Category Archives: HDB

SECOND concessionary loans from the Housing Development Board (HDB) – once reserved for the most part for upgraders – will be far more widely available from today.

Homebuyers will also be made to dip into their own pockets first before reaching for a loan, with HDB reducing the amount of the second concessionary loans it grants.

Under changes announced yesterday, buyers who move down to smaller flats or to the same type of flat will find it much easier to get the loan.

In the past, second concessionary loans were granted to downgraders only on a case-by-case basis.

The more liberal policy announced by National Development Minister Mah Bow Tan yesterday will help Singaporeans right-size to a home they can sustain over the long-term, to encourage financial prudence.

Mr Mah added that restricting the loan for upgrading might drive households to upgrade even if it were not a prudent move.

‘With greater economic volatility, the flexibility to right-size will be more important… But I hope residents will take that second loan carefully and cautiously,’ he said.

HDB buyers who have sold private properties will remain ineligible for a second concessionary loan.

Many Members of Parliament have been calling for this change for some years.

The HDB said that the change will benefit families which need to right-size to smaller flats but which lack sufficient proceeds from the sale of their existing flats.

It will also be less generous with the way second concessionary loan amounts are awarded.

The loan will be reduced by a homebuyer’s full CPF balance and part of the cash proceeds from the sale of the first flat in an effort to further ensure financial prudence.

But the household can retain at least half of the cash proceeds, or $25,000 in cash, whichever is greater.

The right-sizing of loan amounts will ensure that flat buyers do not take a larger than necessary concessionary loan, reducing the likelihood of subsequent mortgage arrears, the HDB said.

‘(These changes) will help homebuyers manage their finances for their flat purchase upstream, and avoid financial difficulties downstream,’ Mr Mah added.

PropNex chief executive Mohamed Ismail said the changes would allow homeowners to unlock the capital appreciation of their homes over the past three years and to reorganise their finances.

Source : Straits Times – 6 Mar 2010

THE suggestions flew fast and furious yesterday as MP after MP rose in Parliament to speak on the hottest topic of the day: How to make housing more affordable and better for Singaporeans.

Proposals ranged from ideas already much-discussed – such as extending the minimum occupation period for HDB flat buyers to discourage speculation – to the new and extreme, including disallowing private property owners from buying HDB flats altogether.

A total of 15 MPs took turns to question the Ministry of National Development (MND) about its policies yesterday as Parliament kicked off the Committee of Supply debate, in which each ministry has to defend its spending plans for the coming financial year.

Another seven MPs are scheduled to query the MND on Monday when the debate resumes.

In all, the ministry, which covers housing and land-related matters, attracted more than 40 queries from MPs – more than any other ministry in the entire Committee of Supply debate.

Some of the most radical recommendations yesterday came from Mr Hri Kumar Nair (Bishan-Toa Payoh GRC), who proposed removing the income ceiling for HDB flat buyers so that any Singaporean who wants to buy a flat can do so.

However, private property owners should be forbidden from buying any HDB flats at all, he added.

To prevent speculation in the private property market, Mr Nair also suggested that foreigners who resell their property within three years of buying it should pay a tax on any profit they make.

Buying and selling the option to purchase a property should also be discouraged by making these options non-transferable or taxing gains made from these transactions, he said.

Mr Nair and Mr Cedric Foo (West Coast GRC) also mooted the idea of building a ready supply of new flats for buyers with urgent needs, rather than allocating units only under the Build-To-Order (BTO) scheme.

Alternatively, Mr Foo added, HDB could start building BTO flats sooner: after 50 per cent of the units had been booked, rather than the current 60 to 70 per cent of bookings required.

In response, Minister for National Development Mah Bow Tan said it is better to build flats based on real demand as demonstrated by actual bookings.

‘If we built ahead of demand, we could end up with a large stock of unsold flats, as in the early 2000s,’ he said.

He added that the waiting time of ‘three years plus’ for a BTO flat is no different from that of private developments. ‘For those who cannot wait, they can buy from the resale market immediately, but at a premium for speed and choice.’

Mr Mah also addressed Mr Liang Eng Hwa’s (Holland-Bukit Timah GRC) query about the BTO system needing to be tweaked as many applicants drop out of the queue when they cannot get their ‘choice’ flats.

While the system may not be ideal, it is a fair one, he said. ‘There will be some flats which are not ‘ideal’… We cannot promise everybody a flat of their choice.’

MPs including Dr Lim Wee Kiak (Sembawang GRC), Madam Ho Geok Choo (West Coast GRC) and Mr Masagos Zulkifli (Tampines GRC) had also raised concerns about speculation in the HDB market and high cash-over-valuation (COV) levels.

To this, Mr Mah stressed that ‘the HDB resale market is a free market, and we should keep it that way’.

He said the COV is the result of negotiation between willing parties and reluctant buyers can always walk away.

In any case, Mr Mah added, the bulk of resale flat buyers are citizens who do not own private property, and ‘there is no evidence’ that specific buyer groups such as permanent residents or private property owners are driving up prices.

HOW ABOUT…

…prohibiting private property owners from buying HDB flats?

…removing the income ceiling for HDB flat buyers?

…taxing foreigners who resell property within 3 years of buying it?

…building a ready supply of new flats for buyers with urgent needs?

Source : Straits Times – 6 Mar 2010