SINGAPORE - A new classification of flats that differentiates Build-To-Order (BTO) projects by the attractiveness of their location, such as proximity to MRT stations and the city centre, will take effect from the second half of 2024.

All new BTO flats launched from the second half of 2024 will be classified into one of three categories – Prime, Plus or Standard – to reflect the changing housing landscape, said Prime Minister Lee Hsien Loong in his National Day Rally speech on Sunday.

The new categories will replace the Housing Board’s current framework of classifying estates as either mature or non-mature, which has been in place since 1992.

Prime flats, which are located in the choicest locations close to the city centre, have the tightest restrictions.

These flats are currently offered under the Prime Location Public Housing (PLH) model and have the most subsidies applied to keep launch prices affordable.

One step down is the new Plus category, which are flats in attractive locations within each region across Singapore, such as those near the MRT station or town centre.

Such flats are less centrally located than Prime flats, but more desirable than Standard flats. Hence, Plus flats will come with restrictions less strict than those for Prime flats, but tighter than those for Standard flats.

Standard flats will continue to form the bulk of the housing supply. These will come with the standard five-year minimum occupation period (MOP) and have no restrictions on the pool of resale buyers.

PM Lee said the new framework will not affect existing home owners or those who have already booked flats, as BTO projects that have been launched will not be reclassified.

It is needed to achieve three important objectives, he said, which is to keep flats affordable to all income groups, maintain a good social mix in every town and region, and keep the public housing system fair for everyone.

Citing the upcoming Bayshore area in Bedok as an example, PM Lee said its proximity to Bayshore and Bedok South MRT stations, a future shopping mall, Siglap Community Club and East Coast Park means BTO projects there will likely be offered under the Plus model.

Buyers of Prime flats will have to live in their flats for at least 10 years and return additional subsidies upon resale.

These conditions will be extended to Plus flats, which will be priced with more subsidies than what is already provided for Standard flats to put them within reach of more households. But the subsidy clawback rate for such flats will be lower than for Prime flats due to the smaller subsidy amount.

To moderate prices at both the initial sale and on the resale market, Plus flats will come with stricter resale conditions, said PM Lee.

The pool of resale buyers for Plus flats will have to meet some BTO eligibility conditions, including an income ceiling. More details will be announced soon.

Resale buyers of Prime flats face stricter rules – they have to meet all the prevailing BTO eligibility conditions, such as the income ceiling cap and not holding or selling a private property in the last 30 months.

The subsidy recovery for Prime and Plus flats applies to only the first resale transaction, not to subsequent resales. This is because of the additional housing subsidies provided to keep the prices affordable when both flat categories are launched at BTO sales exercises.

HDB and the Ministry of National Development said clawing back the additional subsidies will help mitigate “excessive windfall gains” if Prime and Plus flat owners choose to sell their units later on, and ensure fairness across all home owners.

Since November 2021, HDB has launched 12 BTO projects under the PLH model, with a subsidy clawback of 6 per cent for all.

The authorities noted that it will take more than 10 years before Plus flats are available in the resale market.

HDB said it will continue to monitor the impact of the measures on the broader resale market and review them where necessary.

The Government will gradually provide more housing grants – especially those that are means-tested – to ensure that lower- and middle-income households get the most support to own their homes, said PM Lee.

He noted that the changing housing landscape meant that the distinction between mature and non-mature estates has blurred over the years as non-mature estates have been much more developed today, citing Jurong East, Woodlands and Punggol as examples.

BTO application rates reflect this, where some choicer projects in non-mature estates are even more popular than projects in mature estates, he said.

“It shows that buyers are discerning – you know when you see a good deal, and what matters to you are the specific attributes of the project, rather than whether we call it mature or non-mature,” said PM Lee.

With fewer undeveloped sites left to build new public housing, HDB will increasingly build more flats within or near existing estates and in more central areas such as Mount Pleasant, where around 5,000 BTO flats will be built, he said.

New projects like these, nestled in older, developed areas with more amenities, will be more popular, and naturally cost more, he added.

Noting that the new framework of Standard, Plus and Prime flats will be a major change to the way HDB sells flats, PM Lee said it will allow the Board to build a good mix of projects within and across regions to cater to different needs and budgets.

“That is how we can fulfil our commitment to keep high-quality HDB flats accessible and affordable to you and to your children for a very long time to come,” he said.

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Watch PM Lee’s National Day Rally speech here: