IS A 40-YEAR OR OLDER HDB FLAT WORTH BUYING?

Are you thinking about buying a 40-year-old or older HDB flat? Before making such an important decision, there are crucial factors you need to consider. In this video, we'll guide you through the key considerations that can greatly impact your decision-making process.

First and foremost, you need to be aware of the financial restrictions. Since May 10th, 2019, there have been changes in the rules regarding using CPF funds to buy property. The remaining lease of the property must cover the youngest buyer until they reach the age of 95. For example, if you and your spouse are 35 and 32 years old respectively, and you come across a 40-year-old HDB flat with a remaining lease of 59 years, your spouse will be 91 when the lease ends. Unfortunately, this means you might face restrictions on using CPF funds to finance the property. To help you estimate how much of your Ordinary Account savings you can use for a property purchase, we will provide a link to a CPF housing usage calculator in the description below.

Another crucial aspect to stay informed about is the government initiatives affecting older HDB flats. Two notable initiatives are the Home Improvement Program 2 (HIP2) and the Voluntary Early Redevelopment Scheme (VERS). HIP2 focuses on upgrading essential infrastructure and enhancing living conditions in older flats, typically taking place around the 60-70 year mark. This program ensures that the flat remains safe to live in until the end of the lease. Additionally, VERS offers an alternative to the Selective En bloc Redevelopment Scheme (SERS), allowing homeowners of flats aged 70 years or older to sell their flats back to the government. However, it's important to note that the compensation package under VERS may not be as attractive as SERS.

While SERS presents an opportunity for rejuvenating older housing estates, it's important to understand that SERS opportunities are limited and only a few blocks across Singapore have been selected for this scheme in the past 10 years. Therefore, the chances of a flat being eligible for SERS are relatively low.

Lastly, you must consider lease decay. HDB flats need to be returned to the government once the 99-year lease expires, without any compensation or extension. Understanding the concept of lease decay is crucial as it affects the long-term plans and potential resale value of the flat.

Before taking the plunge and purchasing an older HDB flat, it's essential to do your homework. Consider the financial restrictions, stay updated on government initiatives like HIP and VERS, be realistic about the limited SERS opportunities, and understand the implications of lease decay. Thank you for watching, and remember to #keepgoing in building your property portfolio. Stay tuned for our next video!

Links

https://www.cpf.gov.sg/member/tools-and-se...

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