Thursday, 28 September 2023

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With rapidly declining prices of older HDB flats (over 40 years), a HDB seller may end up with insufficient sales proceeds to return to CPF Board

A member of the public shared his story on social media in regards to the return of CPF money after selling of property, complaining about why he has to pay interest for his own CPF money and that he had to pay back more than what he got from the sale of HDB flat due to the accrued interest.

Here is what he wrote in full:

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“Recently, I was asked by CPF board to return the total amount I used my CPF money plus interest when I sold my apartment.

I was shocked and asked CPF staffs why I need to return my money when I already 66 years old, they said it is a new rule regardless of your age.

The amount I need to pay back is more than my selling price because of the accrued interest.

Instead of asking back my 50% I took from my retirement fund they wanted the whole amount plus interest over 20 years.

Why should I pay interest for my own money and why should I return my money when CPF had released my fund when I reached 55 years old?

This has caused me financially because upfront I have to use my saving to pay agent commission, lawyer fee, flat rental, mover, and other charges.

CPF Board kept my whole selling price for 15 days without interest and returned my money after deducting the 50% of my retirement fund I pledge for my property.

Apparently, only those who sold the property were notified by the CPF Board of such unreasonable rules especially so for those way above 55 years old.

Please let your friend and family members know of such hidden and unreasonable rules which will affect the seniors who don’t have spare money upfront for payment, hence affecting the sale proceedings.”


Responding to this, past president of the Society of Financial Service Professionals, Leong Sze Hian wrote:

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Under current CPF rules, when you sell your house, the CPF used plus accrued interest has to be returned to your CPF account.

Then, after retaining your Full Retirement Sum (FRS) which is currently $171,000 for those age 55 this year – any excess from your CPF can be withdrawn.

For example, if you sell your house at say age 65 – the FRS (at the time you turned 55) plus accrued interest will be retained in your CPF, under the CPF Life scheme.

If you buy or already own another house, then you can pledge it and the amount of your FRS will be halved.

Because of the rapidly declining prices of older HDB flats (over 40 years) now, following the revelation last year that your HDB flat will be worth nothing at the end of the 99-year lease – the seller may end up with insufficient sales proceeds to return his or her FRS plus accrued interest, to CPF.

One should also note that at the end of the 99-year lease – all the CPF and cash utilised for your HDB flat will be gone too.


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