HDB Flats That Have Been Compulsorily Acquired

Mr Zainal Sapari asked the Minister for National Development (a) how many HDB flats have been compulsorily acquired in the past three years; (b) what are the main reasons behind the compulsory acquisition of these HDB flats; (c) what are the alternative accommodation provided to families affected by the compulsory acquisition; and (d) what measures are in place to enable these families to own HDB flats again.

The Minister of State for National Development (Mr Desmond Lee) (for the Minister for National Development): Mdm Speaker, for the three-year period from January 2012 to December 2014, HDB compulsorily acquired 202 flats. HDB takes Compulsory Acquisition (CA) action against flat lessees who have committed major lease infringements such as the unauthorised subletting of flats. Compulsory Acquisition (CA) action is also taken, as a last resort, against HDB mortgagors who persistently refuse to resolve their arrears, or work towards a sustainable solution, despite the assistance given.

HDB will assist households affected by CA due to mortgage arrears to find alternative accommodation. For those who can afford smaller flats, HDB will help them buy one and may offer them another loan for the purchase, if necessary. Those who are unable to afford another flat, and have no family support or other housing option, are allocated rental flats.

Mr Zainal Sapari (Pasir Ris-Punggol): I thank the Minister of State. I have three supplementary questions. First, after how many months of mortgage arrears will HDB start the process of CA? Second, how does HDB help homeowners manage their arrears; and third, could HDB consider assisting homeowners with alternative accommodation even if they decide to sell their flats on their own instead of through CA?

Mr Desmond Lee: Mdm Speaker, it is not in the interest of HDB flat owners to accumulate mortgage arrears. It is not just a heavy financial burden on them but also tremendous emotional strain. HDB, therefore, intervenes early, proactively and sympathetically to help flat owners resolve their arrears issues.

There are many measures that can be taken to help these HDB homeowners. Some are short term, to deal with the short-term financial difficulties. Some are longer term for those facing prolonged difficulties. For instance, loan instalments are usually paid on the first of each month but HDB gives lessees up to the end of the month if they face temporary cash flow difficulties. But if they still face problems doing so, HDB will make a call, arrange a meet-up or even do a home visit, to better understand the situation and to offer help. The Member may note that every HDB branch has housing counsellors that offer financial counselling and explore sustainable housing options for homeowners in mortgage arrears.

What are some of these options? First, HDB can help the flat owner reschedule his mortgage loan, including extending the repayment up to the maximum loan period, if that would help.

Second, under the reduced repayment scheme, owners in difficulty can pay lower monthly instalments of between, let say, 50% and 75% of their normal instalments for, say, up to two years.

Third, they can defer their mortgage payments if they face serious financial difficulties. This will be for an initial six-month period. It can be extended based on review.

Fourth, homeowners can pay their arrears by instalments.

Fifth, they could sublet a spare room if there is one to generate additional income for themselves.

Sixth, they can also include their working adult children to help pay the loan without affecting their children's eligibility to apply for HDB loans in future.

Seventh, apart from financial measures, we also recognise that mortgage arrears are normally a symptom of other difficulties that the owners face. For instance, medical problems, medical or family issues, loss of job, loss of a loved one and the breadwinner, and so on.

HDB's counsellors, therefore, look beyond housing loan measures that I have just detailed above, and work with other agencies to help these families more holistically. These include Family Service Centres for family counselling; e2i, WDA or the CDC for job placement or job upgrading; the SSO for financial assistance; VWOs and so on.

Eighth, for those who are still unable to manage, as I said earlier, HDB will help them right size to the flat that they can afford and offer another housing loan to assist them, if necessary.

Ninth, if they cannot afford another flat, then HDB will allocate them a rental flat.

From January 2012 to December 2014, HDB has assisted 9,752 families with one or more the measures that I have just described above. It is only when all these attempts to solve their arrears problem fail, such as when the homeowners persistently refuse to solve their arrears or work towards a sustainable solution, that HDB has no choice but to exercise Compulsory Acquisition.

Well, the Member has asked, what is the time frame. Under the legislation, Compulsory Acquisition can be taken if arrears pile up for up to three months but in practice, HDB works with lessees, as I have just mentioned above, and this can take quite some time. It is an on-going process.

Mr Patrick Tay Teck Guan (Nee Soon): I wish to ask the Minister of State once the date of Compulsory Acquisition has been firmed up, is there a formal written notice sent to the lessee? That is one. The second is, how long is this period of notification on notice period?

Mr Desmond Lee: Mdm Speaker, yes, the HDB issues a Notice of Intention to compulsory acquire the flat, and down the line after all measures have failed, in addition to what I have just detailed above, a revesting notice is issued. Between the Notice of Intention and the actual acquisition, if HDB does need to resort to that, it can be many months, even up to a year or beyond. That is a reflection of the effort that HDB officers put in to try resolve the issues with the families directly.

Mr Zaqy Mohamad: I thank the Minister of State for the clarification earlier. I just want to move slightly onto a different note. I know most times we have been sympathetic and I credit HDB for being sympathetic for a lot of compassionate cases out there. But in my estate, for example, we have a lot of middle income families, and most times we look at right sizing and when they go into arrears, it is really about credit card debts and other sort of debts.

HDB has not mentioned one of those as a criteria that you consider but most of the times, when they right size, the cash that they get is also used to pay for a lot of these debts. What is HDB's view on this because many a time, when they want to right size, you take into account all these cash surpluses that you get as part of the settlement. I think for many of them, they also get stuck in trying to get a new flat or to right size. So, what is HDB's view on credit card debts and other forms of debts?

Mr Desmond Lee: An HDB flat is a home and HDB does not encourage people to monetise the flats then use it to settle debts, leaving themselves without shelter. Having said that, we recognise the realities and difficulties of life. Families may choose to settle all these debts to the detriment of their housing needs. It is, therefore, as I said in my answer earlier, that in the last resort HDB offers public rental housing or interim rental housing as these families take time to sort out the various issues.

I also said earlier, in my response to the Member Zainal's supplementary question, that HDB counsellors look beyond just arrears management and work holistically across the board with various agencies to tackle these issues such as credit cards, money lenders, social assistance, healthcare, and do their best to sort out these issues holistically.