There are changes to the HDB concessionary loan and the Minimum Occupation Period. Here’s a rundown of what these new measures are and how they will affect you.

1. Lifting of Upgrading Condition
Current Situation
If you’re upgrading to a larger flat, HDB will give you their super-low second concessionary loan; but only if you are upgrading (ie. 4rm to 5rm). Downsizers have to trawl the banks for a market-rate loan.

New Situation
HDB will give you a second concessionary loan regardless. So whether you’re upgrading, downgrading or ‘rightsizing’ as they call it, HDB will be there with their loan.

Private property owners, you’re on your own. You won’t get a second HDB loan when you sell your condo/landed/apartment.

Say you’ve just sold your old flat and bought a new one for $500k. From the sale of your old flat, you pay back the CPF refund of $100k, take a loan of $450k from HDB for the new flat and walk off with $100k in cash.

New Situation
After using your $100k CPF refund to offset the loan for the new flat, half of your $100k cash ($50k) proceeds have to be channeled to your loan. This means that you will get a reduced loan of $300k ($450k – $100k – $50k), but you will only have $50k in cash.

So sorry guys, the cash you will get from your COV has been effectively reduced by 50%. There’s an exception though, you will get to keep at least $25k from your cash proceeds. This means that if your cash proceeds is $40k, you’ll get to keep $25k and the remaining $15k will be channeled to your loan.

Also, in the event that you’ve bought your new flat before you sold your old one, HDB will lend you a larger loan first (since you’ve haven’t got the money to offset your new house yet), but at average bank market rates. When you’ve sold your old flat, they will take the proceeds to offset your loan as per above and give you a new loan based on their concessionary rates.

Oh yeah, this measure is WITH EFFECT FROM TODAY.

Confused? Look at this example by HDB.

3. Raising the Minimum Occupation Period (MOP) for the resale of non-subsidised HDB flats
Current Situation
a. Resale HDB/DBSS Buyers who take a housing grant and New HDB flat buyers have a Minimum Occupancy Period (MOP) of 5 years before they can sell their flat.

b. Those who did not take a housing grant, but took a HDB concessionary loan will have an MOP of 2.5 years.

c. Those who did not take a housing grant, and took a bank loan will have an MOP of 1 year.

New Situation
a. NO CHANGE

b. MOP changed to 3 years

c. MOP changed to 3 years

The Minimum Occupation Period (MOP) for the resale of non-subsidised HDB flats has been revised upwards to three years.

Announcing the change in Parliament on Friday, National Development Minister Mah Bow Tan said the objective of such a move was to reinforce the idea that HDB flats are for owner-occupation.

He stressed that flats are not meant for speculation or short-term profit.

And with the extension of the MOP, he said the demand in the resale market will more accurately reflect the interest from buyers who are buying flats for occupation.

Non-subsidised HDB flats refer to resale flats bought without a CPF Housing Grant.

Currently, those who buy such flats with an HDB loan are subjected to an MOP of 2.5 years.

Those who take a bank loan or do not take a loan at all are subjected to an MOP of one year.

The revised MOP takes effect from Friday but existing lessees of non-subsidised flats will not be affected.

Source : Channel NewsAsia – 5 Mar 2010

HDB resale flat owners must occupy their flats for at least three years before they can sell them. The move is to further curb speculation in the HDB resale market.

But the board’s also extending help to genuine buyers by revising its second concessionary loan policy.

An HDB flat is meant for residents to live in not for short-term profit. It’s a message that housing authorities have repeatedly stressed in recent months.

And now, the government is acting further to keep speculators out.

From Friday, if you buy a non-subsidised resale flat without taking a CPF grant, you can only sell it after three years.

With this change, HDB said demand in the resale market will more accurately reflect the interest of genuine buyers.

Also with effect from Friday, if you buy a non-subsidised resale flat, without taking a CPF grant, you can only sell it after three years.

Previously, such buyers on an HDB loan have a minimum occupation period of two and a half years.

