It happens – sweet nothings devolving into verbal antagonistic missiles as the relationship takes a turn for the worse. It becomes even more complicated when a HDB flat is involved. We explore the financial implications and the ways to lessen the blow.
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The romance has all but fizzled out and the fat lady, she with the falsetto voice and remarkable throat clearing abilities, is in the middle of her solo. While break-ups and divorces in most other countries are quite procedurally straightforward, separations in Singapore can be a rather complicated affair, especially when a HDB flat is involved.
For those not in the know, most Singapore courtships begin in school and plod along steadily until marriage. The key difference though is that many couples apply for public housing, also known as a HDB flat, three to four years before actually tying the knot and being legally married in the eyes of the law. Singapore might be the only country in the world where it’s more practical to put the cart in front of the horse.
Having said that, a lot can happen in that three- to four-year wait. The worst: breaking the engagement or separating before the flat is completed.
Practical reasons aside, applying for a HDB flat is a huge financial decision that shouldn’t be taken lightly. Many young couples jump feet-first into the balloting pool in their rush to score a house without properly considering the possible fiscal consequences. Unfortunately, there aren’t many resources out there that explain the different options available to a young couple who have decided to separate before the marriage ceremony, so we’ve listed down the possible consequences as well as what you can do to minimise the financial impact of letting go of your HDB flat.
READ: The Financial Guide to Buying Your First HDB Flat
The Fiancé and Fiancée Breaks Up
It might seem cruel but when you and your significant other break up before the flat’s completion, neither of you are allowed to retain the flat. Cruel? Perhaps. But, it’s the HDB’s (practical) way of preventing any possible marriage scams. Also, the both of you aren’t allowed to apply for a new flat or a resale flat with housing grants for the next one year. Again, this is HDB’s practical way of preventing folks with frivolous intentions from queuing up and balloting for a flat.
On the financial front, the both of you will lose the 10 percent downpayment you put up when you applied for the flat. It could be anywhere between S$20,000 and S$50,000. Ouch.
Is there any way to prevent losing the not-so-financially-insignificant downpayment? Short of going ahead with the marriage, there’s nothing that you can do to prevent the cash from going down the drain. There is a way to mitigate this possible outcome – list your parents as co-applicants or occupiers in the flat. Then, you can transfer the ownership of the flat to your parents. Of course, this means discussing this with your significant other.
The scenario above is for a situation when you’ve paid the option and downpayment fees but haven’t gone for the appointment to sign the Agreement of Lease with HDB. However, if everything has been completed and you’re just waiting for the house keys but unfortunately decide to break up, then the financial implications are more devastating.
Everything that you’ve paid for up until that point is forfeited. Most importantly, you have to return the grants that have been given to you, with interest. HDB will mail you a letter to authorise the return of the grants that were put into your CPF and not doing so is tantamount to owing money to the government.
Again, the only way around this is either to go ahead with the marriage or transfer the ownership of the flat to the parents whose names were listed in the application.
Heading for a Divorce after Getting the Flat
The both of you are married in the eyes of the law and staying in the flat but have decided to head to the divorce courts. Both of your names are listed in the flat’s documents. In these cases, the courts are usually the ones who decide on the fate of the HDB flat.
Usually, the courts grant ownership of the flat to the party who retains custody of the child or children.
However, if there are no children in the marriage, the ex-couple can sell the flat in the open market if the Minimum Occupation Period (MOP) of five years has been met. Alternatively, one person can take over the flat if he or she is at least 35-years-old, thanks to the Single Singapore Citizen Scheme.
What happens if the MOP is not met and there are no children in the marriage? The owners will have to return the flat to the HDB and will be given compensation for the flat, which is determined by HDB. According to a HDB spokesperson, the compensation varies according to a few factors:
- The mode of purchase
- The occupation period
- The purchase price
- The valuation of the flat
The good news is that the financial consequences aren’t as critical as the first scenario. The only payments that you need to fork out might include the lawyer fees and stamp duties, if applicable.
READ: Do the Dead Affect HDB Prices? Nope
A Way to Lessen the Financial Implications
Singaporeans are practical folks and we’ll be willing to put in an insane amount of legwork and hard work just to lessen the financially excruciating impact of a break-up or a divorce.
The best way is to include your parents, either as co-applicants or occupiers. This method gives you the most possible options that you can choose from should things go south in your relationship.
There is another way. It does require you to be legally married but you won’t have to see each other’s faces in the morning – rent the rooms out. This way, you’ll still be earning money from your investment while not having to deal with the emotional fallout from your separation. Do note that you cannot technically rent the whole flat out if the MOP hasn’t been fully met.
Whatever way you choose, understand that the HDB flat is a significant financial and emotional investment, and that if you and your significant other are bickering with each other, it might be financially smarter to see a marriage or relationship counsellor instead.
What happens if one party in a joint condo purchase refuses to continue paying for the condo through CPF?
If CPF is insufficient, then a cash top up would be necessary.
If the one party defaults, the other is liable to repay the loan.
Would really appreciate for some help here.
Its is a pity that my partner and I have decided to part our ways. We are already at the stage where we have already paid our Staggered 5% downpayment to HDB for the HDB loan. At the stage we are in now, is there any ways me or she could include our immediate parents name, sell away the old house and to be moved over to this BTO?
I think you have to check with HDB on the matter. Maybe can also ask your MP for help if needed.