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9 Things You Should Know About Minimum Occupation Period


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Obligations During the Minimum Occupation Period


Introduction

The Minimum Occupation Period (MOP) is the main obligation that HDB flat buyers are subjected to. All owners and potential buyers of HDB flats, whether new or resale, should know about the MOP and what are the things that they cannot do during their MOP. We will list 9 of the more important obligations and explain only the most important ones.


Minimum Occupation Period Obligations

Generally, these are the Minimum Occupation Period (MOP) obligations


  • #1 5 years
  • #2 Regardless of whether grant is used or not
  • #3 Cannot own private property during MOP (reason why cannot own private property first)
  • #4 Owners must occupy the house
  • #5 Cannot rent out the whole unit
  • #6 Cannot lock one door and rent out other rooms because owner is not at home
  • #7 Singapore citizen household can buy private property and keep HDB flat after MOP
  • #8 Singapore citizen household also need not stay in HDB flat after MOP
  • #9 Cannot sell into the open market during MOP

Ironically, the MOP is the main reason why HDB owners can own both a HDB flat and private residential property at the same time while private property owners cannot buy a HDB flat afterwards. Once the MOP ended, the HDB owners can purchase another private residential property. However, when private residential property owners purchased a HDB flat (without grants and subsidies), they are now subjected to MOP and have to sell their private residential property within 6 months from completion date of HDB transaction.

During the MOP, applicants, essential occupiers and occupiers that are listed need to occupy the flat. The MOP not only binds the applicants, it also binds the essential occupier.


Occupiers and MOP

If Minimum Occupation Period (MOP) is not reached, the proposed occupiers can be an ex-owner of private property, but still cannot have any interest in private property. If MOP is cleared, then proposed occupiers can own private property for investment purposes. SPR occupiers in a SC household will be able to own a private residential property for investment and continue to be an occupier of the HDB flat that has already completed the MOP.

When we tried to clarify with HDB Officers, the answer we received is that for subsidized HDB flats at the point of purchase, the proposed occupiers must not have disposed interest of private property within the last 30 months. However, when the subsidized flat is within the MOP and you want to add an occupier in, it does not matter when the private property was sold. This also translates to the same meaning as, proposed occupiers can be added in later on even if his private property is disposed less than 30 months ago.


When does the MOP starts

The MOP starts only when the owner starts occupying the flat. This typically is when buyers collect their keys

If all the owners leave Singapore for an extended period for work during the MOP, the MOP will stop, and continue after the owner comes back. If there is at least one owner in the flat, then the MOP will not stop.


MOP that are not 5 years in Today Context

Almost every HDB flat that is purchased has a MOP of 5 years. However, there are rare exceptions. If you are under the Fresh Start Housing Scheme, the MOP is 20 years! If you want to find out more on the Fresh Start Housing Scheme, you can visit our article here.


Conclusion

Breaching the Mop intentionally is a very serious offence and the penalties are very severe too. HDB owners who are thinking of circumventing the MOP for financial gains because you think that you will not get caught should think thrice again. Similarly, Real Estate Salespersons who are thinking of advising your clients to circumvent HDB rules and MOP should reconsider as your career may be destroyed in a moment of folly to earn a little more commission.



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Obligations During the Minimum Occupation Period


Introduction

The Minimum Occupation Period (MOP) is the main obligation that HDB flat buyers are subjected to. All owners and potential buyers of HDB flats, whether new or resale, should know about the MOP and what are the things that they cannot do during their MOP. Generally, the MOP applies a substantial downward pressure on both demand and price. It prevents speculators to unnecessarily push the prices up in the market. As HDB aims to provide an affordable housing for every Singaporean, the MOP is very important, though it causes the asset to be very illiquid.


Minimum Occupation Period Obligations

In today's regulations, the obligations of MOP, years bounded by MOP by different models of flats had converged and almost all newly transacted HDB flats follow the same rule on MOP.

