options to purchase

HDB option to purchase


The HDB Option to Purchase (OTP) is a key document used to purchase a resale Housing and Development Board (HDB) flat in Singapore. It is an agreement between the seller and buyer, allowing the buyer to reserve the flat for a specified period by paying an option fee. The OTP grants exclusivity to the buyer, meaning that during this period, the seller cannot sell the flat to anyone else.

Key Features

1. Reservation Period:

Upon payment of an option fee, the buyer is typically granted a reservation period lasting 21 days. Other buyers cannot view or make offers on the flat during this time.

2. Exercise Price:

The exercise price is the agreed-upon purchase price stated in the OTP. This amount will be paid if the buyer exercises their option within the reservation period.

3. Validity Period:

The OTP has a validity period that remains legally binding and enforceable. Typically, it is valid for up to 12 weeks from its issue date, providing sufficient time for both parties involved.

4. Financing Arrangements:

Buyers are advised to arrange their finances before exercising their option, as financial institutions will need time to process loan applications.

5. Buyer's Decision:

At any point during or even after the expiration of the end-of-reservation dates, buyers can choose whether they want to proceed with buying these flats. They will lose them if you have less than the remaining booking fee.

Process Flow:

Seller Initiates

The seller agrees to sell their HDB flat and contacts potential buyers.

The seller prepares an OTP document upon mutual agreement on terms and conditions such as price and completion date.

Buyer Reviews

Upon receipt of the OTP from the seller's agent or representative, the buyer reviews it and considers whether to proceed with the purchase.

Buyer's Decision

If the buyer is not interested,

The buyer informs the seller or the agent that they are not interested in purchasing the flat.

The OTP becomes void, and both parties can move on.

If the buyer is interested,

The buyer exercises their option by signing the OTP document and paying a deposit (typically 1% of the purchase price).

After exercising, both parties will work towards completing financial arrangements, such as loan application approval.


Legal completion occurs on an agreed-upon date after completing financial arrangements, including obtaining a housing loan if necessary.

On this day, upon payment of the remaining funds from the buyer side, the seller hands over possession of the HDB flat to the buyers.

Deposit to Sellers in HDB Option to Purchase

In an OTP, the buyer must pay a deposit to the sellers as a show of commitment to purchase the flat. This deposit, also known as the option fee, is usually a percentage of the agreed purchase price and is paid directly to the sellers.

The deposit to sellers in an HDB OTP typically consists of two components:

Option Fee: This is the initial deposit the buyer pays the seller upon exercising the option. It is usually 1% of the agreed purchase price, but it can be negotiated between the buyers and sellers. The option fee is non-refundable if the buyer decides not to proceed with the purchase, but it will be deducted from the purchase price if the transaction is completed.

Cash Over Valuation (COV): In certain cases, the agreed purchase price may be higher than the HDB's flat valuation. The difference between the agreed purchase price and the valuation is known as the COV. The buyers must pay the COV in cash to the sellers as part of the deposit. The amount of COV can vary depending on the demand for the flat and the location.

It is important for buyers to have sufficient funds to cover the deposit to sellers when entering into an HDB OTP. Buyers should also take note of the timeline specified in the OTP for exercising the option and paying the deposit, as failure to meet these deadlines may result in the termination of the option.

Remember to seek professional advice from a qualified real estate agent or lawyer when navigating the HDB OTP process to ensure a smooth and secure transaction.

Procedure to enter into a contract using the OTP

The procedure to enter into a contract using the HDB Option to Purchase (OTP) is as follows:

1. Offer by Buyer

The buyer (also known as the option holder) submits an offer to purchase the HDB flat to the seller (also known as the option Issuer). The offer should include the proposed purchase price, option fee amount, and other conditions or requests.

2. Acceptance by the Seller

If the seller agrees to the terms of the offer, they will sign a copy of the OTP to indicate their acceptance. The seller must sign within 21 calendar days from the option date or by any timeline mutually agreed upon by the buyer and seller.

3. Payment of the Option Fee

Upon acceptance of the offer, the buyer must pay the option fee to the seller. The option fee is usually 1% of the purchase price and must be paid in cash or check.

4. Exercise the option

The buyer can exercise the option at any time during the OTP's validity period, usually 14 calendar days from the option date. To do so, the buyer must complete and sign the Acceptance of Offer portion of the OTP and submit it to the seller.

5. Execution of the Sale and Purchase Agreement

After the buyer exercises the option, the buyer and seller will sign the Sale and Purchase Agreement (S&P Agreement). This agreement contains all the terms and conditions of the sale, including the completion date and any other agreed-upon conditions.

6. Completion of the Sale

On the completion date specified in the S&P Agreement, the buyer will pay the seller the remaining purchase price (after deducting the option fee). The completion process also involves the transfer of ownership and key handovers.