For those on bank loans, it’s one year.

All households can now apply for a second mortgage loan from the housing board for their next flat.

This excludes those who have disposed of their private properties.

But under new rules, they can only keep S$25,000 or half of cash proceeds, whichever is higher.

So for instance, a couple sells their existing flat first, and gets S$80,000 in cash and S$60,000 in CPF refund.

To pay for their next HDB flat, they will use half of their cash, or S$40,000, and the entire CPF refund.

In turn, HDB will grant them a loan that is S$100,000 less and the couple keeps S$40,000 in cash.

If the couple buys another flat before selling their existing one, the HDB will give them a loan based on commercial rates.

They will also have to draw down on their CPF balance.

Once they sell their old flat, say after six months, they have to redeem this loan using part of their cash proceeds and the CPF refund.

Interest on the HDB loan will then revert to concessionary rates.

Previously, only those moving to bigger flats were eligible for the loan.

But authorities said this may have driven some to upgrade even though they cannot afford it.

National Development Minister Mah Bow Tan said: “The changes to the second concessionary loan will help Singaporeans right-size to a home that they can sustain over the long term. It will help homebuyers manage their finances for their flat purchase upstream, and avoid financial difficulties downstream.”

The minister also urged buyers to choose within their means.

Source : Channel NewsAsia – 5 Mar 2010

TOWN councils can look forward to government help in paying for lift upgrading.

Senior Minister of State for National Development Grace Fu said it is considering a one-off subsidy for town councils, estimated at $130 million in total.

The amount each will receive will depend partly on the complexity and scale of the lift upgrading project, she said yesterday.

Town councils will be given the details later this year.

They now co-pay the cost of the Lift Upgrading Programme (LUP) to make it more affordable for residents.

While this is well-intended and should be upheld, it must be ensured that this co-payment ‘does not overstrain the town councils’ ability to meet other cyclical works, which are also for the benefit of residents’, said Ms Fu.

She added that even though the Government bears the bulk of the cost of the LUP, at $5.5 billion, town councils still have to co-pay about $360 million in total – not a small sum.

This can pose a ’significant burden’ for some town councils, especially those with a high concentration of flats built in the 1980s, when homes were built to allow greater privacy. These flats will require costlier lift projects.

Ms Fu was answering questions from MPs, such as Mr Ahmad Magad (Pasir-Ris Punggol GRC) and Mr Masagos Zulkifli (Tampines GRC), on the lift upgrading burden on town councils.

She also provided an update on the LUP, saying it was ‘on track’.

The Government has identified more than 90 per cent of the blocks eligible for lift upgrading, and 50 per cent have works completed or ongoing, she said.

The HDB will select the remaining blocks for upgrading over the next two years or so and the whole programme will be completed by 2014, as earlier announced.

Source : Straits Times – 6 Mar 2010

THE Lease Buyback Scheme will be expanded to include an additional 3,800 households of elderly folk.

It will now include people who have owned four-room or bigger flats. Previously, the scheme was restricted to those who own three-room or smaller units.

The HDB said in a statement yesterday that although these homeowners would have received substantial proceeds from the sale of their earlier flats, some could still be in need of help. They include those who may have downsized many years ago.

The second group added into the scheme are households with an outstanding mortgage exceeding $5,000 but who would be able to buy an immediate annuity under CPF Life for at least $60,000 with the HDB payout. Previously, the household had to have less than $5,000 outstanding on a home loan.

The changes, which were outlined in Parliament yesterday, kick in on April 1.

They will make 3,800 more elderly households living in three-room or smaller flats eligible for the scheme, said HDB.

This will bring the total number of eligible households to 34,800 – which is 82 per cent of elderly households in three-room and smaller flats.

The Lease Buyback Scheme started in March last year and helps the elderly sell their HDB flats to the Government for cash. HDB buys back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household.

For example, if a flat has 70 years left on the lease, HDB buys 40 years of the lease from the owner at market rate with the cash going into a CPF Life annuity in the owner’s name. He receives a monthly income stream for life.

