Rental flats in Singapore

The Housing Development has allowed the sale of three-room flats as a shorter lease to rental households under the Fresh Start Housing Scheme on top of the two-room flexi units currently offered.

The scheme was launched in 2016 to help families with at least one child below the age of 18 and which had previously bought a subsidised flat. To promote affordability, both the two- and three-room flexi flats will be offered with leases of 45 to 65 years in five-year increments, as long as the lease can cover the youngest applicant up to age 95, added HDB.

The Fresh Start Housing Grant was also increased from $35,000 to $50,000 from May 2022, with eligible families receiving $35,000 upfront in their Central Provident Fund (CPF) Ordinary Account when they collect their keys.

The remaining $15,000 will be disbursed into the account in equal tranches over the next five years.

As at December 2022, 95 families have been emplaced on the enhanced scheme.

Of these, 44 have collected keys to their flats, 48 are waiting to collect their keys, and three are waiting to book a flat

A 53-year resident was said to have bought a two-room flexi unit from the Housing Development Board (HDB) in January after staying in a rental flat for 12 years with her two sons. She paid about S$122,000, including a resale levy – under the Fresh Start Housing Scheme.

The scheme made the purchase more affordable for the assistant infant care teacher, who also received a housing grant of $35,000.

This would mean that the resident’s two-room flexi 50-year lease’s original cost (before the housing grant + the resale levy) is about $157,000 ($122,000 + $35,000).

According to the HDB website, the conditions for selling a flexi unit are as below:

A short-lease 2-room Flexi flat cannot be sold in the open market. If you no longer wish to live in it or become ineligible to do so, the flat must be returned to HDB. We will then pay you the value of the unused portion of the lease when you return the short-lease 2-room Flexi flat.

However, the Fresh Start Scheme seems to allow the owners to sell their flats after 20 years of Minimum Occupancy Period.

As for renting, HDB flat “owners” are not allowed to rent out their bedroom if they “own” a 1 or 2-room flat.

The Straits Times reported that over the past 10 years, more than 7,800 rental households have bought homes, while another 2,300 households have booked units and are waiting for them to be completed.

Of the more than 700 households, seven in 10 bought a flat from the HDB, with the remainder going for resale units. About two-thirds received grants, such as the Enhanced CPF Housing Grant of up to S$80,000.

Given that there are currently 51,100 households living in public rental flats, does it mean that 1.4 per cent of those living in public rental flats were able to buy a HDB flat in 2022?

How many were able to get the maximum housing grant of $80,000? Can we have a breakdown of the percentage receiving different grant amounts?

It is said by HDB that a majority of residents bought a three-or four-room flat in a non-mature estate, using a quarter or less of their monthly income to service their mortgage.

However, I understand that one has to apply for a Housing Loan Eligibility (HLE) letter and “affordability” test at the time of application, and again at the time of delivery of the flat, anyone whose monthly mortgage payment is more than 30% of their gross income, wouldn’t be allowed to buy.

And, of course, those who can’t afford wouldn’t buy it or be allowed to buy in the fist place — so, with this kind of “statistical” logic – it may always be affordable?

Also, flats sold under the scheme have a 20-year minimum occupation period (MOP) to ensure a stable home for the families and children, said HDB.

But what would be the value of the HDB flat after the 20-year MOP, with 30 years remaining?

The HDB seems to be, arguably, trying to address the “affordability” issue, by starting to sell bigger 3-room flats now, with as short a lease as 45 years.

As to the subject example of the 53-year-old, Mdm Lee, purchasing a 2-room flexi for a 50-year lease – how much is she likely to have available for retirement, when she reaches age 65, given that her flat cannot be rented out? And what value can she get out of a flat that has 30 years of lease?

Isn’t she in a sense, locking up and throwing away her CPF and cash utilised for the flat, for the rest of her life, until the flat becomes worthless, at the end of the 50-year lease?

Lower-income HDB tenants, should not be advised or put in a situation, whereby what little CPF and/or cash that they may have, may in essence, be eaten up forever, by changing from a rental to a short-lease 2-room flexi flat.

Wouldn’t a better solution be to allow them to use their CPF to pay for their monthly public rental, which may be much less than having to commit to, as in the subject example – lump sum and mortgage payments amounting to $122,000 at the onset?

And why is it that flat owners under the scheme can sell their flexi units after 20 years but the others buying the same unit are not allowed to do so? Is it fair to the other buyers?

Edited article on sale of 2-room flexi unit.

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