With stricter rules for BTO non-selection, is HDB pretty much saying 'not for selective buyers'?

Don't anyhow apply.

Ilyda Chua| March 04, 2023, 01:00 PM

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On Mar. 2, Minister for National Development Desmond Lee announced a set of tightened rules regarding the non-selection of Build-to-Order (BTO) flats.

Here's what you might need to know about it.

What are the new rules?

With the tightened rules, applicants who successfully get a queue number, but opt not to book a flat, will be penalised.

For first-time applicants, they'll lose their first-timer privileges for a year and get moved to the second-timer category for subsequent applications.

Whereas second-timer applicants will be debarred from sales exercises entirely for the same period of time — one year.

Applicants are considered first-timers if they have never received housing subsidies before. Households in this category have more ballot chances and qualify for more grants than second-timers, as they're deemed to have a more pressing need for a home.

For an idea of how significant first-timer privileges are, the majority of newly-built homes — up to 95 per cent — are also set aside for first-timers.

The non-selection penalty isn't new, although it was less strict before.

Previously, applicants were able to pass over a flat once with no penalty. They would only be subject to the deterrent measures upon rejecting a flat for the second time.

Who will be affected?

Of course, there are plenty of valid reasons why couples might forfeit their queue numbers.

Their queue numbers might be less than ideal, resulting in them having only a few units left to choose from. These may be undesirable for a number of reasons — with some being more valid than others — including a low floor, bad feng shui, poorer resale prospects, or simply being out of the couple's budget.

HDB has made some provision for such reasons, saying that it would waive the non-selection count for applicants with 10 or fewer BTO flats to choose from, or five or fewer Sale of Balance Flats (SBF) flats to choose from.

As for other reasons: the couple may also have changed their minds as to the affordability of the flat, the location, the size — anything really.

Or, well, the relationship might simply not have worked out.

In such cases, HDB may also choose to waive the non-selection count, Lee said.

Why the need for this?

Presumably, this is part of HDB's response to the high demand for BTO flats, which has resulted in people complaining of long waiting times and low success rates.

In his Committee of Supply speech, Lee explained that buyers who choose not to book flats "crowd out other homebuyers who may have more pressing needs".

While some have genuine needs, there are applicants who are simply more selective, wanting only flats on high floors, Lee added.

The tighter rules, then, seek to streamline flat allocation so that those who need it can secure their flats as quickly as possible.

"HDB flats are heavily subsidised and in demand," HDB said in a press release. "We strongly encourage all applicants to carefully consider when they should apply for a new flat, and book a flat when invited to do so."

Translation: If you can afford to be picky, you can afford to look someplace else.

Or just wait out the penalty period.

What's gonna happen?

The aim seems simple enough: to allocate BTOs to those who really need a subsidised flat.

But it's also worth noting that many couples do apply for BTOs before they're necessarily ready, simply because it's not that easy to get a successful application.

Very in line with the Singaporean kiasu spirit.

We all know of friends who start applying early with the expectation that they won't get a queue number till much later.

With this new measure, such couples are likely to become much more cautious when applying for a flat.

They might also be more selective with factors such as location and size, particularly with the knowledge that they won't be able to just forfeit their queue number once without consequence.

Couples who can afford a resale or private property are also likely to be nudged in that direction.

Either way, it seems the government's position on BTOs now seems to echo an oft-heard mantra on online marketplace Carousell: "Not for fussy buyers."

Top photo by Danist Soh via Unsplash