To be eligible, a home owner must be 62 or over, own a three-room or smaller flat, have enjoyed only one housing subsidy and must have lived in the flat for at least five years. The household must also not have owned or currently own a private home and must not have a monthly household income exceeding $3,000.

Ang Mo Kio GRC MP Lee Bee Wah hopes to see the scheme extended to elderly households currently living in four-room flats.

Source : Straits Times – 6 Mar 2010

The HDB resale market is hot but for some home owners, selling off their homes for a quick buck is not on their minds.

Among them is sales executive Claudia Woo, 31, who has lived in the same three-room HDB flat all her life. She lives with her retiree father, her assistant teacher mother and her brother, who is a civil servant.

The Woos bought their flat in Henderson Road for slightly more than $13,000 in 1974. Today, the flat is worth about $310,000. Despite this, the family has no plans to move.

‘This area has great amenities – we have two wet markets, and both Redhill and Tiong Bahru MRT stations are nearby,’ says Ms Woo. ‘Getting to town is also easy, so we have no plans to shift.’

An HDB study showed that nearly one in 10 flats transacted last year involved homes that were owned for less than three years. In 2006, these accounted for only 6 per cent of all transactions.

Last month, Prime Minister Lee Hsien Loong urged Singaporeans to treasure their homes and not use them as an easy means to make a quick buck or settle a debt.

Speaking at a Chinese New Year dinner, he said: ‘Property is for people to buy to live in, not for speculating.’ He also added that home owners can pass their flats on to their children.

Housewife Tan Lee Lee, 65, plans to do just that. She moved into her four-room Ang Mo Kio flat 25 years ago. Her youngest son, Bryan, 33, is still single. ‘I won’t sell the flat so I can give it to him eventually,’ she says.

Life! meets four home owners, who each have been living in the same flat for more than 30 years, and finds out why they have no plans to move out.

taysc@sph.com.sg

Hip Holland Village is her ‘kampung’

Who: Madam S.H. Khoo

Age: 63

Occupation: Retiree

Lives in: Four-room HDB flat in Holland Drive

Bought it for: $15,500 in 1974

Now it is worth: $440,000

Length of stay: 36 years

It is just a stone’s throw away from the hip and happening Holland Village, but for Madam Khoo, home feels ‘like a kampung’.

The divorced retiree lives with her son-in-law’s aunt in a four-room HDB flat in Holland Drive.

‘Most of the neighbours have been living here for more than three decades, and we all know and look out for one another. I don’t want to move because I like the kampung feel of the area,’ says Madam Khoo.

‘If I had to move, I would miss my neighbours most.’

She had previously been living in a three-room flat in Tanglin Halt and moved to Holland Drive in 1974 when she needed more room.

Her two grown-up children moved out when they got married.

Despite spending more than 30 years here, Madam Khoo is still staying put.

‘The area is quiet. You can hear the birds chirping in the evening and it is very accessible,’ she says.

Her flat was upgraded in the late 1990s and she got a bigger kitchen.

It takes her 15 minutes to walk to the nearby Bouna Vista MRT station and it takes about 30 minutes by bus to Orchard Road.

Her grandchildren who live in Holland Road are a five-minute cab ride away.

She adds that shopping for groceriesis also a breeze as there is a wet market nearby, and supermarkets FairPriceand Cold Storage are both within walking distance.

The area used to have a cinema that has since made way for a shopping mall. Holland Village has also become noisier at night, but Madam Khoo does not mind.

‘I’ve grown to love this place and can even walk around it with my eyes closed,’ she says. ‘I’m definitely not selling my home for now.’

