property transactions in Singapore.

In this case of purchasing another private condo there is no exception, you will have to factor buyer stamp duty into part of the transaction cost.

The BSD tax rates will be as follow

Purchase Price / Market ValueBSD Rates for Residential Property
First $180,0001%
Next $180,0002%
Next $640,0003%
Next $500,0004%
Next $1.5 million5%
In excess of $3 million6%

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Illustration – BSD on a $1.4 mil private condo

Assuming you were to purchase a private condo valued at $1.4 mil, it will cost you a buyer stamp duty of $40,600.

Additional Buyer Stamp Duty – ABSD

Additional buyer stamp duty is another tax levied by IRAS. It specifically meant to deter property investors looking to purchase multiple properties and foreign property buyers from inflating property prices in Singapore.

The latest ABSD rates are as follows.

Profile of BuyerABSD Rates on or after 27 Apr 2023
Singapore Citizen (SC) 
SC buying first residential property0%
SC buying second residential property20%
SC buying third and subsequent residential property30%
Singapore Permanent Residents (SPR) 
SPR buying first residential property5%
SPR buying second residential property30%
SPR buying third and subsequent residential property35%
Foreigner (FR) 
FR buying any residential property60%
Others 
Entities buying any residential property65%
Housing Developers buying any residential property35%
Trustee buying any residential property65%

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Given that you are looking to retain your HDB while purchasing a private condo as a second property and assuming you are a Singapore citizen.

You will be looking at an ABSD rate of 20% on the property’s purchase price or valuation, whichever is higher.

Illustration – ABSD

Using the same example of purchasing a $1.4 mil private condo, you will be looking at a ABSD of $280,000.

Loan to Value Limits – LTV

Another factor to consider when purchasing a second private condo is the reduced loan to value limits that you will have to adhere to.

Loan to value limit is a regulation established by MAS its seeks to prevent Singaporean from over leveraging for their property purchase.

For your first HDB purchase if you are taking a HDB loan you can take up to a 80% loan and if you are taking a private bank loan you can take up to a 75% loan.

However, when you are trying to retain your HDB to purchase a private condo, you will have to work with a reduced 45% LTV limit.

This means that you will have to finance 55% of the payment in cash or CPF and out of this 55%, you will have to fork out. A minimum 25% minimum cash down payment.

Illustration – Impact on reduced LTV on 2nd private condo purchase

Using the same $1.4 mil condo purchase, working within the reduced 45% LTV limit, you will only be able to take up a $630,000 loan.

You will have to fund the remaining $770,000 using cash or cpf. Out of this, $346,500 has to be funded with cash and the remaining

Total Debt Servicing Ratio – TDSR

TDSR is the second measure implemented by MAS to complement the LTV limits. While LTV restrict the amount of leverage one can take, TDSR ensure that the monthly mortgage obligation stay within a prudent proportion of your monthly income.

Current TDSR limit sitpulate that your monthly debt obligation, which comprises of your home mortgage, car loan and any other recurring payment does not exceed 55% of your monthly income.

Illustration – TDSR restricting maximum loan quantum

Using the same $1.4 mil condo example above, given that after applying the 45% loan quantum. You are eligible for a $630,000 loan.

At a 4% interest rate, monthly interest will come up to $3007 per month.

Assuming your existing HDB loan requires you to pay a mortgage of $739 per month, and you do not have any other loan obligation

Assuming you are earning an income of $6,000 per month.

The total loan obligation will only form 62% of your total monthly income, you will be eligible to take the maximum $630,000 loan.

You will have to lower the loan quantum which monthly mortgage when added to your existing mortgage falls below the 55% ratio.

Working backwards, you will only be eligible for a smaller loan size of $438,486 which comes with a monthly mortgage of $2,261.

The cost of getting a private condo while holding on to your current HDB

To summarise, let’s review the aggregate cost required for you to purchase the private condo while retaining your HDB flat.

Again, assuming you are looking to purchase the same $1.4 mil condo.

Transactional cost

  • Buyer stamp duty – $40,600
  • Additional buyer stamp duty – $280,000
  • Legal fee – $3,000

Private Bank Loan

  • Based on 45% loan to valuation ratio
  • $630,000

Cash and CPF,/p>

  • To cover remaining 55% not covered by loan
  • Minimum cash down payment (25% of 55% portion) – $346,500
  • CPF or Cash – $423,500

From this quick summary, you would have immediately noticed that the additional buyer stamp duty of $280,000 and the cash and cpf requirement amounting to $346,500 and $423,500 respectively, would be significant challenges that need to be overcome.

To calculate the ABSD that you will need to pay for your desired 2nd property, head over to the 2nd property stamp duty calculation to work out the sums.

Is it worth getting a private condo while holding on to your current HDB ?

Now let’s use this section to discuss if it is really worthwhile purchasing another private condo while retaining your HDB.

Considering this strictly from an investment perspective, let’s establish the following assumptions.
You were to continue using the HDB flat as your primary residence.
You will be renting out your private condo and will be looking to exit the property for a profit when the timing is right.

