• About Us
    • Fact Checking Policy
    • Ownership & funding information
    • Volunteer
  • Subscribe
  • Letter submission
    • Submissions Policy
  • Contact Us
The Online Citizen Asia
  • Opinion
    • Editorial
    • Commentaries
    • Letters
    • Comments
  • Current Affairs
    • Singapore
    • Malaysia
    • Indonesia
    • China
    • ASEAN
    • Asia
    • International
  • Finance
    • Economics
    • Labour
    • Property
    • Business
  • Community
    • Arts & Culture
    • Consumer Watch
    • NGO
    • Lifestyle
    • Travel
  • Politics
    • Civil Society
    • Parliament
    • Transport
    • Education
    • Environment
    • Health
    • Housing
  • Law & Order
    • Legislation
    • Court Cases
No Result
View All Result
  • Opinion
    • Editorial
    • Commentaries
    • Letters
    • Comments
  • Current Affairs
    • Singapore
    • Malaysia
    • Indonesia
    • China
    • ASEAN
    • Asia
    • International
  • Finance
    • Economics
    • Labour
    • Property
    • Business
  • Community
    • Arts & Culture
    • Consumer Watch
    • NGO
    • Lifestyle
    • Travel
  • Politics
    • Civil Society
    • Parliament
    • Transport
    • Education
    • Environment
    • Health
    • Housing
  • Law & Order
    • Legislation
    • Court Cases
No Result
View All Result
The Online Citizen Asia
No Result
View All Result

HDB: Why not so easy to downgrade

by onlinecitizen
28/06/2011
in Current Affairs, Letters, Opinion
Reading Time: 6 mins read
0

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

For just US$7.50 a month, sign up as a subscriber on The Online Citizen Asia (and enjoy ads-free experience on our site) to support our mission to transform TOC into an alternative mainstream press.

Related Posts

Returning Officer to issue corrective directions, overseas Singaporeans allowed to vote by post, among changes to laws tabled to Parliament
Singapore

Returning Officer to issue corrective directions, overseas Singaporeans allowed to vote by post, among changes to laws tabled to Parliament

07/02/2023
Can Malaysia review its current practices on foreign worker management?
Asia

Can Malaysia review its current practices on foreign worker management?

07/02/2023
Forum Asia calls for India to revoke arbitrary ban on BBC documentary
Civil Society

Forum Asia calls for India to revoke arbitrary ban on BBC documentary

07/02/2023
AFP

Google to release ChatGPT rival named Bard

07/02/2023
Earthquake kills more than 3,800 in Turkey, Syria
AFP

Earthquake kills more than 3,800 in Turkey, Syria

07/02/2023
Leong Mun Wai calls for a reset of housing policies to deliver affordable and accessible HDB flats and protect retirement adequacy
Politics

Leong Mun Wai calls for a reset of housing policies to deliver affordable and accessible HDB flats and protect retirement adequacy

07/02/2023
Subscribe
Connect withD
Login
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of
Connect withD
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
0 Comments
Inline Feedbacks
View all comments

Latest posts

Returning Officer to issue corrective directions, overseas Singaporeans allowed to vote by post, among changes to laws tabled to Parliament

Returning Officer to issue corrective directions, overseas Singaporeans allowed to vote by post, among changes to laws tabled to Parliament

07/02/2023
Can Malaysia review its current practices on foreign worker management?

Can Malaysia review its current practices on foreign worker management?

07/02/2023
Forum Asia calls for India to revoke arbitrary ban on BBC documentary

Forum Asia calls for India to revoke arbitrary ban on BBC documentary

07/02/2023

Google to release ChatGPT rival named Bard

07/02/2023
Earthquake kills more than 3,800 in Turkey, Syria

Earthquake kills more than 3,800 in Turkey, Syria

07/02/2023
Leong Mun Wai calls for a reset of housing policies to deliver affordable and accessible HDB flats and protect retirement adequacy

Leong Mun Wai calls for a reset of housing policies to deliver affordable and accessible HDB flats and protect retirement adequacy

07/02/2023
LTA revises ERP rates up after latest review; Gantries reach as high as S$5 for 8:30am – 9:00am

LTA revises ERP rates up after latest review; Gantries reach as high as S$5 for 8:30am – 9:00am

07/02/2023
Stern warnings was an “in-between” solution as CPIB lacks sufficient evidence to prosecute six former KOM executives for bribery, said Indranee Rajah

Stern warnings was an “in-between” solution as CPIB lacks sufficient evidence to prosecute six former KOM executives for bribery, said Indranee Rajah

06/02/2023

Trending posts

Cognizant India transfers staff to work in Singapore as recently as this year

Local IT grads can’t find jobs while engineers constantly transferred from India to work in SG under CECA

by Correspondent
05/02/2023
104

...

They have done a fine job of confusing us about the jobs situation

They have done a fine job of confusing us about the jobs situation

by Augustine Low
01/02/2023
47

...

Adani’s brother runs SG company and registers as director with local ID

Adani’s brother runs SG company and registers as director with local ID

by Correspondent
03/02/2023
26

...

Former Singaporean shares change of life in Australia with annual pay of S$80,000 as a plumber

Former Singaporean shares change of life in Australia with annual pay of S$80,000 as a plumber

by Yee Loon
30/01/2023
25

...

No response from Josephine Teo on whether Mediacorp has been instructed to stop coverage of SMT circulation scandal

No response from Josephine Teo over alleged blackout of coverage by Mediacorp over SMT circulation scandal

by Terry Xu
06/02/2023
11

...

Singapore Law Watch removes commentary on CPIB’s decision to not prosecute former Keppel executives

Singapore Law Watch removes commentary on CPIB’s decision to not prosecute former Keppel executives

by The Online Citizen
02/02/2023
19

...

June 2011
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
27282930  
« May   Jul »

The Online Citizen is a regional online publication based in Taiwan and formerly Singapore’s longest-running independent online media platform.

Navigation

  • Editorial
  • Commentaries
  • Opinion
  • Politics
  • Community

Support

  • Contact Us
  • Letter submission
  • Membership subscription

Follow Us

  • Facebook
  • Twitter
  • YouTube
  • Instagram
  • Fact Checking Policy
  • Privacy Policy

© 2022 - 2023 The Online Citizen Asia

No Result
View All Result
  • Opinion
    • Editorial
    • Commentaries
    • Comments
  • Current Affairs
    • Malaysia
    • Indonesia
    • China
    • ASEAN
    • Asia
    • International
  • Finance
    • Economics
    • Labour
    • Property
    • Business
  • Community
    • Civil Society
    • Arts & Culture
    • Consumer Watch
    • NGO
  • Politics
    • Parliament
    • Transport
    • Education
    • Environment
    • Health
    • Housing
  • Law & Order
    • Legislation
    • Court Cases
  • Lifestyle
    • Travel
  • Subscribers login

© 2022 - 2023 The Online Citizen Asia

wpDiscuz