All You Need To Know About HDB’s Prime Location Public Housing (PLH) Model

On 26 October 2021, the Government announced a new model for public housing in Singapore, known as PLH (Prime Location Housing). What does it all mean for home buyers? Let’s take a look.

What exactly is the PLH?

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. The main ones are:

• 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)

To PLH or not to 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.

Think about it. 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 as ‘Forever Homes’

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.

Through the crystal ball

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.

Soul-searching, House-hunting or Reno-planning

Whether PLH is a good choice for you and your family, is a question only you can answer.

Meanwhile, should you reconsider your decision to buy a new home, why not lay low and improve the one you’re in now? Or if you can afford a resale flat – in view of the fact that a million dollars-plus is the going rate for flats in prime locations, why not buy a run-down one and make it your own with a well-planned home renovation?

A home renovation can help elevate your quality of life for years to come – with a price tag of thousands, not hundreds of thousands. If you switch your sights from a new home to a home renovation, there’s no better place to start looking than HomeRenoGuru.sg, Singapore’s No. 1 renovation portal. You can browse hundreds of photos of real-life local home renovations, source obligation-free quotes within your budget, and find the perfect Interior Designer to co-create your Dream Home with you.