Questions for HDB on housing policy. By Leong Sze Hian .

HDB means-testing?

Leong Sze Hian / Columnist

I would like to ask HDB some questions about our public housing policies.

What is the rationale for requiring applicants to upgrade to a bigger flat in order to get a HDB concessionary loan ?

Why is it that a single or divorced applicant earning less can get a larger loan to buy a flat, than a larger household earning a higher income ?

How are Singaporeans expected to have more children, and/or stay with their parents, when the more family members you have, the harder it is to get a HDB loan ?

Why is the HDB not transparent in disclosing the process, criteria, formula and methodology ; in means testing loan applicants on the loan quantum ?

Why does the HDB use the threat of compulsory acquisition of flats, for those who are in arrears – given the general perception that the “compulsory acquisition” valuation may generally be lower than selling in the open market ?

Can the HDB give us the statistics as to how many flat-owners in arrears, have been coerced into selling in the open market ?

Depending on the statistic in answer to the above question, does the HDB still maintain its position that only 360 flat-owners voluntarily surrendered their flats from 2003 to 2006 ?

Isn’t the HDB re-sale levy of up to $ 40,000 for those who upgrade to a new flat, instead of a re-sale flat, discriminatory against flat-owners whose flats are in negative equity or in arrears ?

Isn’t the HDB’s policies self-contradictory, when it’s income ceiling policy “forces” the lower-income to buy larger flats than they can afford (see below for a detailed explanation), its new flat purchase and concessionary loan eligibility policy for upgraders only, and it loan eligibility and “means testing” policy denies adequate loans to larger and lower-income families ?

Aren’t some of the above policies discriminatory against lower-income or larger families ?

Shouldn’t the HDB be accountable to Parliament, when it decided to “means test” from 1 January 2007 ? Was any approval sought or debated in Parliament ?

Income ceiling “force” lower-income to buy bigger flats ?

I refer to the articles “$ 645K HBD’s priciest flats go on sale : [email protected] units are among 992 released for sale yesterday” (ST, Sep 27) and “New HDB flats for sale, rent in West” (ST, Aug 27).

It states that “The 94 three-room flats will have a floor area of 67 sq m each and cost $ 138,000 to $ 170,000”/

This means that the average cost of the new three-room flats is $ 154,000

($ 138,000 plus $ 170,000 divided by 2).

The monthly mortgage repayment for a 30-year HDB loan at 2.6 per cent interest on a 90 per cent loan of $ 138,000 (90% of $ 154,000) is about $ 554.

In this connection, HDB’s income eligibility requires a household earning more than $ 2,000 a month to buy a flat that is bigger than a two-room flat.

So, for a household earning say $ 2,001, after utilising the CPF Ordinary Account (OA) monthly contribution of $ 460 and cash of $ 94 to pay the monthly mortgage, one is left with a disposable income of $ 1,506 ($ 2,000 less employee’s 20 per cent CPF contribution minus $ 94).

Assuming a household of a couple with two children with expenditure of $ 685 (utilities $ 100 plus service and conservancy fee $ 35 plus transport $ 400 plus children’s educational costs $ 150 plus miscellaneous other expenses $ 100), one is left with $ 721. This amount enables just about $ 6 per day per family member for food ($ 21 divided by 30 divided by 4 family members).

If the household has non-working parents of the working couple, the financial stress may be even greater. Similarly, a household earning just over $ 3,000, is also not eligible to buy a three-room flat, and have to buy a four-room flat.

In view of the above, is the HDB’s income eligibility, which I understand has not been changed for many years, despite increasing new HDB flat prices, forcing Singaporeans to buy bigger flats than what they can afford ?

To what extent has this contributed to the financial stress of Singaporeans ?