150 Caught Buying Private Properties Before Their HDB MOP is Up

For Singaporeans, housing has always been a thorn in our side. Housing prices are unbelievably high, and regulations surrounding the market are extensive.

Regardless, this doesn’t stop Singaporeans from resorting to all sorts of tricks up their sleeves when it comes to housing.

This time, 150 people were caught buying private properties before the Minimum Occupation Period (MOP) of their HDBs had passed.

150 Caught Buying Private Properties Before HDB MOP Had Passed

The MOP restriction—we all know about it. After collecting the keys to your HDB flat, whether BTO or resale, you’re stuck with the flat for a minimum occupation period before you can sell it and buy another private residential home.

For most flats, the MOP period lasts five years. However, the MOP period lasts an entire decade for Prime Location Public Housing (PLH) flats.

RIP to all Singaporeans with commitment issues. You better choose your flat well.

However, for 150 flat owners, this MOP doesn’t seem to be an issue—or so they thought.

From 2018 to 2022, HDB has caught 150 flat owners for investing in private properties, although their HDB’s MOP has yet to pass. Of course, it’s hard to believe these people didn’t know about the MOP restriction.

They probably did, but they thought they could outsmart HDB by thinking out of the box for a solution to circumvent the MOP problem.

Ah… We indeed are a nation of smart alecs.

These 150 people had this idea: to put the new private residential properties they were purchasing on trust under their children’s names.

In the future, the question that Singaporean children will ask will no longer be, “Ma, am I an accident?” but rather, “Ma, did you have me so you could skirt housing regulations like the MOP?”

Flat Owners Not Allowed to Purchase Private Properties Even On Trust Before MOP Passes

Unfortunately, these 150 HDB flat owners have to try harder next time to beat the final boss, HDB.

According to a representative from HDB, flat owners are not allowed to purchase private properties before the MOP is passed, even if it’s on trust. And, of course, others are also not allowed to buy private properties on trust for these flat owners.

Suck thumb lor. Wait five years. Patience is a virtue.

The HDB representative also added that should flat owners be found to have violated MOP restrictions, enforcement action will be taken against them.

What exactly is this “enforcement action”? Well, you either pay a penalty of up to $50,000, or HDB acquires your flat, and you become homeless.

Well, if HDB does acquire your flat, you could always install Tinder and try to get a Sentosa Cove dweller to give you a place to stay.

Most Flat Owners Cite Either Wrongful Advice or Lack of Awareness as Reason for Actions

It is unclear what the penalties are for the 150 offenders caught by HDB. However, the penalties for each offender will differ based on severity.

Those who blatantly sought to step all over the MOP restriction will likely receive harsher penalties than those who broke the restriction due to wrongful advice from their real estate agents.

A handful of the 150 flat owners who were caught cited wrongful advice from their real estate agents as the reason for their actions.

See lah. Find real estate agents from those sketchy flyers some more.

Many shared that their real estate agents had given them the okay to purchase another private residential property on trust since, by right, these properties were not under the flat owner’s name.

But by left, HDB has already said this violates the MOP restriction nonetheless.

So in these cases, do you bear the responsibility, or does your real estate agent bear it?

The answer is that it depends.

If your real estate agent had given wrongful advice, they might still turn to their indemnity policies on the condition that their advice was given in good faith. This means you will have to bear responsibility.

Of course, if your real estate agent is blatantly dishonest, they cannot rely on these indemnity policies.

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On the other hand, several flat owners who were caught cited a lack of awareness of the MOP restriction as the reason for their actions.

This, ladies and gentlemen, is what we call “lying with your eyes wide open” in Mandarin.

Given that these flat owners had spit in HDB’s face, HDB was now going to return the favour with their response.

HDB stated that since flat owners were likely reminded of such restrictions repeatedly during the flat purchase process, it is difficult to believe that they were unaware of the MOP restriction.

Further, information on the MOP restriction is readily available on the HDB portal. If not, your lunch kakis would have complained about it too.

Saying that you don’t know about the MOP restriction is like saying you don’t know kopi means coffee.

Purpose of MOP is to Ring-Fence HDB Flats for Owner-Occupation

If the MOP restriction is such a thorn in one’s side, why does it still exist?

Well, the MOP restriction isn’t all that bad. You have it to thank for the roof above your head right now.

As we all already know, HDB flats are built mainly for owner-occupation. With the MOP restriction, flat owners must physically occupy their flats for a few years upon purchase. This ensures that buyers are prevented from buying an HDB flat as a speculative purchase and leaving it empty afterwards.

The benefit is that HDB flats are then ring-fenced for those who genuinely want to own a place to stay.

And of course, the side benefit is that you won’t have to worry that the flat beside yours is haunted after someone else buys it and leaves it unoccupied.

Buying Properties on Trust: Everything You Need to Know

MOP restrictions aside, you can buy properties on trust if your HDB’s MOP is up—that is if you’re cash rich and don’t mind paying 65% of additional buyer’s stamp duty (ABSD).

How it works is this: if you’re buying a property on trust for your child, your child is likely under 21 with no income. This means that when you knock on the bank’s door asking for a mortgage, the bank is unlikely to approve one. As a result, what you’ll need to buy a property on trust is a lot, a lot of cash.

Further, the upfront ABSD to be paid by buyers of trust properties was raised from 35% to 65% last month.

Yes, you read that right. 65%. This gives you a gauge of how much cash you’ll need to buy a trust property for your child.

So unless your father was a doctor who left you millions in his will, you should probably ground your expectations and settle for one BTO.

The Drawbacks of Buying Properties on Trust

Even if you can afford a trust property, you should still think twice before buying a property on trust for your child.

If your child intends to move to Australia to become a farmer, perhaps don’t chain them down in Singapore with long-term plans like trust properties.

There are two critical considerations regarding the drawbacks of trust properties.

First, you should consider if your child wants to purchase their own home in the future.

Say you buy a trust property for your child in Tampines. However, your child is a fervent believer in “West side, best side” and wants to own a home in the West instead.

Due to the trust property you’ve already purchased for them, your child can’t apply for their own HDB flat in the West. They’re stuck between a rock and a hard place—selling the trust property might not be profitable, but keeping it and purchasing a new home means paying the 65% ABSD.

Perhaps the solution here is to accept that the West side is not the best side. 

Next, you should also consider that once you purchase a property on trust for your child, the property belongs to your child.

Property is not like a packet of chicken rice. You can’t say it’s yours just because you were the one who bought it. After purchasing a trust property, you cannot reverse the ownership and claim that the property is yours—doing so could land you in trouble with the law for tax evasion.

You should also consider that if you ever fall out with your child, they could also apply to remove your name as trustee of the property.

So, if you’re not purchasing the trust property with the ultimate goal of it being owned by your child, we’d say: don’t purchase it at all.

For the rest of us, find a partner to BTO with first bah.