BTOs vs Resale – a simple guide to choosing a HDB flat of your dreams
As a property agent, I often get this question from young couples. It’s definitely a popular one — to decide between these two options for HDB flats.
What is the difference between these two types of properties?
So here’s a quick summary of the pros and cons.
New Units — Because it’s Built to Order, you get a brand new apartment that has not been occupied by previous tenants.
Price — Typically, BTOs are cheaper than resale, but it depends on factors like market rate.
No COV — There is no Cash Over Valuation needed as these are brand new units.
Size — As we all know, the newer the flats, the smaller the size will be.
Waiting time — For BTOs, the waiting time it’d be 2 to 3 years of waiting time. Once applied, you’ve got to wait for the construction to complete and for the key collection date.
Location — You are limited to the areas as to where HDB decides to build at any point in time.
Renovation — Since it’s a brand new unit, you need to set aside some funds for renovation, and this adds on to the waiting time too.
Uncertainty — BTO applications are done through the balloting system. Say you’ve set your eyes on a particular BTO — there’s no way to definitely secure that unit as everyone goes through the system. And even if you do get a ballot number, choices of units may not be the best, especially if your number is on the higher side.
Location — You can choose whichever location you wish to live in. Usually, there is always a unit in the market that you can get for the location that you want. Whether it’s mature or non-mature estates, or if you want to be close to your parents, chances are there’s a unit for you.
Size — Converse from BTO, the older the flat is, the bigger it tends to be. The reason is that BTOs that were built 10 years ago are of a bigger size, and you can expect that BTOs that will be built in 10 years time will be smaller still.
Renovation — This is a bit of a double sided sword, it can be a pro or a con. If you picked a house whereby the renovation work suits you, there won’t be a need to do any further work. However, I’ve seen clients who took up a unit and even though the interior was already nice, they still spent more money doing renovation work to get it to their preference.
Grants — Resale units have more government grants as opposed to BTOs. The government is allocating more grants for resale because BTO is considered to be subsidised housing. The grants for resale can go up to $110,000. For example, a first time grant for resale can go at a range of $40,000 to $50,000. There are also things like proximity grants, income-based etc.
(stay tuned for a grants summary we’re working on right now)
Waiting Time — You can get a house within 10 weeks, approximately. This is a dramatic reduction as compared to a 2 to 3 year period for BTOs. So if there’s any reason where you need to get a house within a short time, you can consider resale.
This is a result of a recent change in the system. Previously, it used to be 4 months.
Price — Again, this depends on market trends but typically, resale units are of higher prices than their BTO counterparts.
Maintenance — Older flats may have some wear and tear issues. For interior wear and tear, a good renovation would suffice to remove any issues resulting from building age. But for exteriors like the lift area for example, this depends on other parties. That said, you can estimate the condition of the unit and estate from appearance and the remaining lease of that building.
If you are looking for a flat, do discuss with your partner on this matter as the decision is subjective to things like financial ability and preference.
Buying a flat is a long term commitment, so please plan well prior to choosing either a BTO or a resale unit. This is where knowledge on these options would be important.
At the end of the day, it’s not just about numbers. Just because it may seem that BTOs have more Cons, but it could be down to one or two factors that makes you decide.
Hope this brief comparison is useful for you, and if you have more questions on this topic or anything related to property, please contact me, Agent Shahid, at +65 9752 6549.