What You Need to Know about HDB’S PRIME LOCATION PUBLIC HOUSING (PLH) MODEL
On 26 October last year, the Singapore Government announced a new model for public housing in Singapore, also known as PLH (Prime Location Housing). A PLH is a new housing model launched by the Ministry of National Development and Housing & Development Board to keep public housing in prime locations affordable, accessible and inclusive for Singaporeans. What does it all mean for home buyers and how does it affect Singaporeans? Our designers analyzed and give their thoughts in this article.
What is the PLH model?
Essentially a cooling measure to counter the bullish HDB resale property market and keep public housing affordable, accessible and inclusive for all Singaporeans, the PLH model has stirred ongoing controversy. Aimed at keeping flats in prime locations affordable and inclusive, it imposes a number of restrictions on prospective buyers, such as:
An income ceiling of $14,000 for the combined household
The minimum occupation period (MOP) has been extended to 10 years (compared to 5 years for non-PLH flats)
They must not have owned private property for 30 months prior to purchase (buyers of non-PLH flats must dispose of private property within 6 months of purchase)
The whole flat is never allowed to be rented out, even post-MOP, though spare bedrooms may be
When and if they ever sell it, they must pay a percentage of the sale proceeds back to HDB, in cash, to reimburse the additional subsidies initially provided by HDB on account of the relatively high purchase price (known as ‘clawback’)
Singles are not allowed to buy PLH flats
Only Singapore citizens may apply (non-PLH BTO flats are available to couples comprising one citizen and one PR, while resale flats are available to PR couples)
Should you purchase a PLH?
When considering whether to apply for a PLH flat or not, there are a few factors. First, you should think about where you see yourself in five years’ time.
If you see your first home as a mere stepping-stone to something better, and plan to upgrade to an EC or private property as soon as possible, a PLH flat is not for you. Obviously.
If you are happy to stay put for 10 years, but probably not for much longer than that, then a PLH flat might be an attractive prospect. However, its appeal probably lies more in the lifestyle it represents rather than in its investment potential.
Some industry pundits have predicted that due to the slew of restrictions on buyers, which mostly apply to second and subsequent owners too, the pool of potential buyers for resale PLH flats that ‘come of age’ will be limited. All upgraders who retain an HDB property and enjoy a passive rental income – they’re out of the picture, because PLH resale flats are not allowed to be rented, and PLH owners are not allowed to own a private property.
In short, limited buyers could potentially keep the prices down, which is of course exactly what HDB wants. Good for society – yes, no doubt. Good for the individual investor – not so much.
PLH Flats your home to 'settle down'
For families who are ready to settle and looking for a home for the foreseeable future – a ‘forever home’ – then a PLH flat could be ideal.
No doubt there will be young couples who relish the convenience of walking to cinemas, upscale restaurants and shopping malls – diehard city slickers, if you like. They will consider the lack of flexibility in terms of freedom to move an acceptable trade-off for the bright lights of an urban lifestyle. If and when they have children, our ever-expanding SMRT network will connect them to every corner of the island (and possibly render a private vehicle redundant) – including their children’s schools, tertiary institutions and workplaces.
Then there will be older couples, who are looking for a home to live out the rest of their days. Their children may be in secondary school or older. The extended MOP will be of no consequence to them.
For these groups of buyers, the key to the good life in Singapore could well be the keys to a PLH flat.
In addition to the possibly daunting 10-year MOP, do not neglect the time it will take to construct new PLH HDB estates. Due to global supply chain issues with building materials and the ongoing labour shortage, it’s impossible to pin down completion dates for major projects.
Realistically, if your ballot for a PLH flat is successful, you’re probably looking at upwards of 15 years before you can contemplate selling – five years (or more) of waiting for construction to be completed, and 10 years for MOP on top of that. Fifteen years is a large chunk of a lifetime.
Set a Timeline for Your Lifetime
All the speculation surrounding the new PLH model serves to underline the fundamental importance of planning. In other words, it’s time to get your life’s timeline in order.
Sure, it takes a little spontaneity out of the adventure. But when travel restrictions are eased, there’ll be plenty of opportunities to venture off the beaten track. Meanwhile, a comfortable home will continue to be a source of physical and emotional comfort, and financial security.
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