Buying a Commercial Property in Singapore – HDB Shophouse

People were getting confuse about the new HDB regulations about housing loans and classifications. If you hear HDB, you would normally associate the word with residential flats. However, the government of Singapore also created another housing project called HDB Shophouse. The HDB Shophouse was placed under the category of commercial properties by the government of Singapore. Normally, you would see this type of housing at the town councils or town centers locations.

Some Of These HDB Shophouses Contains Residential Quarters.

The problem lies really on some HDB Shophouses that carry residential quarters. The design created confusion on how to classify the flat. Some would rather put it under the HDB flat while some would prefer to put it under the partial HDB flats. Partial HDB flats refer to a portion from the total size of the unit.

What if you already own a private property, can you buy a HDB shophouse commercial unit that also happens to have a residential dwelling?

Apparent if we go by the HDB rules that applies on HDB flats, then you cannot buy a HDB shophouse if you already own a Private property.

Say for example the HDB shophouse is 1600 sq feet made up of 2 floors.
— 800 Sq feet on 1st floor and
— 800 sq feet of residential unit on the second floor.

If you have NO outstanding housing loan, then the bank will consider to lend you 80% of the valuation for the property. However, if you have any existing home loan, some banks are considering: -

— Lending you 80% on the commercial portion of the HDB shophouse of 800 sq feet
— Lending you 60% on the residential portion of the HDB shophouse of 800 sq feet

The banks are still trying to figure out how to deal with the classification and computation for the mortgage loan application on this property. There are also numbers of regulations attached to the unit that they need to further figure out because of the category of the housing unit. The question usually focused on the topic of whether to consider it under the commercial or residential category.

The confusion may put the lender and the borrower at risk in terms of treatment and classification of interest and mortgage computation. So we decided to check with HDB on how they Classify HDB shophouses.

Below is the inquiry about the purchase of commercial properties

—————————- Original Message —————————-
Subject: ENQUIRY ON PURCHASE OF COMMERCIAL PROPERTIES
From: ”Yit Hah LEE” >xxxxx@hdb.gov.sg>
Date: Fri, October 21, 2011 6:40 pm
To: Property Buyer Mortgage Consultant
————————————————————————–

HOUSING DEVELOPMENT BOARD

Your Ref :
Our Ref :
Date : 21 Oct 2011
TEL : 1800-8663073
FAX : 63972477/8
EMAIL : pldmail@hdb.gov.sg

xxxxxx
(Email: admin@propertybuyer.com.sg)

Dear xxxxx,

ENQUIRY ON PURCHASE OF COMMERCIAL PROPERTIES

We refer to your email of 19 Oct 2011.

2 Please be informed that although some HDB commercial
properties have living quarters attached to them, these properties are
sold or tenanted out as a commercial property under a single title and
deemed as non-residential. The prevailing policy that persons who buy
non-subsidized flats are not allowed to concurrently own an HDB flat and
private property within the minimum occupation period is applicable only
to private residential property.

3 We have also no restriction for foreigner/ Singapore
Permanent Resident to purchase HDB commercial shops (i.e. shop with living
quarters at 2nd storey or shop without living quarters) provided the
individual(s) are above 21 years of age and is not an undischarged
bankrupt

4 You may visit our website at http://www.hdb.gov.sg>
Commercial Tenants & Lessees > Managing your sold premises. There is
more general information on the procedure; policies for Resale/
Transfer of Shop. Alternatively, you can call our toll-free enquiry
hotline at 1800-8663073

Yours faithfully

LEE YIT HAH (Miss)
SENIOR ADMIN EXECUTIVE
for HEAD, TENANCY; LEASE MANAGEMENT UNIT
PROPERTIES; LAND DEPARTMENT

CLARIFICATION FROM HDB REGARDING HDB SHOPHOUSE

We are thankful to Ms. Lee of HDB for her fast response to clarify the issue of HDB shophouses.

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