HDB versus Condo, Which is Better?

This is the property version of Android versus iOS. Always an intensely debated topic with die-hard supporters from both camps. I’ll be comparing the key differences on HDB versus Condo. These pointers are useful for aspiring HDB upgraders to consider before making their next property move.

Cost of Maintenance – SC&CC vs. MCST Fee

For HDBs, there’s a monthly SC&CC (Service & Conservancy Charges) while Private Residential charges MCST fee. Both fees pretty much serves the same purpose of operations and maintenance to the estate.

The scope of maintenance includes provision of cleaning, waste disposal, landscaping and M&E services (lifts, pumps, electrical switchboards, etc). The scope is quite similar for both asset class except most private properties are guarded by a 24 hours security team.

Typical SC&CC cost about $60 monthly for a 4 room flat while a 3 bedder condo charges about $300 to $400 monthly for the MCST fee. The fees can also vary depending on the size and age of the development. Do note that the MCST fee is split into maintenance fund (for daily operating costs) and sinking fund (for cyclical replacement and repair works).

That’s about 5 to 6 times more condo owners are expected to pay as compared to HDB owners!

Dedicated Facilities vs. Public Facilities

Given the premium that condo owners pay, they get to enjoy dedicated facilities like swimming pools, gyms, BBQ pits, function rooms and lush gardens. They also have 24 hours security coupled with access control to ensure your estate is safe.

For HDBs, they do have similar facilities like BBQ pits and function spaces at the void decks. In terms of security, HDB estate common areas are open to public and doesn’t have access control to deter strangers from showing up at your doorstep unannounced.

Financing – MSR vs. TDSR

HDB buyer is subjected to MSR (Mortgage Servicing Ratio) while for private property is TDSR (Total Debt Servicing Ratio). The MSR caps the monthly mortgage amount to 30% of your income while TDSR limit stands at 60%.

Besides using bank loans for financing public housing, HDB concessionary loans are also available for eligible buyers. For comparison sake, the current HDB loan interest rate stands at 2.6% versus 1.1% (this is what i’m getting for 2 year fixed rates) for private properties.

Option of Leveraging

In my earlier article on reasons we should invest in real estate, we discussed about leveraging through taking an equity term loan. This option is not available for HDB owners as this asset class is subsidised by the government. The concept of HDB was to provide affordable housing for Singaporeans.

Private residential owners however has the flexibility to leverage on their property without selling it. In summary, you can borrow against your own property subject to certain conditions.

Purchasing Eligibility

As HDBs are subsidised housing, purchasers have to meet certain criteria in order to qualify. These criteria are known as the HDB Eligibility Schemes and are subjected to further eligibility conditions like income ceiling.

Private residential properties can be purchased singly or jointly with anyone who can meet the financing criteria. You can be more “creative” in the method of holding the property.

For example after selling my matrimonial home (a HDB BTO flat), my husband and I decided that getting one each will optimise our leverage at this point of our life.

Summary

While the above pointers are not exhaustive, it is clear that holding either asset class has its pros and cons. It really boils down to the stage of life you’re in, so we can’t put a finger to which is better.

From affordability to preference of lifestyle, there’s a multitude of factors to consider which asset best suits your family needs. For my personal property road map, my decisions are based on lifestyle + potential capital appreciation.

How does your property road map looks like?

Stay focus and consider speaking to a professional to gain more clarity.

All the best to your property journey!

Your Friendly Property Consultant,

Wanni 😉

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