Madam Khoo who has lived in her Holland Drive flat for 36 years

Name: Madam Ger Hui Luan and Mr Koh Min Chai

Ages: 70 and 76

Occupation: Housewife and general worker

Live in: A three-room HDB flat in Ang Mo Kio Avenue 10

Bought it for: $17,000 in 1979

Now it is worth: $290,000

Length of stay: 31 years

For the Koh family, the annual reunion dinner on the eve of Chinese New Year is a rowdy affair. About 16 adults and children squeeze around a dining table in the kitchen, enjoying a steamboat meal.

‘It can be a tight squeeze but we all enjoy it,’ says Madam Ger. ‘My kitchen is big enough for all of us. If I moved into one of the newer flats, we wouldn’t be able to do this.’

The family moved into the flat in 1979 from a one-room unit in Aljunied. ‘It became too small as we have four children,’ says Madam Ger. Their three-room apartment in Ang Mo Kio provided the family with much needed space.

Today, the couple’s three married sons have moved out. Their only daughter still lives with them. The couple, who have been married since 1956, use one bedroom, while daughter Guek Liang takes the other.

‘When I was taking care of my grandchildren a few years ago, Guek Liang’s bedroom was big enough to fit six of them,’ says Madam Ger. ‘Nowadays, bedrooms are so small.’

It is not just because of the spacious flat that the Kohs have no plans to move out.

‘This area is very convenient,’ says Madam Ger, who heads across the road to the wet market on alternate days to shop for groceries. The avid cook whips up dinner every night.

There is a bus stop at the foot of the block with direct buses to Ang Mo Kio Interchange, Bedok and Chinatown.

From her airy living room, Madam Ger can see Bishan in the distance.

What used to be grassland in front of her block is now an industrial park, with low-rise flatted factories, but she does not mind.

‘There is no noise or fumes, and the factories don’t block my view,’ she says.

Her neighbours on the same floor are also long-time residents. ‘Only two families have moved out.’

She says that ’some residents in this block moved out and ended up moving back here again, because they miss the area’. She adds: ‘There is really no need for us to move.’

Madam Ger, who has been living in her Ang Mo Kio flat for 31 years

Name: Madam Chan Ah Loi and MrTok Kin Guan

Ages: 68 and 67

Occupations: Housewife and general worker

Live in: A three-room HDB flat in Clementi West Street 1

Bought it for: $17,300 in 1979

Now it is worth: $270,000

Length of stay: 31 years

Madam Chan and Mr Tok are certainly doting parents: When their children wanted a home with a view of the sea, they obliged and the family moved into a three-room flat in West Coast with a sea view.

Previously, they lived in a one-room flat in Bukit Merah.

‘We moved also because there wasn’t enough space in that small flat for three growing children,’ says Madam Chan.

Mr Tok adds that ‘this location is ideal as there are schools nearby, so the kids did not have to travel too far to study’.

Two children have married and moved out. Their eldest daughter, who is single, lives with them.

Besides the availability of schools nearby, the couple are staying put because of the area’s amenities.

West Coast Park and Clementi Woods, which are within walking distance of their home, have proven to be popular with the couple, especially Madam Chan who heads to Clementi Woods for daily walks.

She also goes to the wet market across the road every day to buy groceries and to chat with her neighbours at the hawker centre. If she needs some cool respite, sheheads for West Coast Plaza mall just next door to ‘enjoy the air-conditioning’.

Her only complaint about the location is that there is no MRT station nearby. The nearest, Clementi, is a five-minute bus ride away.

There are direct buses to Chinatown, Orchard, Bugis and Bedok, which the couple find useful.

As for that sea view, it became partially blocked when in 1993, a residential block on top of what is now West Coast Plaza was built. ‘Now we can see only some parts of the sea,’ she says.

Still, the couple have no plans to move. ‘I find it troublesome to get settled into a new area. I’ll have to make new friends again,’ she says.

Her immediate neighbours are also long-time residents. Only one family has moved out.

She is hoping that eventually ‘one of my children can live next door’. But it does not look like that will happen any time soon.

‘We are so comfortable here that no one wants to move,’ she says with a laugh.

