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With the booming of the HDB resale market, we have seen resale flat prices hitting a record high in the third quarter of this year. A record number of HDB flats has also been seen crossing over the $1 million mark, 174 to be exact, and in just the first nine months of 2021. A huge jump as compared to the 82 $1 million flats sold in the whole of last year. With all these in mind, the government has decided to bring about a new measure that would ensure that public housing remains affordable, especially in prime locations where most of the million dollar big ticket sales have been occurring. This new measure comes in the form of the new Prime Location Public Housing (PLH) model.

So what is the Prime Location Public Housing (PLH) model and why was it introduced?

The PLH model was first introduced on October 26 by National Development Minister Desmond Lee. It was introduced with the main aim of keeping public housing in prime/central locations like the city centre and the Greater Southern Waterfront affordable, accessible and inclusive for all Singaporeans both at the initial purchase and at subsequent purchase on the open market.

Who will be affected by the PLH model?

The PLH model only applies to future HDBs, not existing ones, so current home owners need not worry about the PLH model. For example, The PLH model will apply to the new pilot project at Rochor, which is a new BTO November 2021 sales exercise located along Kelantan Road. It will not, however, apply to older projects like the Pinnacle @ Duxton, for instance. 

How many PLH model HDBs will there be?

According to Mr Desmond Lee, the exact number of projects launched each year under this model will depend on site availability and overall supply of flats across all towns. However, we do know that at least one prime location HDB project will be launched every year. 

Key measures of PLH model

Buying a new PLH HDB flat 

Additional Subsidies Provided 

Because prime location HDBs have higher market values, the government will be pricing new PLH flats with additional subsidies on top of the current ones to keep flat prices affordable for a wider range of Singaporeans. This is to eliminate the idea that only the more “well off” can afford prime/central located housing. 

Additional Subsidies To Be Recovered Upon Resale of Flats

Once flat owners of PLH flats sell their flats in the resale market, they will have to pay a percentage of the resale price of the flat back to HDB, in a way to recover the additional subsidies. The additional recovery is based on the initial additional subsidy that was granted to the flat owner when the flat was purchased.

Under the PLH model, owners of the recently launched Rochor flats, will have to pay 6 percent of the resale price or valuation (whichever is higher), to HDB when they sell their home on the open market for the first time.

However, this subsidy clawback only applies to the first resale transaction and not to subsequent resale transactions..

This measure is taken by HDB since it has to provide additional subsidies in addition to those provided for all BTO flats, in order to ensure that these prime area flats are kept affordable.

Reduced Priority Allocation Quota for Married Child Priority Scheme

Currently up to 30% of new flats are set aside under the Married Child Priority Scheme, which is a scheme that gives priority to those whose parents or children live in the same area. With reduced priority to those under this scheme, it allows public housing in prime/central locations to be more inclusive and also allows more opportunities for Singaporeans to live in these prime/central locations.

Buying a resale PLH HDB flat 

Additional Eligibility Conditions for Buyers of Resale PLH Flats

To ensure that PLH flats remain inclusive and affordable to a broad group of subsequent buyers, buyers must first meet the above eligibility criteria. Without such criteria, resale prices will again rise to a level where it is unreachable to many Singaporeans, something the government is trying to refrain from. As per the intentions of HDB and MND, only buyers who are able to meet the prevailing eligibility conditions of BTO flats to approximately half of the 99-year lease, will be allowed to purchase resale PLH flats. The eligible buyers will then be put through a review.

After the Purchase of a PLH flat

To ensure that PLH flats are being sold to Singaporeans who have “genuine housing needs”, meaning that they buy with the main intention of staying instead of buying with the intention of selling as an option to invest, they have increased the Minimum Occupation Period (MOP) to 10 years instead of the usual 5 years. This means that you can only sell your PLH flat after the 10 year period.

Also, changes have been made for rentals too. Only spare bedrooms of PLH flats are allowed to be rented out. Renting of the whole flat is not allowed even after MOP. This can be seen in the table above.