By Leong Sze Hian

I refer to the article “Low subscription rate for two-room units in BTO projects” (Channel NewsAsia, Jun 5).

Low subscription for 2-room flats?

It states that “As of 5pm Tuesday, the Housing and Development Board has received only 82 applications for the 230 two-room flat units from the Build-To-Order (BTO) projects announced in May.”

I understand that practically every recent BTO had low subscription rates for 2-room flats. It may appear that Singaporeans are generally so well off that they shun 2-room flats for larger ones. Another way of looking at it may be that larger flats are well within the affordability of most Singaporeans.

Want to buy, but not allowed?

However, in my more than a decade of volunteer work doing financial counseling for the needy and cash-strapped, and also during my 3-  year plus stint as a weekly Chinese money radio show host – I have come across hundreds of financially stressed Singaporeans who desperately need a 2-room BTO flat as the optimal and often the only affordable solution to their housing problems.

Forced to buy bigger 3-room?

Allow me to explain why in almost all these cases, the stumbling block may be the HDB’s policies.

For example, the income ceiling for 2-room flats in non-mature estates is $2,000 household monthly income.

To illustrate this issue with an example – a self-employed Singaporean and his family has a monthly household income of say $2.001 (just fail under the $2,000 income ceiling).

Since they are not eligible to buy a 2-room flat, they are literally forced to buy a larger 3-room flat. Using the May 2013 BTO in Jurong West, the cheapest 2 and 3-room flats were priced at $94,000 (up to $123,000) and $160,000 (up to $200,000), respectively.

Hence, he is forced to buy say the cheapest 3-room flat at $160,000.

This may be a contributory reason why “the most popular out of the eight projects on offer are the three-room and four-room units” in the subject BTO as well as I understand it other BTOs as well.

He is not eligible for any housing grant because he had included his name to help his parents pay for their HDB flat, and is thus considered as a 2nd-timer.

After paying the minimum 5% down-payment of $8,000, he needs a HDB concessionary loan of $152,000 (95%) for the longest period 30 years (that is provided he is age 35 or younger).

The monthly mortgage repayment is $609.

HDB “forced” financial hardship?

After paying for his monthly mortgage of $609, S & CC and property tax, and compulsory Medisave contribution of $160 (8%), his family of 4 (non-working spouse and 2 children) is left with only about $1,150 of disposable income – hardly enough for his family of 4 to survive!

If he is allowed to buy a 2-room flat instead, he will have about $260 more disposable income a month because the 2-room monthly mortgage is much lower at $376, as well as lower S & CC and no property tax.

So, why is his family struggling financially – because the HDB income ceiling policy had forced him to buy a 3-room flat which he actually cannot afford!

Income ceiling illogical?

The HDB income ceiling policies in my view are quite illogical, because just because 2-room flats cost much more in mature estates, the income ceiling is allowed to be higher at $5,000. This policy change to allow up to $5,000 was made in March last year.

The new singles age 35 and above BTO 2-room eligibility effective from next month may be even more illogical, because  why are singles allowed to buy with an income ceiling policy of $5,000 in both non-mature and mature estates, whereas a family’s income ceiling remains at $2,000 in non-mature estates?

Undoubtedly, the fact that “the government had stopped building two-room flats for at least 10 to 20 years.

During the last two years, it resumed supply to provide for the low-income households”, was a bad policy decision by the HDB.

1001 reasons cannot buy? 

In addition to the example described above, there may  also be various other reasons why cash-strapped families may not be eligible to buy a 2-room flat, such as 3rd-timer, unable to pay the resale levy, still within the 5-year minimum occupation period (MOP), under 30-month waiting period because a previous HDB, private property, commercial property or foreign property was sold, not eligible because own a fractional interest in say a tiny market stall inherited from a parent’s death or private or commercial or foreign property, spouse is not a citizen or PR (about 1 in 2 marriages now are between a Singaporean and a non-citizen (including PRs)!), divorce 30-month waiting period due to matrimonial HDB split, insufficient income to be eligible for HDB loan, unable to cough up 50% of the previous flat sale cash profits to get a 2nd HDB concessionary loan, unable to qualify for a HDB bank loan due to a poor credit history, discharged bankruptcy, ever being sued on financial matters in one’s lifetime, etc.

Why so harsh to divorcees?

In my view, the HDB’s eligibility policies (reproduced below from the HDB’s web site) towards divorcees is particularly harsh (for no good reason that I can think of) –

“Within three years from the date of the divorce, only one party in the divorce can own one of the following housing units:

  • a flat bought directly from the HDB
  • a DBSS flat / EC bought directly from a private developer
  • a resale flat bought from open market under the CPF Housing Grant Scheme

If you have an existing matrimonial home, which is one of the above, and that home is retained by your ex-spouse, you may apply to buy or be listed as an essential occupier in any of the above housing unit only three years after your date of divorce.

However, this three-year wait out period will not apply if you are buying any of the above homes with your parents or a new spouse, or if you are buying a resale flat from the open market without the CPF Housing Grant.

If there is no matrimonial home or the matrimonial home was bought from the open market without any CPF Housing Grant, you may apply for any of the above housing units after you get your ex-spouse’s consent not to own or be listed as an essential occupier in any of the above housing units within the three-year period from the date of divorce.

The requirement for ex-spouse’s consent is waived if you are buying any of the above housing units with your parents or a new spouse or if you are buying a resale flat from the open market without the CPF Housing Grant.

The requirement to seek ex-spouse’s consent during the three-year period from the date of divorce is also waived if you meet the following conditions:

  • All your children are below 18 years old at the date of divorce; and
  • You have the legal custody of all your children and are also the only parent with the care and control of all your children”.


Illusionary affordability?

So, in the final analysis, low subscription for 2-room flats does not necessarily mean that most Singaporeans can afford or want larger flats.

The fact that in one GRC alone (Ang Mo Kio), MPs wrote 5,000 letters of appeal to HDB in one year is perhaps the best indicator that HDB policies may be causing untold hardships and misery to many Singaporeans.


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