Singapore tightens rules for BTO flat applicants, turning first-time rejections into second-timers

Singapore tightens rules for BTO flat applicants, turning first-time rejections into second-timers

The Singaporean government has announced that it will be tightening the rules for Build-To-Order (BTO) flat applicants to ensure a more efficient allocation of flats.

This was said by National Development Minister Desmond Lee on Thursday (2 Mar) during the Committee of Supply debate for the budget of the ministry.

First-timer applicants who do not select a BTO flat when invited to do so will be considered second-timers in subsequent flat applications for a year, starting from the August sales exercise.

This new policy is meant to reduce the number of people who decline to pick a flat and ensure that those who need a flat can secure it more quickly.

Currently, first-timers are only moved to the second-timer category for a year when balloting for flats if they do not book a BTO flat twice.

The tightening of the rule means that fewer flats will be set aside for second-timers – 5% of four-room and larger flats, versus at least 95% for first-timer families.

To further help first-timers secure their home, the government has announced new measures, including reserving more flats for a new subset of first-timer families. From the August BTO exercise, up to 40% of the flat supply will be reserved for this group of applicants, up from 30% now. Additionally, up to 60% of Sales of Balance Flats (SBF) units will be set aside for them as well, an increase from the current 50%.

Applicants under this new First-Timer (Parents & Married Couples) priority category will also get one additional ballot chance in their BTO and SBF applications, for a total of three ballot chances. Families must not have owned or sold a residential property before, or did not have a chance to book a flat in the past five years before their application.

Housing demand has been strong in Singapore, and elevated resale prices have made it difficult for Singaporeans to buy their first home. To address this issue, the government plans to ramp up flat supply in the next few years, with close to 100,000 homes expected to be completed between 2023 and 2025 across both the private and public housing markets.

National Development Minister Desmond Lee said that the drop-out rate for BTO flats has hovered around 40% in the past few years, even as strong housing demand pushed up application rates. He noted that some reasons include people wanting only flats on high floors, trying their luck or the remaining flats being out of their budget. Nevertheless, he urged Singaporeans to apply for flats only if they really intend to purchase one.

While trying to reduce “picky” HDB buyers who deprive other buyers in the ballot process may seem reasonable, can you imagine being offered 10 BTO flats on the second floor, or flats that are beyond your budget, and when you reject them, you will become a second-timer?

Is this reasonable or fair for HDB buyers?

The HDB should not implement such draconian policies to possibly make the demand statistics look better than they are now.

In a sense, by the stroke of a pen, fewer people may appear to be on the demand side for first-timers, while the number of second-timers may increase – buyers who may be labelled as difficult and opportunistic by the media and be guilt-tripped.

In this connection, we should be giving regular and more detailed statistics on second-timers, as the narrative always seems to focus on first-timers.

Deputy Prime Minister Lawrence Wong earlier announced that the CPF Housing Grant would be increased from S$50,000 to S$80,000 for eligible first-timer families buying a four-room or smaller resale Housing Board flats. For such families buying a five-room or larger resale flat, the amount would be increased from S$40,000 to S$50,000. First-timer families can receive up to S$190,000 in grants when buying a resale flat, while first-timer singles can receive up to S$95,000 in grants.

The maximum housing grants for a BTO flat are S$80,000, and they are income means-tested. A family needs to have a household income of not more than S$1,500 to get the maximum grant of S$80,000.

In stark contrast, the maximum grant for resale flats is now increased to S$190,000, and there is no income means test, the only caveat is that the income ceiling cannot exceed S$14,000.

Why are we giving more help to arguably richer people to buy more expensive resale flats, relative to poorer people who may only be able to afford BTO flats? Also, is it arguably fair or equitable to have public housing policies that enable richer people to buy immediately (with up to S$190,000 grants), whereas poorer people may have to ballot (and have to be means tested to determine the grant amount) and wait four to five years for a flat?

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