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HDB: Why not so easy to downgrade

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13 years ago

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Leong Sze Hian/

Over the last few weeks, we have encountered more than 10 cases of Singaporeans with HDB housing problems and homelessness.

There was a Singaporean divorcee in her mid 40s, who works as a security guard for $1,300 a month, who downgraded to homelessness.  When we asked her where is she staying now?  She said “Most of the time in the security guards office”.

Then there was the case of a 44 year old single Singaporean lady staying in a homeless shelter who had lodged 18 appeals to the HDB in her attempts to apply for a subsidized rental flat after selling the four-room flat in Sembawang that she co-owned with her brother. (“HDB: 18 appeals and still homeless“).

So why is it so hard to downgrade your HDB flat?

More downgraders than upgraders?

Thanks to the National Development Minister’s blog entry “Who buy resale flats”, we finally have statistics on the people who purchase resale flats.

According to the statistics, 8 per cent were private property downgraders,  and 37 per cent of the 34 per cent second-timers bought 3-room or smaller flats. Not counting the number of those downgrading to BTOs, and the fact that second-timers preferred smaller flats, it may indicate that the trend may be more people downgrading than upgrading.

I believe most people downgrade because they are cash-strapped, can’t afford to pay their mortgage, or need to monetise their HDB flat, etc.

Their typical downgrading problems are:-

  • not enough cash to pay for the Cash-over-valuation (COV), which is once again rising to a record high  (“COV for HDB resale flats rises again“)
  • no bank willing to lend them a housing loan because of a poor credit record, current or discharged bankrupt, having income of less than $2,000,  the loan amount  being less than $100,000, or having been sued for non-payment of debt previously.
  • the HDB refused to give a housing loan because those who have ever owned a private property or Executive Condo (EC) are barred, household income insufficient to support the mortgage and number of persons in the household (this hits particularly larger families), irregular income record, borrower unable to come up with half of the cash proceeds from the last HDB flat sale (regardless of how long ago), the entire CPF and accrued interest from the last flat sale which may have already been withdrawn for other purposes such as education, unable to pay the Resale Levy of up to $50,000, etc.

With recent media reports that even about 200 licensed moneylenders have joined the credit bureau, may mean that even more Singaporeans may have difficulties getting a housing loan, because previously only bank debts were recorded in the Consumer Credit Bureau, and not moneylenders’ debts.

In this connection, in the Parliamentary debate on allowing banks to start offering HDB housing loans from 1 January 2003, the then-National Development Minister assured the members of the House that the HDB would help Singaporeans who may face difficulty in getting a housing loan.

However, in the past ten years that I have been providing free financial counseling for the needy, I hardly see any HDB housing loan problem cases where the loans were made prior to 1 January 2003!

All HDB housing loans prior to the 2003 ruling were either HDB Concessionary Loans for up to two times, or HDB Market Rate Loans for third-timers, without all the complicated rules that we now have for HDB bank loans.

Have CPF, but no  COV?

To illustrate the difficulty of downgrading, with a live example, let’s do an update on the article “HDB: $431,000 CPF – But homeless soon?”.

Mr and Mrs. Lim received a telephone call on 27 June from the HDB informing them that their appeal for a $30,000 HDB housing loan has been rejected, and that a letter of rejection would be sent to them.

The HDB also advised them to go to Credit Counseling Singapore (CCS) to work out a monthly installment plan for Mrs Lim’s debts.

In my view, the HDB may be quite out of touch with the realities on the ground.  Mrs Lim’s estimated $80,000 debts cannot be negotiated by CCS with all the bank creditors concerned, because their net monthly income is not enough to support even the longest installment plan generally allowed by the banks.

I estimate a five year installment plan on her $80,000 debts to be about $1,700 a month.

Also, as Mrs Lim is already in default on some of her debts, an installment plan or even reverting to paying the normal minimum amount every month may no longer be acceptable to the banks, because it is already in the hands of the debt collector or lawyers.

After struggling for the past seven years, due to Mr Lim’s business failure during the 2003 SARS crisis, they are at their wits end, and have already sold their EC, in a final act of desperation with the approval of the Official Assignee.

Why do we call it a final act of desperation?  Because if the wife is sued by any of her creditors for bankruptcy, the only avenue and hope of selling their EC to downgrade to a resale flat, may no longer be possible.

Based on the information and documents given to us, our best estimate of their current debt situation is as follows:-

  • CPF available for the resale flat purchase – $420,000 ($11,000 cannot be used as this was from their CPF Special Account allowed for the mortgage repayment on a special ‘hardship’ appeal basis).
  • Compulsory discharge of Mr Lim’s $117,000 bankruptcy creditors’ debts from the EC sale cash proceeds, of about $213,000.
  • Mrs Lim’s debts (excluding employer’s loan, loans from relatives, friends, etc) – $80,000
  • Net EC cash proceeds left after the above –  $16,000.