Break even point

The break even point or the cost hurdle to beat will be the point whereby your profit from the sale of the private condo exceeds the cost of transaction which comprises buyer stamp duty, additional buyer stamp duty and legal fee.

Using the same $1.4 mil condo example above. We will need to consider how many years it will take for the private condo to appreciate in value, in order for its profit upon sale to supersede $323,600.

How many years will it take for profit from a private condo to exceed cost of transaction ?

To be prudent, let’s use the annualised growth of private property peg at 2.21% to consider how many years it will take for us to make $323,600 and breakeven.

Time periodPriceGains / Profit
Starting point1,400,000 
Year 11,430,94030,940
Year 21,462,56431,624
Year 31,494,88632,323
Year 41,527,92333,037
Year 51,561,69133,767
Year 61,596,20434,513
Year 71,631,48035,276
Year 81,667,53636,056
Year 91,704,38836,853
Year 101,742,05537,667
Total 342,055

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Referencing the calculation above it will take at least 10 years for your condo to appreciate in value, in order to bring in a capital gain that can surpass $323,600.

Consider if it is really worthwhile holding on to your HDB flat ?

From the calculation above, you can clearly see that it is pretty challenging to justify the investment in a private condo while retaining your HDB flat, it will take 10 years for you to come close to breaking even.

To jump ahead, the key issue leading to the high ABSD cost incurred and reduced LTV ratios lies in the fact that you want to retain your existing HDB flat while achieving your aspiration of owning a second property.

It is understandable that you would be looking to keep your current HDB flat due to certain lifestyle considerations, probably because you are living near your child’s school or parent’s place.

But if you are willing to explore the option of selling your current HDB, there could be more investment friendly options towards building a duo property portfolio.

Is there a better way to own two properties for HDB owners ?

Now let’s explore the common method in which property owners in Singapore often used to legally avoid ABSD and enjoy the full 75% loan to value limits.

Decoupling is out of the question for HDB owners

To set the context, decoupling is a method to delink both your names from the current property that is jointly owned.

It involves a sale and purchase process between you and your spouse, where one party purchases the other party’s share of ownership in the property.

The outcome of this is that the party’s name that is delinked from the property will be free to purchase the second property with no ABSD and full 75% LTV

Unfortunately, HDB decoupling is out of the question for HDB owners. Since 2016, HDB has tightened share transfer regulations to only permit share transfer to 6 special circumstances, and purchasing a second private condo is not one of them.

Sell one buy two as the viable solution for HDB owners looking to own 2 property

Given that holding on to your current HDB is not a mandatory criteria for you, and you are open to the consideration of selling your HDB. Then the sell one buy two approach could be one of the most viable methods to consider at the current state.

The sell one buy two approach would require you to see your current hdb flat, and purchase two private condos under separate names. You and your spouse will each own one property under your name.

The benefits of sell one buy two for HDB owners

When adopting the sell one buy two strategy, the 2nd property purchase would be much more cost efficient, you would be able to avoid paying the 20% ABSD.

Next from a financing standpoint, you would also be able to each take the maximum 75% LTV for each property

The downside to the sell one buy two approach

Straight up, one of the downsides of this approach would be the fact that you will not be able to retain your HDB. You will have to incur more capital in the form of cash and to upgrade into two private properties.

Another challenge to note for this approach is that both you and your spouse must each have reasonable monthly income to ensure eligibility to take up loan for both properties and also service monthly mortgage for both properties.

Illustration of how sell one buy two works for a HDB owner

In this illustration we will simulate how sell one buy two works

Context

  • John and Sally both own a HDB.
  • The HDB is valued at $900,000.
  • They have got an outstanding loan of $200,000.
  • John has got utilised cpf with accrued interest amounting to $150,000.
  • Sally has utilised cpf with accrued interest amounting to $150,000.

Action

  • Assuming they sold the property at $900,000
  • Less outstanding loan of $200,000
  • less cpf utilised by both party of $300,000
  • They would have $400,000 worth of cash proceeds

Fund available for each party

  • Assuming the cash proceeds is distributed evenly
  • John would have 200,000 cash and 150,000 cpf
  • Sally would have 200,000 cash and 150,000 cpf

Loan eligibility

  • with 350,000 in funds we can work backwards for the maximum loan quantum of 75%
  • Both John and Sally each can take up a maximum loan of 1,050,000

Checking to see if both meets 55% TDSR requirements

  • Assuming both earn a monthly income of 10,000
  • Monthly mortgage for a 1,050,000 loan will come up to 4,426
  • 4,426 forms 44% of each of their income

Each of them will have a budget of 1.4mil.

This should provide enough budget for a larger 3 bedder condo in the OCR region and a smaller 2 bedder condo in RCR as a duo property portfolio.