Please note that this is a general outline of the procedure, and specific details may vary depending on the circumstances and agreements between the parties involved. It is always advisable to consult with a professional real estate agent or lawyer to ensure a smooth OTP process.

Negotiating the Resale Price

One essential step in the HDB Option to Purchase is negotiating and agreeing with the buyers on the resale price of the flat, which is the amount at which the flat will be sold to them.

Factors to consider

During the negotiation process, it is crucial to consider several factors that can influence the resale price. These factors may include:

Market Conditions: Understand the current market conditions, including property trends, demand, and supply.

Location: Consider the flat's location, which can significantly impact the resale price.

Flat Attributes: Consider the flat's specific attributes, such as its size, design, layout, condition, and amenities.

Renovations: Assess any renovations or improvements made to the flat, as they can affect its value.

Comparable Sales: To understand the market value, look at recent transactions of similar flats in the area.

Valuation Report: Consider obtaining a valuation report from a professional appraiser to estimate the fair market value of the flat.

Strategies for Negotiation

When negotiating the resale price, it's important to approach the process strategically. Here are a few strategies to consider:

Know Your Budget: Determine your desired minimum and maximum prices based on your financial situation and expectations.

Be Flexible: Be prepared to negotiate and make reasonable compromises to reach a mutually beneficial agreement

Highlight Unique Features: Emphasise any unique features or value-added aspects of the flat that may justify a higher price.

Use Recent Transactions: Reference recent transactions of similar flats to support your proposed price.

Consider Time Factors: Understand both parties' urgency and time constraints, as they can impact negotiation dynamics.

Seek Professional Advice: Consult real estate agents or property experts who can advise on pricing strategies and negotiation techniques.

Ultimately, through effective communication, understanding, and a willingness to find a compromise, you can negotiate and reach a mutually agreed-upon resale price.

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What is an HDB Option to Purchase (OTP)?

It is a legal document granting buyers the exclusive right to purchase an HDB flat at an agreed-upon resale price within a specified period. The sellers (existing flat owners) typically grant the OTP to potential buyers.

How does the granting of OTP work?

The granting of OTP involves several steps:

Agreement on the resale price: The buyer and seller negotiate and agree upon the resale price of the HDB flat. This price will be stated in the OTP.

Preparation of the OTP: Once the resale price is agreed upon, the seller(s) will prepare the OTP document. The OTP will include details such as the flat address, the agreed resale price, and the validity period of the OTP.

Granting of OTP: The seller(s) will grant the OTP to the buyer(s), giving them the exclusive right to purchase the flat at the agreed price within the validity period. The OTP should be signed by all sellers and buyers involved.

It is important to note that the grant of an OTP does not guarantee the sale of the flat. It only grants the buyers the exclusive right to purchase the flat within the specified period.

What are the benefits of granting an OTP to the buyers?

Granting an OTP to the buyers provides them with certain benefits, including:

Exclusive right: The buyers have the exclusive right to purchase the flat within the validity period of the OTP. This means that the sellers cannot entertain other offers during this period.

Price protection: The agreed resale price stated in the OTP provides buyer price protection. If the property market prices increase during the validity period, the buyers can still purchase the flat at the agreed price.

Time to arrange for finances: The buyers have ample time to arrange their finances, such as securing a home loan or obtaining the necessary funds for the purchase.

The grant of an HDB Option to Purchase (OTP) gives buyers the exclusive right to purchase the HDB flat at an agreed-upon resale price within a specified period. It provides benefits such as price protection and time to arrange finances.

HDB Option to Purchase: Buyers to Exercise the OTP or Allow OTP to Expire

When purchasing a flat under the HDB (Housing and Development Board) scheme in Singapore, buyers must go through a process called the Option to Purchase (OTP). During this process, they are given a fixed period to decide whether to proceed with the purchase.

Here are two options buyers can choose from:

Exercise the OTP: If buyers wish to purchase the flat, they must exercise the OTP during the specified option period. This means they officially indicate their intention to buy the property within the allocated timeframe. By doing so, buyers are committing to the purchase. They must proceed with the subsequent steps, such as arranging the necessary financing and fulfilling any other conditions stated in the OTP.

Allow the OTP to expire: If buyers decide not to proceed with the purchase, they can opt to let the OTP expire. In this case, they do not take any further action to indicate their interest in buying the flat. Allowing the OTP to expire means the option period has lapsed, and the buyers are no longer bound to purchase the property.

It's important to note that once an OTP expires, you will have to wait for a certain period before you can be granted another OTP. This waiting period is known as the "cooling-off period" and is typically six months from the expiration date of the previous OTP. During this time, the seller cannot grant an OTP to any other buyers for the same property.

It's advisable to carefully consider your decision before exercising the OTP or allowing it to expire. Consulting with a real estate professional or doing thorough research on the property and its market value can help buyers make an informed decision.