How Will the Prime Location Public Housing (PLH) Model Affect Me?

Last Updated on January 3, 2022

In a joint announcement, MND and HDB announced the development of the Prime Location Public Housing (PLH) model in Oct 2021, after comprehensive discussions with the public, industry experts, and industry stakeholders.

The key features of the PLH model is the doubling of Minimum Occupation period to 10 years, and increased restrictions on who can buy, sell or rent these flats.

In addition new PLH flats will be priced with additional subsidies than regular Build-to-Order (BTO) flats, so that these PLH flats remain affordable despite their prime locations.

Why is the PLH model necessary?

This new model ensures that new public housing built in prime, central locations like the city centre and the future Greater Southern Waterfront will remain affordable, accessible and inclusive for Singaporeans both at the initial purchase and for any subsequent transaction on the open market.

In Singapore, nearly 4 out of 5 people live in HDB flats, of which about 90% own their homes. At the heart of Singapore’s public housing programme is affordable, accessible, and inclusive. Therefore, it is imperative that public housing for residents in prime locations reflect the same values.

Due to their attractive locations and attributes, these downtown flats are consistently breaking the million-dollar barrier, and would likely only be affordable to the well-off if left exclusively to market forces.

These charts show that in 2021, Singapore has hit a record number of million-dollar HDB transactions, and many of these are located in prime locations such as Pinnacle@Duxton (in Tanjong Pagar). These deals can also occur outside prime areas, such as the The Peak at Toa Payoh, and other similar projects in Bishan.

The BTO launch site at Rochor will be the first project under the PLH model during the Nov 2021 sales exercise. HDB estimates that there could be an average of 1 PLH project each year from 2022 onwards.

How will the PLH model affect sellers and landlords?

Because PLH flats are in prime locations and additionally subsidised to meet affordability standards, flat owners will see their Minimum Occupation Period (MOP) doubled to 10 years before they can sell.

In addition, while they may rent out their spare bedrooms, they will not be allowed to rent out the whole flat after MOP. These conditions, outlined in the table below, will apply to those who buy PLH properties from HDB or on the open market.

However, the government intends to require resale of PLH flats only to buyers who can meet prevailing eligibility conditions for BTO flats. This can be in the form of an income ceiling, which is currently set at $14,000 monthly household income. This is because, without the eligibility conditions, the resale prices of these prime location flats may rise beyond the reach of many Singaporeans.

HDB also intends to recover the additional subsidies upon the sale of PLH flats as a means of evening out with BTO flat owners who are not entitled to these additional subsidies. The subsidy recovery percentage will be proportional to the level of the extra subsidy provided, but exact figures have not been released yet.

How will this affect future buyers?

The eligibility conditions for buying flats under the PLH model are mostly the same as those prevailing for the purchase of BTO flats. However, the quotas for the Married Child Priority Scheme (MCPS) will be revised and adjusted depending on the location of the sites. Currently they have not announced the new quota of flats that will be reserved under MCPS.

This article was originally published on Ohmyhome.

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