What is HDB Housing and How Does it Work

HDB housing is a system of public housing in Singapore, managed by the Housing and Development Board. It offers quality homes at affordable prices for rent or purchase. The HDB provides rental flats to more than 700,000 households as well as owning about 90% of Singapore’s residential properties through its 99-year leasehold scheme.

Every year, there are new projects being built with many different types of accommodation which include studios, one-room apartments, two-room apartments, and three-room apartments. HDB Properties are considered an especially good investment because they have long leases that will not be expiring anytime soon. Read more about this type of housing system below.

What is HDB Housing?

Housing and Development Board or “HDB” is a statutory board under the Ministry of National Development in Singapore.  Their main goals are to promote homeownership so that renting a HDB would be easy for people. It provides public housing to more than 80% of Singaporeans, which can include ownership of flats and rental of flats from the HDB itself. However, it does not operate for profit thus majority of its revenue goes into building new public flats.

There are 3 different categories of HDB housing that is offered:

1. New flat: To build a new HDB flat, the government acquires and develops idle land to convert it into a residential site (usually in the outskirts or near town area), and this process usually takes 4-5 years until moving in. This method is quite popular amongst the majority of Singaporean families since it offers the most affordable flat prices.

2. Executive Condominium or EC: This is a new type of public housing that was introduced in 2003 which combines the benefits of renting, owning, and living in a condo for elderly who are above 55 years old. The main difference between this and an actual condo is that ECs are sold at a fixed price instead of being rented or bought.

3. Rental: HDB provides rental flats for lower to middle-income families under the direction of the Ministry of National Development. As most Singaporeans have been renting from Tenants’ Unions, they have been accustomed to this system and thus highly populated.

How Does It Work?

Since housing boards are under the Ministry of National Development, they do not operate for profit thus majority of its revenue goes into building new flats. For example, HDB receives only 30% to 35% of its revenue from issuing HDB loans; it earns approximately 70% through home sales and rentals collection.

A typical HDB family, which has applied for a flat through the resale market, usually starts off by picking out the type of flat that they are interested in. The flats are then put up for sale at open-market prices where they will be sold to the highest bidder within 6 weeks.

After choosing their preferred flat, applicants will have to apply for a housing loan with HDB which usually takes about 3 months. After completing the application, applicants have roughly 2 weeks to pay a deposit of over 20% of their desired flat. They will pay an additional 10% if they want to book the flat within that time period. Allocated flats are then sold on a first-come-first-served basis.

What Are The Drawbacks?

One major drawback is the eligibility criteria as they do not allow young couples to buy their own flat usually because they still depend on their parents financially. In addition, flats are usually located in the outskirts or near town areas as a means of creating a buffer zone between residential and commercial areas. Although this is favorable since it helps to maintain good living conditions, it also becomes inconvenient for those who have jobs that require them to be at work during peak hours. Married couples who need to both work and study can often find themselves struggling to keep up with the mortgage payments.

The Benefits

1. Increase in Housing Options

One of the benefits is that HDB has created a diverse range of housing options. This allows Singaporeans to live with their parents or families if they do not have enough money to buy their own flat. It also provides more affordable housing options for young couples who are unable to afford private housing units, which usually are out of reach for people with mid-level incomes.

2. Retirement Protection Scheme

The Government provides a retirement protection scheme that gives applicants the opportunity to withdraw part of their Central Provident Fund (CPF) savings when they move into residential property, provided that they have saved up 20% or more of their home purchase price using their CPF savings. This is beneficial because it gives Singaporeans peace of mind that they will be financially stable when they retire.

3. More Stable Housing Prices

Since the Government has a large stake in housing, they provide stability to its prices on all public housing units which means that every Singaporean has equal access to affordable housing. This is beneficial because it allows couples to buy their own flat without having to worry that the prices will skyrocket in the future.

4. Better Living Conditions

Public housing flats are often located nearer to town centers which makes it more convenient for their residents. This, in turn, creates a better living environment because there is less traffic and noise pollution around them; hence, making it a more enjoyable place to live.

HDB Housing is a public housing program designed to provide affordable homes for low-income families and individuals. This article has been about what exactly HDB Housing is and how it works so if this post piqued your interest feel free to read more about it.