Subsidy clawback for Oct. 2024 BTO HDB flats: 6%-8% for Plus, 9% for Prime

A subsidy clawback of between 6 and 9 per cent will apply to the new Plus and Prime flats launched on Oct. 16, 2024.

This is to curb the “lottery effect” of owning flats in prime and central locations, the Housing and Development Board (HDB) said when it announced the quantum of the clawback with the roll-out of 8,573 Build-To-Order (BTO) homes under a new flat classification system.

Subsidy recovery

The subsidy clawback has been set at between 6 per cent and 8 per cent for the Plus projects, and 9 per cent for the Prime project.

They both have a minimum occupation period (MOP) of 10 years.

Standard flats will not have a subsidy recovery clause when they are sold, and will come with a five-year MOP.

1 Prime, 7 Plus, 7 Standard

This launch has only one Prime project in Kallang/Whampoa, Crawford Heights, which has 312 units for sale.

The remaining 14 projects are split evenly between Plus and Standard.

There are seven projects that fall under the Plus category, or 3,273 Plus flats, and another seven projects that fall under the Standard category, or 4,988 Standard flats.

Rationale

The system of categorising estates as mature or non-mature has made way for Standard, Plus and Prime categories based on their proximity to the city centre, transport connectivity and amenities.

Plus and Prime flats come with significant market discounts to keep them affordable, HDB said.

The subsidy recovery clause, HDB said, is to "maintain parity with other BTO flat buyers who are not accorded additional subsidies".

HDB added that Plus and Prime flat owners will be required to pay HDB a percentage of the resale or valuation price, whichever is higher upon selling the flat, after meeting the 10-year MOP.

The math

If a buyer purchases a four-room Prime flat at S$650,000 and resells it for S$1.2 million in the future, the 9 per cent subsidy clawback comes up to S$108,000, which is equivalent to gross gains of more than S$400,000, according to The Straits Times.

Price ranges

Crawford Heights

Prices without grants for Prime project Crawford Heights flats range from S$390,000 to S$523,000 for a three-room flat, and S$568,000 to S$759,000 for a four-room flat, making these units among the priciest at this launch.

HDB said, as a matter of comparison, four-room resale flats in Kallang/Whampoa transacted at between S$890,000 and S$938,000.

There were no comparable three-room resale flats in the vicinity, it was noted.

Merpati Alcove

The Plus project Merpati Alcove, located next to Mattar MRT station, near Aljunied Road, has a subsidy recovery set at 8 per cent.

Four-room flats in this project are going for S$530,000 to S$647,000, without grants.

Bayshore Vista and Bayshore Palms

Four-room flats at Bayshore Vista and Bayshore Palms in Bedok, priced between S$495,000 and S$694,000 without grants, have a subsidy recovery clause of 7 per cent.

Kembangan Wave

Four-room flats in Kembangan Wave in the same estate are priced at S$453,000 to S$592,000 without grants, with the subsidy clawback set at 6 per cent.

Rationale

HDB explained that the two BTO projects in Bayshore are “more favourably located” than the Kembangan project, as they are near East Coast Park, and a proposed sports and recreation facility.

Merpati Alcove’s subsidy clawback of 8 per cent is higher than Bayshore’s as it has a MRT station “at the doorstep” and is closer to the city centre, it was explained.

HDB also said it takes into consideration the extra subsidies needed to keep individual Plus projects more affordable when determining the subsidy recovery percentages.

“As their more favourable locations command higher market values, higher additional subsidies are required to lower their flat prices so that they are more affordable to a wider range of Singaporeans,” HDB said.

HDB said whether the subsidy recovery rate will be fixed will vary at each launch in the future.

The clawback sum will correspond with the amount of additional subsidies needed to bring the prices of Plus and Prime projects down to more affordable levels.

Background

The clawback was 6 per cent in 2021 when the prime location public housing model was introduced.

It was raised to 8 per cent in December 2023, then to 9 per cent in June 2024.

All media via HDB