Therefore, without the $30,000 HDB loan that they have been appealing for, it may almost be impossible for them to buy a resale flat and pay the COV (Note: COVs are hitting a record high again now).

The seller of the resale flat (in Jurong West which the Lims have been told is the cheapest area) for which they have already signed the option to purchase, is sympathetic to their plight, and has agreed orally to given them until the end of this month, to exercise the option.

As they have to vacate their EC at the end of July, what will happen to them, if they cannot get the $30,000 HDB loan?

Change ‘mindset’ towards marriage?

To conclude I would like to refer to an article published on Channel Newsasia where the Acting Minister for Community Development, Youth and Sports called for Singaporeans to change their ‘mindset’ in their attitude towards marriage.(“S’poreans need to change mindset towards marriage: Chan Chun Sing”, Channel NewsAsia, Jun 25)

However, if we take the Lim family as a case in point, all their financial problems may go away if they do not have three children.

So, is it any wonder why Singapore’s marriage rate fell to a record low last year, while the number of divorces has increased, and the procreation rate is at a historical low?

—
Alex Lew, Lee Mei Wei, Ko Siew Huey and Leong Sze Hian provide free financial counseling every Thursday from 8 – 10 pm., at Block 108, Potong Pasir Ave 1

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Current Affairs

TJC issued 3rd POFMA order under Minister K Shanmugam for alleged falsehoods

The Transformative Justice Collective (TJC) was issued its third POFMA correction order on 5 October 2024 under the direction of Minister K Shanmugam for alleged falsehoods about death penalty processes. TJC has rejected the government’s claims, describing POFMA as a tool to suppress dissent.

Published

1 day ago

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6 October 2024

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The Transformative Justice Collective (TJC), an advocacy group opposed to the death penalty, was issued its third Protection from Online Falsehoods and Manipulation Act (POFMA) correction direction on 5 October 2024.

The correction was ordered by Minister for Home Affairs and Law, K Shanmugam, following TJC’s publication of what the Ministry of Home Affairs (MHA) alleges to be false information regarding Singapore’s death row procedures and the prosecution of drug trafficking cases.

These statements were made on TJC’s website and across its social media platforms, including Facebook, Instagram, TikTok, and X (formerly Twitter).

In addition to TJC, civil activist Kokila Annamalai was also issued a correction direction by the minister over posts she made on Facebook and X between 4 and 5 October 2024.

According to MHA, these posts echoed similar views on the death penalty and the legal procedures for drug-related offences, and contained statements that the ministry claims are false concerning the treatment of death row prisoners and the state’s legal responsibilities in drug trafficking cases.

MHA stated that the posts suggested the government schedules and stays executions arbitrarily, without due regard to legal processes, and that the state does not bear the burden of proving drug trafficking charges.

However, these alleged falsehoods are contested by MHA, which maintains that the government strictly follows legal procedures, scheduling executions only after all legal avenues have been exhausted, and that the state always carries the burden of proof in such cases.

In its official release, MHA emphasised, “The prosecution always bears the legal burden of proving its case beyond a reasonable doubt, and this applies to all criminal offences, including drug trafficking.”

It also pointed to an article on the government fact-checking site Factually to provide further clarification on the issues raised.

As a result of these allegations, both TJC and Annamalai are now required to post correction notices. TJC must display these corrections on its website and social media platforms, while Annamalai is required to carry similar notices on her Facebook and X posts.

TikTok has also been issued a targeted correction direction, requiring the platform to communicate the correction to all Singapore-based users who viewed the related TJC post.

In a statement following the issuance of the correction direction, TJC strongly rejected the government’s claims. The group criticised the POFMA law, calling it a “political weapon used to crush dissent,” and argued that the order was more about the exercise of state power than the pursuit of truth. “We have put up the Correction Directions not because we accept any of what the government asserts, but because of the grossly unjust terms of the POFMA law,” TJC stated.

TJC further argued that the government’s control over Singapore’s media landscape enables it to push pro-death penalty views without opposition. The group also stated that it would not engage in prolonged legal battles over the POFMA correction orders, opting to focus on its abolitionist work instead.

This marks the third time TJC has been subject to a POFMA correction direction in recent months.

The group was previously issued two orders in August 2024 for making similar statements concerning death row prisoners.

In its latest statement, MHA noted that despite being corrected previously, TJC had repeated what the ministry views as falsehoods.