Madam Chan on how her view from her West Coast flat has been affected by a residential block that was built in 1993

Name: Kervis Ho

Age: 39

Occupation: Administrative executive

Lives in: A three-room HDB flat in Toa Payoh

Bought it for: $7,000 in 1969

Now it is worth: $320,000

Length of stay: 39 years

For Ms Ho, home has been this three-room flat in Toa Payoh since the day she was born.

In her childhood days, her mother, together with seven children, would sleep in one bedroom. Her late father had the other bedroom.

‘It was indeed a squeeze,’ recalls Ms Ho, the youngest in the family. The family lived in rental flats around Singapore before moving here.

Since 2004, she has been living on her own. Some of her siblings moved out when they got married. Her divorced mother lives with another single brother in Kallang Bahru. Her father, before he died, transferred the flat’s title deed to her.

Though she finds the kitchen and toilet too small, she likes the flat’s location as it is opposite Toa Payoh Central. ‘Sometimes I cycle to FairPrice supermarket across the road or exercise at the nearby sports complex.’

Getting to town is easy, too. It is about 15 minutes by car. She can also take direct buses or the MRT.

About half of the neighbours in the same block arelong-time residents. ‘They’re mostly aunties and uncles,’ says Ms Ho. ‘We’ve known one another for a long time.’

Once, she left her keys in the door and went out. Her neighbour called her about it. ‘She kept the keys for me for the day. We trust each other,’ she says.

The flat was upgraded in 2003, when an extra room was added at the back of the apartment. But it was the renovation that MsHo had done in 2004 that she is most proud of.

Gone are the old cement flooring and messy cables. For $10,000, she put in new tiled flooring and gave the flat a fresh coat of paint. ‘You can’t tell that this is a 41-year-old flat,’ she says.

Source : Straits Times – 6 Mar 2010

NATIONAL Development Minister Mah Bow Tan yesterday addressed the issue of flat owners up in arms over the fact that new rental flats will be built in their neighbourhoods.

Appealing for their understanding, he said: ‘In land-scarce Singapore, give and take is often necessary to make space for the different groups in our society.’

He was replying to Madam Ho Geok Choo (West Coast GRC) during the debate on his ministry’s budget estimates.

She brought up residents’ grievances that they had not been consulted about the move to build rental flats in their neighbourhoods.

Mr Mah said residents were informed of construction works before these started.

‘As far as possible, HDB will minimise blockage and inconvenience from the rental blocks. As for concerns about resale prices, HDB’s data suggests that rental blocks alone do not affect prices,’ he added.

Responding to demand from Singaporeans, the Housing Board recently decided to build 7,000 more rental flats in various parts of Singapore over the next three years.

This will increase the supply of rental flats to 50,000 units.

Combined with changes to eligibility rules, the increased supply will halve waiting time for such flats – from 21 months a year ago to 12 months now.

This way, the Government ensures that the truly needy get rental flats faster, Mr Mah noted in response to Mr Teo Ser Luck (Pasir Ris-Punggol GRC) and Madam Ho.

Mr Teo recounted the story of a couple with two young children – aged two and four – who appealed to him for help. They lived in a room in a friend’s house, but because their friend needed the room back, they ‘were extremely anxious and helpless’ while waiting for a rental flat to be allocated to them.

Said Mr Teo, who is also Senior Parliamentary Secretary at the Ministry of Community Development, Youth and Sports: ‘Time is of the essence… While they are waiting, they can’t afford to live anywhere else, (so) they end up living outdoors.’

Mr Mah assured MPs that the HDB ‘has a heart’ and will help those in genuine need.

But he also pointed out: ‘The problem is that sometimes people take advantage of HDB’s kindness.’

He cited the case of a resident who did not pay his loan instalments for three years, resulting in the HDB having to acquire the flat back from him.

‘There is a limit to compassion. Decisive action is needed to prevent households from spiralling further into debt, but HDB will always ensure that they have viable housing options,’ said Mr Mah.

Source : Straits Times – 6 Mar 2010