BTO stands for the build to order flats, which is a responsive system designed to ensure flexibility and timing of construction against purchase of the HDB flat buyers. How does this work?
The HDB announces the location and prices of the new HDB flats. If you are interested to buy a unit because of the location, you need to submit your interest to buy or application to buy within the stated application period. Make sure you make it on time because the selection is made through a computer ballot. The computer ballot organizes the queue positions of the applicants in booking the flats.
When the booking starts, you will receive an invitation by the HDB to book a flat. When the booking period ends, the demand for the flats will be assessed and the decision to either build or abandon the project will be evaluated. If the demand is low, there would be no contract to sell. If the demand is high, tenders would be collected for the construction. The key to the flat is given to the applicant after the project is completed.
The May 2015 sales of non-mature estates flat distribution went up to 50% as of the two-room flats. In 2014, there were about 22,455 BTO flats constructed by the government. For the 2015, the government plans to cater only to first time and second timer families and also, those who want to live with or near their parents.
The government clearly stated their desire to lower the production until the backlog of demand is cleared. There would be fewer larger new HDB flats. To meet the demand of the singles, studio flats and 2 room flats would be prioritized in the construction.
The eligible first timer families can enjoy up to $60,000 housing grant. The grant would be $40,000 AHG and $20,000 SHG. Considering that singles over 35 are allowed to own HDB flats, the government needs to evaluate BTOs demand from the studio designs to the large 5 room units.
Last Month (May 2015), the government offered about 4,044 BTO flats and 5,837 balance flats. The locations of the BTO flats are on the non-mature towns of Sembawang and Punggol. The new flats have been priced with subsidy because of the project design and existing market conditions.
However, there is a slight problem. Second timers need to dispose their HDB flats within six months of collecting their keys. Because of this, the resale of their existing flats came out lesser. The resale prices started falling in 2014 because of the loan curbs and many buyers prefer the new BTOs. In addition, second flat purchases are not so attractive to buyers anymore.