HDB Contra 2023 - Buying and Selling HDB at the same time

Looking to downgrade or upgrade your HDB to another HDB in 2023 and wondering how to go about doing it?

Not to worry, we are here to share some useful tips that can help you in this process – specifically this HDB Contra Scheme.

Many second-time home buyers face similar concerns too.

Here’s a list of the most common questions we hear from our clients all the time:
- How do you sell an existing HDB flat and buy a new one?
- Should I sell my HDB flat first or buy first?
- How long is the process of selling and buying HDB flats?

Since selling off an existing flat and purchasing a new one involves a potential buyer, a potential seller and yourself, it is a much more complicated process than when you first bought your first home.

What is the HDB Contra Scheme about?

The HDB Contra Scheme, otherwise known as the Enhanced Contra Facility, is a useful but little-known scheme to help second-time home buyers.

A joint effort by HDB and the CPF board, it allows sellers to sell their existing HDB flat and concurrently buy another HDB resale flat using the proceeds (as well as the refunded CPF monies).

What does that mean for you (the seller and second-time home buyer)?

It means you will need to pay a much lesser amount of cash upfront for your new HDB flat and get a reduced mortgage loan for the new flat.

Why?
Because the proceeds from your old home will be used automatically to pay for the new home including the insurance premiums for the CPF Home Protection Scheme.

However, do note that the CPF refunded monies cannot be used for the payment of fees like stamp duty and conveyancing fees.

How does the HDB Contra Scheme work in real life?

Still unclear about how it works? No problem. We’ll use a simple case study to illustrate how the HDB Contra Scheme can work for you.

Parties involved:

Group A – Aaron (Potential Buyer): Wants to buy your existing HDB flat
Group B – You (Seller of existing HDB and buyer of next HDB): Wants to buy Cherrie’s HDB flat
Group C –Cherrie (Seller of Cherrie’s HDB): Wants to sell her HDB flat to you

Still unclear about how it works? No problem. We’ll use a simple case study to illustrate how the HDB Contra Scheme can work for you.

However, amongst the three groups, only one group is eligible to apply for the scheme at any one time.

If you apply for the Enhanced Contra Facility, Aaron and Cherrie will not be eligible to apply for their own sale and purchases.

Conditions for applying Enhanced Contra Facility

Like all government schemes and grants, there are conditions for applying.

Do remember to check if you fulfil these necessary conditions before going ahead with this.

You can apply for the ECF (Enhanced Contra Facility) if you are selling your existing HDB flat and buying an HDB resale flat. However, the buyer of your flat and the seller of your new flat cannot apply for this same scheme.
You cannot be an undischarged bankrupt or have any bankruptcy proceedings against you. HDB may not approve the ECF application if any of the following apply:
- There is a mortgage in favour of a financial institution
- There is a CPF mortgage/ charge on Flat A and/ or Flat B
Private solicitors must be engaged
ECF is not available for the following types of resale applications:
- Conversion Scheme
- Sale of part-share of an existing flat
Contra party buys another resale flat using a housing loan from a bank
The resale of Flat A must be completed before or on the same day as the completion of the resale of Flat B

Step by step guide to apply for HDB Contra

Fulfilled the conditions above, completed your HDB MOP completion and ready to apply for the Enhanced Contra Facility? Let us guide you step by step:

1) Log in to HDB Resale Portal and register your Intent to Sell.

2) Starts marketing your HDB flat for sale.
It can be done either DIY or by engaging a real estate agent to facilitate the two-way negotiations.

3) Upon successfully finding a Buyer (Group A), you can grant the Buyer (Group A) an Option To Purchase (OTP).
Must use the HDB prescribed (OTP) Option to Purchase as the form of contract in resale transactions. Do note, the Option Period for the (OTP) Option to Purchase is 21 days.
Buyer must exercise the OTP within that period, if not the deposit will be forfeited.

4) Following that you should register an Intent to Buy in the HDB Resale Portal and start looking for next HDB flat.

5) Upon successfully finding a flat you would like to purchase, Seller of the new house (Group C), will need to grant an Option to Purchase (OTP) to you.

6) All Groups, Sellers and Buyers, will submit a Resale Application within a previously agreed timeframe. Group B will indicate in Resale Application that he/she is applying for ECF.

7) Upon approval (HDB’s Approval Letter is posted in the HDB resale portal), the buyers and sellers will be notified via SMS or E-mail.

8) HDB completion normally is scheduled after 8 weeks from the date of Acceptance of the resale application after the required documents are submitted successfully.

HDB contra timeline

This is the timeline for selling or buying a HDB.

You can use this as a reference to plan for HDB contra timeline.

Bonus for our readers

Are you planning to buy or sell an HDB flat in Singapore?

If so, you may want to consider HDB contra as a financing option. With HDB contra, you can potentially reduce your cash outlay and simplify the buying and selling process.

As real estate consultants with years of experience in the HDB market, we can help you navigate the intricacies of HDB contra and ensure a smooth transaction.

Applying is a breeze – just hit that shiny “Schedule” button.

Who should apply?

Existing HDB homeowners who are considering upgrading to a larger flat or downsizing to a smaller one.
Real estate agents who want to advise their clients on the various financing options available for HDB flats.
Anyone interested in the Singapore real estate market and the unique features of HDB housing.