BTO penalties may be waived, says the Ministry of National Development (MND).


July 26, 2021

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Purchased a BTO (Build-To-Order) but shocked at  the ridiculous wait that came along with the COVID-19 pandemic delays? We have some, perhaps comforting, news for you.

In a Written Answer by Ministry of National Development on managing the construction of BTO flats that have been delayed due to the COVID-19 pandemic on April 5, 2021, we learned that while construction of all 89 ongoing HDB BTO projects have resumed following Circuit Breaker in 2020, 85% of expectant homeowners are still looking at a 6-to 9-month delay beyond the originally indicated Estimated Completion Dates (ECDs).

While some may be relatively unaffected by this delay, many who are looking to start a family — or even just a conducive space for work from home  — are impeded by this situation. These understandable but frustrating delays stem from strict safe management measures that have been erected post COVID-19, as well as from disruptions in our global supply chain disruptions that has led to manpower shortages within the construction industry. Site specific factors such as contractors’ availability and supply of raw materials also vary the projected completion date across different BTO projects.

In a more recent update on Jul 5, 2021 on alternatives that could be offered to successful BTO applicants affected by construction completion delays, MND has again released a second statement — one that affords more flexibility for expectant home owners.

To ensure buyer commitment to these HDB flats, HDB has typically held certain penalties for buyers who later decide to cancel their BTO flat bookings. Generally, they are denied the chance to apply for a second subsidised unit, whether it be a BTO or resale flat with government-awarded grants. Additionally, they also risk losing their deposited option fee, which can range anything from $500 to $2,000, or the 5 percent of the flat purchase price. “These measures are in place to ensure that buyers are serious when they buy a flat and do not deprive others with urgent housing needs of the opportunity to do so,” said MND.

However, buyers affected by the incessant delays would be happy to find that if successful in their appeal, HDB will now waive the financial penalty and the one-year wait-out period. This will allow first-timer families with urgent housing needs to receive up to $160,000 in housing grants should they decide to purchase a resale flat.

Furthermore, MND has also been looking at ways to increase the supply of interim housing, to better support affected families in these pandemic times. As more families navigate new work-from-home arrangements, MND has seen a stark increase in demand for temporary housing. In 2020, HDB received 2,350 applications under their Parenthood Provisional Housing Scheme (PPHS), with only 160 flats available.

As work and life structures continue to shape themselves around our pandemic realities, we can all appreciate the flexibility offered by these government bodies. Moving forward, MND has proposed offering interim rental housing on a case-by-case basis – a move that acknowledges the unique realities faced by individual families. Alternatively, urgent flat buyers are also encouraged to make alternative housing arrangements with family members, relatives or on the open real estate market.

Despite the aforementioned challenges, we can expect the launch of 17,000 BTO flats this year, more than the 16,800 flats launched last year, and 14,600 units in 2019.

If you find yourself affected by the long waiting period for your BTO flat, or are looking towards the open market for quality resale flats or interim housing, you may contact our PropertyLimBrothers market specialists who would be more than happy to help you further along your journey.

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