MHA also criticised TJC for presenting the perspective of a convicted drug trafficker without acknowledging the harm caused to victims of drug abuse.

Annamalai, a prominent civil rights activist, is also known for her involvement in various social justice campaigns. She was charged in June 2024 for her participation in a pro-Palestinian procession near the Istana. Her posts, now subject to correction, contained information similar to those presented by TJC regarding death penalty procedures and drug-related cases.

POFMA, which was introduced in 2019, allows the government to issue correction directions when it deems falsehoods are being spread online.

Critics of the law argue that it can be used to suppress dissent, while the government asserts that it is a necessary tool for combating misinformation. The law has been frequently invoked against opposition politicians and activists.

As of October 2024, Minister K Shanmugam has issued 17 POFMA directions, more than any other minister. Shanmugam, who was instrumental in introducing POFMA, is followed by National Development Minister Desmond Lee, who has issued 10 POFMA directions.

Major media outlets, including The Straits Times, Channel News Asia, and Mothership, have covered the POFMA directions. However, as of the time of writing, none have included TJC’s response rejecting the government’s allegations.

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Current Affairs

Hotel Properties Limited suspends trading ahead of Ong Beng Seng’s court hearing

Hotel Properties Limited (HPL), co-founded by Mr Ong Beng Seng, has halted trading ahead of his court appearance today (4 October). The announcement was made by HPL’s company secretary at about 7.45am, citing a pending release of an announcement. Mr Ong faces one charge of abetting a public servant in obtaining gifts and another charge of obstruction of justice. He is due in court at 2.30pm.

Published

4 days ago

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4 October 2024

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SINGAPORE: Hotel Properties Limited (HPL), the property and hotel developer co-founded by Mr Ong Beng Seng, has requested a trading halt ahead of the Singapore tycoon’s scheduled court appearance today (4 October) afternoon.

This announcement was made by HPL’s company secretary at approximately 7.45am, stating that the halt was due to a pending release of an announcement.

Mr Ong, who serves as HPL’s managing director and controlling shareholder, faces one charge under Section 165, accused of abetting a public servant in obtaining gifts, as well as one charge of obstruction of justice.

He is set to appear in court at 2.30pm on 4 October.

Ong’s charges stem from his involvement in a high-profile corruption case linked to former Singaporean transport minister S Iswaran.

The 80-year-old businessman was named in Iswaran’s initial graft charges earlier this year.

These charges alleged that Iswaran had corruptly received valuable gifts from Ong, including tickets to the 2022 Singapore Formula 1 Grand Prix, flights, and a hotel stay in Doha.

These gifts were allegedly provided to advance Ong’s business interests, particularly in securing contracts with the Singapore Tourism Board for the Singapore GP and the ABBA Voyage virtual concert.

Although Iswaran no longer faces the original corruption charges, the prosecution amended them to lesser charges under Section 165.

Iswaran pleaded guilty on 24 September, 2024, to four counts under this section, which covered over S$400,000 worth of gifts, including flight tickets, sports event access, and luxury items like whisky and wines.

Additionally, he faced one count of obstructing justice for repaying Ong for a Doha-Singapore flight shortly before the Corrupt Practices Investigation Bureau (CPIB) became involved.

On 3 October, Iswaran was sentenced to one year in jail by presiding judge Justice Vincent Hoong.

The prosecution had sought a sentence of six to seven months for all charges, while the defence had asked for a significantly reduced sentence of no more than eight weeks.

Ong, a Malaysian national based in Singapore, was arrested by CPIB in July 2023 and released on bail shortly thereafter. Although no charges were initially filed against him, Ong’s involvement in the case intensified following Iswaran’s guilty plea.

The Attorney-General’s Chambers (AGC) had earlier indicated that it would soon make a decision regarding Ong’s legal standing, which has now led to the current charges.

According to the statement of facts read during Iswaran’s conviction, Ong’s case came to light as part of a broader investigation into his associates, which revealed Iswaran’s use of Ong’s private jet for a flight from Singapore to Doha in December 2022.

CPIB investigators uncovered the flight manifest and seized the document.

Upon learning that the flight records had been obtained, Ong contacted Iswaran, advising him to arrange for Singapore GP to bill him for the flight.

Iswaran subsequently paid Singapore GP S$5,700 for the Doha-Singapore business class flight in May 2023, forming the basis of his obstruction of justice charge.

Mr Ong is recognised as the figure who brought Formula One to Singapore in 2008, marking the first night race in the sport’s history.

He holds the rights to the Singapore Grand Prix. Iswaran was the chairman of the F1 steering committee and acted as the chief negotiator with Singapore GP on business matters concerning the race.

 

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