Difference between sell one buy two and option of keeping HDB and buying condo

Cost ComponentsRetaining HDB and purchasing private condoSell HDB and purchasing 2 seperate private condoComments
Property in portfolioHDB + Private condo ( valued at $1.4mil )Private condo ( valued at 1.4mil ) + Private condo ( valued at 1.2mil )
Transaction Cost – Buyer stamp duty40,60040,600
Transaction Cost – Additional buyer stamp duty280,0000
Transaction Cost – Legal Fee3,0006,000Legal fee for two purchase transaction
Total Transaction Cost323,60046,600277,000

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Loan financingRetaining HDB and purchasing private condoSell HDB and purchasing 2 seperate private condoComments
Loan to value limits45% for private condo75% for both private condo to be purchase under seperate name
Maximum Loan Quantum – For private property630,0001,050,000“For 1 property, private condo valued at $1.4 mil . Spouse can take another 75% loan for another private condo to be purchased”
Maximum Loan Quantum – For 2nd private property or for existing HDB200,000900,000“Assume 2nd private condo to be valued at $1.2 mil. Assume remaining outstanding loan for HDB to be at $200,000”
Total Loan830,0001,950,000

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“Cash and CPF requirement – For Property 1 | HDB in the case of retaining HDB option and 2nd private property in the case of Sell one buy two option”Retaining HDB and purchasing private condoSell HDB and purchasing 2 seperate private condoComments
“Amount not covered by loan | HDB in the case of retaining HDB option 2nd private property in the case of Sell one buy two option”NA900,000
Mandatory Cash (%)NA5% of amount not covered by loan
Mandatory cash requirementNA45,000
Amount to be covered by cash or CPFNA855,000
Total cash requirement (mandatory)192,50062,500
Cash and cpf requirement577,5001,187,500
Total cash and CPF requirement for 2 properties770,0001,250,000Difference of 480,000

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Referencing the tables above, you can see that the key benefits of adopting the sell one buy two approach could be summarised into the following pointers.

Lower transaction cost incurred – a saving of $277,000 for sell one buy two approach
Significantly lower cash and cpf funds requirement – $480,000 less CPF and cash required when adopting the sell one buy two option

Higher financing risk involved for sell one buy two approach

Taking a balanced approach, the sell one buy two approach presents greater risk in financing as you are taking on a significantly larger bank loan to purchase two private condos.

In aggregate, you will be looking at a total of $1,950,000 for two private condos, between you and your spouse. Where else in the case of retaining your HDB and purchasing a private condo you are looking at a lower combined leverage of $830,000 due to a smaller price tag and loan size that comes with a HDB unit.

Final Words

In conclusion, there could be lifestyle reasons that could lead one to consider retaining the existing HDB, while purchasing a private condo at the same time.

But from an investment standpoint, the odds may not be stacked in your favour, due to the regulatory hurdles that are being put in place to deter HDB owners from owning multiple properties.

More reads, more gains ?

Kudos on making it this far. The fact that you have invested the last 5 mins reading this article. We believe you are a like minded real estate investor looking to beat the rat race by getting more out of your real estate investment.

If so, do check out the following articles.

FAQ

Can I buy a second property if I own a HDB ?

Yes, in summary a Singapore citizen can buy a second property if you own a HDB. But you must first fulfil your minimum occupancy period, which is mostly 5 years for most HDB flat types. However, a household that comprises no Singapore citizen and only Singapore PR, will not be able to retain their HDB and purchase a second property, you will have to dispose of the HDB within 6 months of purchase of the second private property.

Can I buy HDB and inherit private property?

Yes, you can only if you have fulfilled the 5 year minimum occupancy period for your current HDB, then you can keep the private property that you have inherited.

Can I buy a HDB if my husband owns a private property?

No, HDB will assess both you and your spouse as a family nucleus and both of your names would be required to be included in order to be eligible for HDB resale purchase. 

What is the 15 month HDB rule ?

On 30 Sep 2022, the Singapore government released a new wave of cooling measures stipulating that private property owners can only be eligible for resale HDB purchase 15 months after the sale of their private property. 

Author

  • Jue Wen

    Jue Wen is the content marketing lead. This means he spend his waking hours researching and writing all things real estate. He believes life is a hustle and there is no joy in grinding away daily in our little rat races. He believes making wise moves in real estate investment can be a game changer. Aside from writing all things real estate, you can find him in your nearest bouldering gym.

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Jue Wen

Author

Jue Wen is the property analyst and content marketing lead at decoupling expertise.
He specialises in helping clients overcome the complexities involved in owning their second private property in Singapore.
He had over 10 years of experience in real estate investing and have written over 40 detail guides on decoupling and minimising ABSD. He is a licensed real estate consultant and holds a Bachelor degree in Business Management from the Nanyang Technological University.

Kenji

Co-Author

Kenji is the Group Division Director of ERA Realty Network.
He have got over 20 years of experience in real estate and have successfully helped over 50 couples purchased their second property. He specialises in helping client achieve the best approach towards acquiring their ideal investment properties while minimising ABSD.