%20copy.png)
Should You Keep Or Sell Your Ageing HDB Flat? (Updated 2025)
- Vivian Chong
- Jun 5
- 7 min read
Updated: Jun 6
Some time ago, I caught up with an old friend, Jane, and her husband, Peter.
In 2003, Jane and Peter purchased their first HDB flat. Choosing a resale flat in the neighborhood where they grew up was an easy decision. They are familiar with the area, and their parents can help look after their children while they also keep an eye on their parents.
After a few viewings, they settled on a 5-room flat that was 26 years old at the time.
Fast forward 22 years.
They find themselves at a crossroads, unsure whether to sell or retain their HDB flat.
Many friends have suggested they sell since the flat is already 48 years old. Others have advised them to keep it, as finding a newer flat of this size is challenging.
Jane and Peter love their flat. It is conveniently located near the MRT station, and their children's school is also nearby. This is their matrimonial flat, so it holds significant sentimental value.
As a long-time friend and an experienced real estate agent, I wish to offer them my honest opinion to assist them in making the best decision.
Why They Should Keep Existing Flat
(1) Avoiding a larger loan
Jane and Peter purchased this flat in 2002, a period when HDB flat prices were comparatively low. They have a minimal outstanding loan, and their monthly payments are covered by their CPF funds.
By remaining in this flat, they can avoid taking on a larger loan.
(2) Sizes of newer flats smaller
Older flats offer more space. If space is a priority, it would be difficult and costlier to find a newer flat that matches the spaciousness of their current one.
(3) Familiarity and Sentimental Value
Having lived in this flat for 22 years, Jane and Peter hold significant sentimental value for the place. They've accumulated many memories here, making it a strong reason for them to remain.
Furthermore, they are well-acquainted with the surroundings and have built strong relationships with their neighbors. This is another reason they are reluctant to sell the flat.
Why They Should Sell Existing Flat
(1) Value Depreciation
Determining when a flat begins to depreciate more rapidly is challenging. Nonetheless, the graph below (published in Straits Times on 12 April 2017) can help us understand how an HDB flat's value might decline over time.
The graph above shows that there are three points during the 99-year lease where the flat experiences significant depreciation.
i) Balance lease less than 35 years
Banks require a remaining lease term of 30 years at the end of the loan period, and the minimum loan term is 5 years. If the remaining lease is less than 35 years, buyers will not qualify for a bank loan.
Example:
Mr. Tan bought an HDB flat with 34 years left on its lease. Banks require that a property has at least 30 years remaining on its lease at the end of the loan term, allowing Mr. Tan to secure a loan for only 4 years. Unfortunately, banks also have a minimum loan term requirement of 5 years, making it impossible for him to obtain a bank loan for this property.
The use of CPF remains applicable for down payments and servicing HDB loans.
ii) Balance lease less than 30 years
CPF can no longer be used for down payments or servicing HDB loans.
iii) Balance lease less than 20 years
Loans cannot be used for the purchase of HDB flats at this point.
Regulations Limiting Demand for Ageing HDB Flats
(a) Financing Limits
Ageing HDB flats face restrictions on financing, affecting the Loan-To-Value (LTV) limit.
The LTV limit is set at 75% for both HDB and bank loans if the flat's remaining lease cover the youngest buyer until age 95. If the lease cannot cover the youngest buyer to age 95, the LTV limit is adjusted proportionally based on the flat's remaining lease.
Example:
A young couple wants to purchase a 4-room flat in Marine Parade estate at $650,000 (at valuation). The husband is 30 years old and the wife is 27 years old, both earning $5,000 per month. The lease of the flat commenced in 1976. As such, it has a balance lease of 50 years.
Using HDB Loan
The buyers qualify for an HDB Concessionary Loan.
Using the HDB calculator, we can see that the HDB loan will be pro-rated to 48% of either the flat's purchase price or its valuation, whichever amount is lower.
Since they are able to borrow only 48% of the property's valuation, the couple needs to provide the remaining 52%, which amounts to $338,000!
So what's the implication of this?
The pool of buyers for older flats gets smaller since younger buyers will not be able to secure the required loan amount to buy older flats.
Using Bank Loan
What if they decide to take a bank loan?
