Do you think the BTO system in Singapore forces/rushes couples to apply even when they might not be ready? Heard quite a few of BTO deposit forfeits which can be quite hefty (~$25K), thoughts?

Cheaper options also come with consequences thus if you want to wait till you're ready can always try out sale of balance or resale! :)

Hi anonymous,

I'd say... no.

Although I can see where you're coming from since a BTO takes about 3 to 5 years to be ready (now it's 4 to 7 years given how COVID-19 has slowed everything down).

So when it comes to proper financial planning as well as living your lives together, it might seem like HDB is encouraging (or forcing) young couples to apply first, and when they book their BTO flat, they've got about 4 to 7 years to figure out where the relationship is going before they officially ROM and collect the keys.

I've written about the cost you will incur depending on which stage you initiate a BTO break-up:

Long story, short. It can get pretty hefty.

I can think of 2 different reasons why young couples would rush (or feel like they have to rush) into getting a BTO.

1) A BTO is the cheapest housing option available

Yes. And no.

A BTO is supposed to be priced at an affordable rate in order to house as many Singaporeans as possible. But that doesn't necessarily mean that resale flats aren't a plausible option either.

In fact, with resale flats, you can get up to $160,000 in grants. Which is way more than the up to $80,000 in grants which you can get for an HDB BTO flat.

So even though a resale flat might be more expensive from the get-go (depending on the location and number of years on the lease left and etc.), if you factor in the housing grants you can get, it might actually be more affordable than a BTO flat.

And most importantly, you don't have to "rush" and make a decision to book an HDB BTO flat now. It gives you the flexibility to look at the resale property market anytime.

2) Location

As land is scarce in Singapore, it might be hard to find an affordable resale flat in the area which you wish to live in.

Especially if it is a mature estate that is considerably built-up.

So in the off-chance that a BTO project is announced in such an estate. It's understandable that many would want to apply for it since the BTO prices can't be more than the resale flat prices in the vicinity of the BTO project. I mean, HDB is not gonna do that... I hope.

~

But overall, I'd say the government isn't forcing anyone to apply for a BTO. It's just one of the many housing options available, and it really depends on time and space.

It's just unfortunate that the way it's set up, it kinda takes the romance out of things especially if you're planning to propose, get married, and settle down in a place of your own within a 3 to 5-year timeline.

If you happen to be in a committed relationship and are looking to settle down, then yeah, apply for that BTO.

But if you're just starting out, and aren't quite sure where the relationship is going yet... don't apply for a BTO just because it's a rare BTO in a mature estate, or because you know it's gonna take 7 years to be built and by that time, both of you might want to settle down then.

The thing is, 7 years is a pretty long time. And anything can happen. So if you're not sure, it's best not to speculate where the relationship is going and just enjoy each other's company while you see where it goes. I mean, it's better than just flushing money away right?

And besides, when the time comes, you can always look at the resale market. Or if you wish to try your luck with BTO flats again, there's always the Sale of Balance flat option which you can take too. And you might not even have to wait the full 7 years...​​​