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Discussion of the Housing Development Board’s (HDB) Build-to-Order (BTO) flats has been buzzing over the past few months, from prices to the minimum occupancy period.

BTO has also become synonymous with Singapore’s dating culture, with one asking the other party to apply for a BTO flat as a form of a marriage proposal.

What is a BTO?

The Build-To-Order scheme was first introduced by HDB in April 2001, and was fully implemented in January 2002 with 2,500 flats in Sembawang and Sengkang.

The BTO scheme allows applicants to ballot for their preferred flats in sites published by HDB every quarter.

In order to secure the booking, applicants are required to make a down payment for the balloted flat. HDB will then determine the success of the BTO and will begin construction once 70 per cent of the demand is met.

Replaced RFS

The BTO scheme replaced the Registration for Flats System (RFS).

Under the RFS, prospective buyers were only able to select the geographical zone of the flats. They will then be invited to select their flats, with the exact locations and cost to be made known once they received the invite.

Applicants would not know the date of completion of the flat.

What’s the difference between BTO and RFS, and what prompted the shift?

Here's a publication from the Lee Kuan Yew School of Public Policy that explains the difference between the two systems:

"Under this scheme (RFS), applicants would register for a unit in their desired location and be allocated an apartment based on availability – effectively a queue system where applicants were allocated apartments that were either under construction or that had been completed.

However, when the housing market plummeted in 1997 due to the Asian Financial Crisis, demand dried up and 20,000 flats were left without takers. HDB was criticised for over-estimating the demand and for wasting public resources as these unsold flats stood empty.

At the same time, it proved politically untenable to reduce the prices of the unsold flats as similar units in the same block or neighbourhood may have been sold earlier at higher prices. In 2001 the RFS was suspended and all applicants were diverted to the Build to Order (BTO) program.

Under the BTO programme the construction of blocks does not commence till a sufficient number of units are sold. As the current BTO programme is demand-led, applicants typically wait for about four years for their apartments to be constructed."

Who can apply for a BTO?

According to HDB’s website, there are several groups who are eligible to purchase a BTO flat, mainly couples and families, seniors and singles.

For couples and families

Applicant must be a Singapore Citizen, with one other Singapore Citizen or a Permanent Resident, and at least 21 years old.

Applicants and occupiers listed must not own or have an interest in any local or overseas private property and must not have disposed any private property in the last 30 months before applying for a BTO.

Under the fiancé and fiancée scheme, the couple would need to be solemnised within three months from the completion of the flat purchase and HDB may require them to produce a marriage certificate for verification purpose.

For Seniors

Buyers and their spouses must be at least 55 years old at the time of applying a flat for short-lease 2-room flexi flats, or 65 years old for community care apartments.

The chosen lease must be able to last all buyers and their spouses until at least age 95, computed as at the time of flat application.

For Singles

Single Singapore Citizens aged 35 years old and above can apply for a 2-room flexi BTO flat in non-mature estates.

They are allowed to apply for the 2-room flexi flat with one or more singles as co-applicants who is at least 35 years old as well.

More information on the eligibility for applying for a BTO flat can be found here.

What is the success rate?

On Nov. 30, Workers’ Party Member of Parliament He Ting Ru got a response to her Parliamentary Question, which went:

"To ask the Minister for National Development with regard to HDB’s BTO applications in mature estates in each of the last three years

(a) how many applicants are successful in their BTO flat application at their first attempt;

(b) what is the median number of attempts for a BTO flat before obtaining a successful application;

(c) many applications required more than five attempts for a successful application; and

(d) what is the maximum number of failed attempts that an applicant put in for a BTO flat."

In a written reply, Minister for National Development Desmond Lee said that from 2019 to 2021, the percentage of first-time families who were successful in their first BTO attempt at a mature estate was between 20 per cent and 24 per cent.

The median number of attempts for applicants before a successful application at a mature estate was one, though Lee noted that it would “not be representative” to look at the maximum number of unsuccessful attempts as there are applicants who may not have an urgent need for a BTO flat.

They might also be applying to BTO projects in the mature estates only or more attractive projects.

Success rate is better in non-mature estate

Even so, Lee shared that over the past three years, less than two per cent of applicants took more than five tries in applying for BTO flats in mature estates.

He also encouraged applicants to apply for flats in non-mature estates in order to improve their chances of successfully securing a BTO flat.

"Virtually all first-timer families who apply for Non-Mature Estate BTO flats were given a chance to select a flat within their first three tries, and almost 90 per cent were given a chance to select a flat within their first two tries," Lee said.

How are the prices of BTO flats determined?

HDB and the Ministry for National Development (MND) released a joint statement in December 2022 on how it sets the BTO selling prices.

HDB looks at the resident household incomes, and compares them with the range of flat types and selling prices on offer at every BTO launch, using benchmarks such as the Mortgage Servicing Ratio (MSR), which refers to the proportion of monthly income used to service mortgage instalment payments.

Such benchmarks consider a range of different household incomes, both above and below the median household income level, to ensure a wide range of BTO flats for first-time homebuyers with different housing needs and budgets.

The selling prices of new BTO flats will not be uniform, as BTO projects are launched every year in different housing estates across the island.

The prices will therefore have to take into account the different attributes and locational factors of the flats on offer at each BTO launch.

This also ensures fairness for the buyers as these HDB flats can be bought and sold in the resale market after the five-year Minimum Occupation (MOP) period, with the locational and other flat attributes reflected in the resale prices, and any benefits accruing to the flat owner or seller.

The statement also highlighted how HDB's pricing approach is "fundamentally different" from that of a private developer's cost-based approach for private residential developments, which takes into account provision for a profit margin.

Are there grants for applicants?

For first time families, applicants may be qualified for an Enhanced CPF Housing Grant of up to S$80,000.

First-time singles may also be eligible for the Enhanced CPF Housing Grants (Singles) of up to S$40,000.

More information on grants and eligibility criteria can be found on HDB’s website.

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Top image by Ivan Yeo on Unsplash