“What is MOP? Isn’t BTO the ultimate goal for Singapore HDB? Does everyone else know to do this after MOP?”
MOP, or Minimum Occupation Period, refers to the first 5-year period where HDB owners have their hands tied. Before MOP, you will be unable to sell the flat on the open market or rent out the entire flat (you can rent out individual rooms if you want but you have to live in the flat). Basically, anything that allows you to earn money from your BTO is not allowed.
That’s why, for business-minded individuals, reaching the end of MOP is a period for celebration.
“Huh? But I BTO to stay in the flat what? Why do I need to know all these after MOP details?”
Of course, when you are just starting out (just got married, starting out with a stable job, etc), BTO allows you to buy a flat at cheaper prices.
5 years on, you are now the owner of a brand new HDB. Some of you have made strides in your career, others have come into a bit of savings. These are things you can use to leverage and upgrade to a better property.
Here are 5 things to know so that you can make a better decision after MOP.
1. All Property Buyers Have A Hidden Countdown Timer
In the resale market, 5-year-old flats are considered the newborn babies.
There are no (or rather, there shouldn’t be) resale flats below 5 years old because they wouldn’t have reached the end of their MOP period.
When buyers want to purchase something, they prefer to get something new, especially since the flat they are buying is hundreds of thousands of dollars.
Compared to an older flat, buyers believe that newer equals better. For you as a seller, better equals higher price.
The buyers are going to come in to view a house that is only 5 years old and therefore in good condition and maintenance.
Even if the flat’s condition is exactly the same as the older one down the road, they have a tendency to think the ‘newborn baby’ is cuter.
You can leverage on these factors to sell your property at a good price.
Furthermore, all the HDB flats have the 99-year lease counting down. Newer flats with more years are expected to command a higher price.
This is why if you are living in an estate that is just past MOP, you might be heavily targeted by Real Estate Agents. This is a time where it actually make sense to do an upgrade.
2. You Can Upgrade To A Private Property (Or To A Better HDB)
Now that you know how much value your After MOP HDB flat can bring you, it’s time to think further.
You can either upgrade to a bigger flat or move to a better location that places you closer to more amenities, possibly even within 1km of a school you’re planning for your kids to enter.
Upgrading is not a small decision. I have even heard stories where people dwelled on the decision to upgrade for years! Do keep that the time you take to make your decision comes with an opportunity cost!
Based on the last 10 years in Singapore, HDBs rose by an average of 37% as compared to private properties that rose as high as 93%.
Making an upgrade and holding on to a private property will mean that each year, your money will be working harder for you then if you were to hold on to your HDB.
3. It’s Actually Not That Tough To Move To A New Property
Many of you will complain that moving your stuff to a new property is tiring and problematic. But these things are better done when you are young and you have lesser things.
Moving after MOP would mean you’ve only stayed at the flat for around 5 years.
The longer you put upgrading, the more stuff you will have at your house and the more troublesome it will become.
Furthermore, if you think about the lifestyle upgrade you’ll be getting and the potential gains your private property will be earning you, moving out will suddenly seem less troubling.
4. It Might Become Tougher Later On
Before you know it, you will have stayed in your flat for 10 to 20 years.
By then, it might be harder to sell your property for the same price as after MOP.
Also, you will probably be in your late 30s or 40s then.
It will be a bigger strain taking on larger mortgage loans while having shorter repayment periods.
You might also have children that are older (and maybe even parents living with you), increasing monthly expenses. Moving then will become a larger hassle.
5. We Are Here To Give You Some Advice
“Alamak, how to start? Make wrong decision how?”
Of course, we know that deciding to buy a new property and selling your own home can give you a massive headache.
One way to get some answers would be to ask your friends and families that have upgraded to private properties or bought a second HDB flat.
It would be even better if you know someone who is well-researched in the property market.
Another method would be getting a free consultation from a seasoned investor.
It’s always best to leverage on other people’s mistakes and successes to cut short your learning.
For most, BTO has always been the end goal. But now that you know what to consider after MOP, you can make a well-informed decision and consider your next move.
Of course, even after all these, you might still decide to stay in your BTO flat way after MOP.
While there is nothing wrong with that, being able to take advantage of your assets to grow your wealth is one way to help you retire early in the expensive city of Singapore.
And for those wanting to take action and yet unsure of your plans, get a complimentary consultation with a seasoned investor here.