Generally, these are the Minimum Occupation Period (MOP) obligations


  • 5 years
  • Regardless of whether grant is used or not
  • Cannot own private property during MOP (reason why cannot own private property first)
  • Owners must occupy the house
  • Cannot rent out the whole unit
  • Cannot lock one door and rent out other rooms because owner is not at home
  • Singapore citizen household can buy private property and keep HDB flat after MOP
  • Singapore citizen household also need not stay in HDB flat after MOP
  • Cannot sell into the open market during MOP

Ironically, the MOP is the main reason why HDB owners can own both a HDB flat and private residential property at the same time while private property owners cannot buy a HDB flat afterwards. Once the MOP ended, the HDB owners can purchase another private residential property. However, when private residential property owners purchased a HDB flat (without grants and subsidies), they are now subjected to MOP and have to sell their private residential property within 6 months from completion date of HDB transaction.

During the MOP, applicants, essential occupiers and occupiers that are listed need to occupy the flat. The MOP not only binds the applicants, it also binds the essential occupier.

Although HDB owners cannot rent out their flat entirely during the MOP, they can rent out rooms during the MOP. HDB flat owners will need to notify the HDB on the room rental. There are of course other requirements for room rentals. We would like to remind again, that locking one door up and claiming it to be a room rental instead of a whole unit rental is illegal, and it is a very serious offence, especially if it is within the MOP.


Occupiers and MOP

If Minimum Occupation Period (MOP) is not reached, the proposed occupiers can be an ex-owner of private property, but still cannot have any interest in private property. If MOP is cleared, then proposed occupiers can own private property for investment purposes. SPR occupiers in a SC household will be able to own a private residential property for investment and continue to be an occupier of the HDB flat that has already completed the MOP.

When we tried to clarify with HDB Officers, the answer we received is that for subsidized HDB flats at the point of purchase, the proposed occupiers must not have disposed interest of private property within the last 30 months. However, when the subsidized flat is within the MOP and you want to add an occupier in, it does not matter when the private property was sold. This also translates to the same meaning as, proposed occupiers can be added in later on even if his private property is disposed less than 30 months ago.


When does the MOP starts

The MOP starts only when the owner starts occupying the flat. This means that if there is a Temporary Extension of Stay agreement, the MOP will only start after the Temporary Extension of Stay.

If all the owners leave Singapore for an extended period for work during the MOP, the MOP will stop, and continue after the owner comes back. If there is at least one owner in the flat, then the MOP will not stop. If the owner is serving the nation (e.g. Singapore Armed Forces Regular Servicemen), and is posted overseas, then MOP will still continue to progress even when the owner is not occupying the flat.


Waiver of MOP

Waiver of MOP is rare and is very specific to each case. For example, if 2 singles own two flats (both MOP not ended yet) previously, and decided to get married now, they can buy a flat together and dispose the two flats regardless of the MOP because they cannot keep 2 flats at the same time as a married couple. One of the flats can be sold into the open market even if it is still within MOP. The other flat can be transferred to eligible family members.

There is no waiver of MOP if there is a divorce that occurs during the MOP. Divorcees can only sell after the MOP. For new flats directly purchased from HDB, it has to be surrendered back to HDB if the flat has to be sold or cannot be retained before MOP is reached. The compensation for the surrender is dependent on several factors determined by HDB and it generally will not be higher than 95% of the purchased price. It is always much lower price than the open market and these groups of people may lose a lot of profit opportunity. Instead of waiting for the MOP to end, why not try and make things work between the couple till the MOP is reached? There may not be a need for divorce by then. For an article on HDB flat and divorce, please refer to the article here.


MOP that are not 5 years in Today Context

Almost every HDB flat that is purchased has a MOP of 5 years. However, there are rare exceptions. Purchase of resale 1 room flat without CPF Housing Grant has no MOP. Under the Selective En Bloc Redevelopment Scheme (SERS), the MOP is either 7 years from the date of selection of flat, or 5 years from the date of occupation, whichever is shorter. If you are under the Fresh Start Housing Scheme, the MOP is 20 years! If you want to find out more on the Fresh Start Housing Scheme, you can visit our article here.


Conclusion

The knowledge on MOP is very important if HDB owners want to plan and time their sales and purchase of HDB flats and their next house. Breaching the Mop intentionally is a very serious offence and the penalties are very severe too. HDB owners who are thinking of circumventing the MOP for financial gains because you think that you will not get caught should think thrice again. Similarly, Real Estate Salespersons who are thinking of advising your clients to circumvent HDB rules and MOP should reconsider as your career may be destroyed in a moment of folly to earn a little more commission.



Date first posted on 18 June 2019; Last Edited on 14 July 2019

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