If you have ever looked through the various HDB schemes and grants, you would have noticed the term “essential occupier” making a constant appearance. Depending on the scheme and grant requirements, your parents, spouse and even children may need to be listed as an essential occupier of your HDB flat. Does this mean that if you stay in the flat, you must be an essential occupier?
In this article, we dispel the notion that you must be an essential occupier if you are just residing in the flat and the cases where it is necessary to be or have an essential occupier.
Who Is An Essential Occupier
The essential occupier is an interesting construct that HDB has created to ensure that families are prioritised in public housing.
According to HDB, an essential occupier must be a family member, who forms a family nucleus with the owner, to qualify for an HDB purchase. This happens because the family member cannot or may not be listed as a co-owner for any reason. The essential occupier is only necessary when the flat owner is not eligible to purchase the flat on his or her own or to fulfil certain grant or scheme requirements.
Source: HDB
When It Is Necessary To Have An Essential Occupier
You will need to have an essential occupier when the family member, who forms the family nucleus with you, cannot be a co-owner, usually because of age or other restrictions.
For example, if you are widowed, divorced or separated and below the age of 35 (and thus not eligible to buy a flat under the Singles Scheme), your children under your custody can form a family nucleus with you as an essential occupier and to qualify you for an HDB purchase. However, they cannot be listed as co-owners as they are underage.
In the case of a foreign spouse purchasing a flat under the Non-Citizen Spouse Scheme, your foreign spouse must be listed as an essential occupier because HDB does not allow foreigners to have any ownership of an HDB flat, even if they are married to a Singaporean.
Read Also: Non-Citizen Spouse Scheme: How You Can Buy An HDB BTO Or Resale Flat With A Foreign Spouse
When You May Choose To Have An Essential Occupier
On one hand, you may choose to list an essential occupier to maximise the amount of grants you are eligible for.
For example, to qualify for the Proximity Housing Grant, your parents just have to stay within a 4 km radius of your HDB purchase. However, if you list one of them as an essential occupier, the amount of grant you can receive will increase from $20,000 to $30,000 for couples and from $10,000 to $15,000 for singles.
You may (or may not) be aware that couples with one Singapore Permanent Resident (SPR) spouse have to pay a $10,000 premium on flats purchased from HDB. If you and your SPR spouse have a Singapore Citizen (SC) child, you may wish to list your child as an essential occupier to qualify for the $10,000 Citizen Top-Up – which acts similar to a rebate on the amount you paid – earlier than waiting until your SPR spouse obtains citizenship.
Likewise, couples with one foreign spouse may also list their SC child as an essential occupier to form a family nucleus to qualify under the Public Scheme and be eligible for a larger amount of grants, instead of qualifying under the Non-Citizen Spouse Scheme.
Read Also: Complete Guide To HDB Housing Grants In Singapore For Different Types Of Flats
When You May Choose Not To Have An Essential Occupier
On the other hand, you may choose not to have an essential occupier because of the minimum occupancy period (MOP) requirement. Essential occupiers are subject to the same MOP of 5 years as owners of the flat.
For example, if your adult child has plans to buy a BTO or resale flat eventually, listing him or her as an essential occupier may be hindering their plans unnecessarily if you already qualify to purchase your flat on your own. Likewise, if there are plans for your parents to move out and live separately, it may not make sense to lock them down to the MOP of your flat by listing them as essential occupiers.
An essential occupier is only necessary to form the family nucleus that HDB requires for flat purchase. If you are 35 and above, you can purchase the flat as a single and have any family member or non-family member stay with you.
You can also remove the names of the existing occupiers from the flat if they are no longer staying in the flat and if it does not affect your eligibility to retain the flat under the eligibility scheme. However, it’s also important to ensure that the removal of the essential occupier does not affect your eligibility to retain the flat.
Read Also: 35 And Single? Here Are HDB Housing Options Available For You
Your Spouse Can Be An Essential Occupier Instead Of A Co-Owner
A little-known fact is that your spouse, regardless of citizenship, can be listed as an essential occupier instead of a co-owner. Presumably, this could lead to interesting property investment opportunities and circumvent the need to decouple in the future. However, before you do so, do recognize that this may affect your ability to finance the flat as only co-owners can borrow and contribute to the mortgage.
The essential occupier also has no legal rights to the property unlike in a joint tenancy. This means that in the event of the owner’s passing, the flat would be subject to either the distribution of the will or the intestate law. The flat ownership does not automatically transfer over to the spouse who is an essential occupier instead of a co-owner.
Thus with these caveats in mind, do give stronger consideration to who are your essential occupiers and whether they should be listed as one or not before you make your next HDB purchase.
Read Also: 5 Potential Pitfalls To Know Before Decoupling To Buy A Second Property In Singapore
To help illustrate the essential occupier, we bring to you this DollarsAndSense webcomic: Why The Essential Occupier Of An HDB Is Important
This article was originally published on 14 September 2020 and updated with webcomic illustration.
The post Who Is An Essential Occupier Of An HDB Flat And When Is It Necessary To Have One? appeared first on DollarsAndSense.sg.