For HDB flats, the maximum loan term is 25 years, or until the borrower reaches 65, whichever is sooner.
However, banks require that the remaining lease at the end of the loan term be at least 30 years.
Since the Marine Parade flat currently has a remaining lease of 50 years, the buyers can only secure a 20-year loan. This leads to a higher monthly installment for the couple.
Additionally, HDB buyers must comply with both the Total Debt Servicing Ratio (TDSR) and the Mortgage Servicing Ratio (MSR).
For TDSR, your monthly debt commitments must not exceed 55% of your monthly income. MSR is limited to 30%.
With a reduced loan tenure, monthly payments will increase. Buyers will need a higher income to meet TDSR and MSR requirements if they opt for an older property compared to a newer one.
So what's the implication of this?
The pool of buyers for older flats gets smaller since younger buyers might not be able to fulfill the TDSR and MSR to secure the required loan amount to buy older flats.
(b) Restrictions To CPF Usage
There are restrictions on using CPF for purchasing HDB flats with ageing lease.
Starting from 10 May 2019, the total amount of CPF that can be utilized will be determined by whether the remaining lease covers the youngest buyer until age 95.
If this condition is satisfied, a buyer can use their CPF funds to pay for a property up to its valuation limit. If not, the CPF usage will be proportionally reduced.
In the example mentioned earlier, the remaining lease of 50 years is insufficient to cover the wife, who is currently 27 years old, until age 95.
If they purchase the 4-room flat in Marine Parade valued at $650,000, they can only utilize a total of $403,000 from their CPF.
If they purchase a 4-room flat of similar price with a newer lease that extends to cover the wife until age 95, they can utilize $650,000 from their CPF to fund the property.
To determine how much CPF you can use for purchasing a property, please visit CPF Housing Usage Calculator.
So what's the implication of this?
The demand for older flats will be impacted since buyers will need to rely more on cash for their down-payment or when paying their monthly loan installments after reaching their CPF limit.
(c) Valuation of HDB Flat at End of 99-year Lease
All HDB flats have a 99-year lease, which means that the value of the flat decreases to zero once the lease ends.
Some people might be hoping for Selective Enbloc Re-development Scheme (SERS).
However, many were alarmed when this headline appeared in the Straits Times on 24 March 2017:
“Don’t assume all old HDB flats will become eligible for SERS.”
At the time, Minister of National Development Lawrence Wong warned that only 4% of HDB flats have been selected for SERS since 1995.
For the majority of HDB flats, the leases will eventually expire, and the flats will be returned to HDB, which then relinquishes the land to the State.
Thus, it is crucial to keep this in mind when deciding whether to sell your old HDB flat.
Recommendations
Following an extensive conversation, Jane and Peter choose to sell their old HDB flat.
They intend to upgrade to a condominium in the wife's name and purchase a smaller condominium for investment purposes in the husband's name.
You might want to read more about how they derived this decision in my article "Is Your Home An Asset?".
If you're living in an older HDB flat and want to explore your options, feel free to schedule an appointment with me for a no-obligation conversation!
Looking forward to speaking with you!
Related Readings
About The Author
Vivian joined the real estate industry in 2002.
Over the years, she has transacted numerous property deals, including HDB and private properties. She is well-versed in policies and regulations involving selling and purchasing residential properties. She has also handled complicated transactions like contra, divorce, administration/probate cases, and decoupling / part-share purchases.
Aside from her professional achievements, Vivian is a dedicated mother to 2 boys. Her role as a real estate mom has allowed her to strike a balance between her career and family, spending quality time with her children as they were growing up. Both boys are passionate footballers, and she takes great joy in supporting them at their school and club games.
Vivian is an active real estate salesperson and team leader. Call her at 98577714 for your real estate matters or if you are looking to join the industry.
![[SOLD] Marine Parade HDB For Sale - 3-room flat at Blk 8 Marine Terrace](https://static.wixstatic.com/media/497f2c_3593054b50c24d068dbdecb260772df8~mv2.png/v1/fill/w_840,h_473,al_c,q_90,enc_avif,quality_auto/497f2c_3593054b50c24d068dbdecb260772df8~mv2.png)
