CPF loan rules for older HDB resale flats to be relaxed

Further changes will be announced in May.

The Housing and Development Board (HDB) eyes relaxing CPF loan rules on the purchase of older Housing Board resale flats, the Ministry for National Development (MND) revealed. The changes will be announced for implementation in May this year.

According to Lawrence Wong, minister for national development, some banks take reference from these CPF restrictions when assessing how much of the loan to extend. “As a result, both the CPF and loan quantums may be reduced for the purchase of such flats,” he said.

The CPF rule is intended to safeguard the retirement adequacy of buyers who purchase older flats, but its design has led to some unintended consequences, Wong said. “For example, if a buyer would like to buy a 39-year-old flat, he can use full CPF; but one year later, because you hit this less-than-60-years requirement, the amount of CPF will be restricted. And there is no good reason why this should be so just because the flat became one year older.”

ERA Realty Network key executive officer Eugene Lim commented, “The relaxation of CPF loan rules will be welcomed by many, especially owners of older flats who are looking to sell their flats. Ageing owners who are looking to right size would also benefit from this as it would make it easier for them to sell their flat. This could boost the prices of older flats once implemented.”

Extending the Step-Up CPF Housing Grant
This is one of the new policies intended to support lower-income families. HDB will extend the coverage of the Step-Up CPF Housing Grant (SUHG) worth $15,000 to include 3-room resale flats in the non-mature estates. The grant will also be extended to second-timer families living in public rental flats who intend to buy 2-room or 3-room, new or resale flats in the non-mature estates.

The SUHG previously covers only lower-income families living in subsidised 2-room flats in the non-mature estates that want to buy 3-room new flats in the non-mature estates.

Currently, the grant is disbursed before the buyer signs the Agreement for Lease. HDB will now disburse the grant before the key collection for their new flat. “This will help to ensure that the buyers are financially ready for home ownership,” HDB said.

HDB will also set up a Home ownership Support Team (HST) that will advise rental tenants on their housing budget and options, the grants and schemes available to help them, and the flat-buying process.

HDB will also enhance its Fresh Start Housing Scheme and have the Ministry of Social and Family Development (MSF) appoint a service provider that will run the support programme. It will also give flexibility to families that may not qualify for Fresh Start but demonstrate “good potential and motivation.”

The age limit for the youngest child will now be increased to age 18 to benefit more families. The new age limit will also be applied to the Parenthood Priority Scheme (PPS) and ASSIST, or the Assistance Scheme for Second-Timers (Divorced/ Widowed Parents).

Moreover, divorcing parties will no longer have to wait until they have obtained the Final Judgement of divorce in order to apply for a flat. Instead, starting from the May 2019 sales exercise, divorcing parties can apply for a new flat from HDB if they have obtained an Interim Judgement of divorce and have settled the ancillary matters on their matrimonial property, and the custody, care and control of their children.

According to HDB. each party will be subject to eligibility criteria like all flat applicants. They must also obtain the Final Judgement of divorce before key collection, and ensure that they remain eligible for the flat that they had booked.

Revamping old rental blocks
Additionally, HDB will revamp some rental blocks built in the 1960s and 1970s by improving airflow and brightness. It will also build more new rental flats with partitions, and existing Joint Singles Scheme (JSS) tenants who are living in flats without partitions can also ask for partitions to be installed.

As part of rent policy changes, HDB will not increase rents for those who have made a downpayment and signed the Agreement for Lease for a flat. “They will continue to pay the same rent they were charged at the time when they made the downpayment for their new flat, even if their income increases thereafter. This will take effect for tenancies which commence from 1 June 2019,” HDB added.

BTO project announcements
HDB will also start to announce upcoming Build-to-Order (BTO) projects six months in advance instead of six months from 2019 onwards. In May, the board will announce projects to be launched in August and November 2019.

The balloting time for the May 2019 BTO exercise onwards will also be reduced from 6 weeks to 3 weeks.

HDB also seeks to conduct Focus Group Discussions in mid-2019 as part of its exploration of the concept of assisted living. It said that it is working towards a pilot at Bukit Batok in 2020.

“The changes to BTO sales launches are welcome. Applicants will now have more time to plan for their future housing needs. The shorter balloting time will also benefit applicants as it has been halved. Unsuccessful applicants can then re-evaluate their housing choices without needing to wait for more than one month,” Lim commented.