HDB GRANTS FOR CASH-OVER-VALUATION PAYMENT

HDB GRANTS FOR CASH-OVER-VALUATION PAYMENT: 16.

Mdm Ho Geok Choo asked the Minister for National Development whether the Ministry would consider allowing HDB grants to be applied towards the payment of the cash-over-valuation component of the purchase price of a resale HDB flat.

The Senior Minister of State for National Development (Ms Grace Fu Hai Yien) (for the Minister for National Development): Mr Speaker, resale flat prices are jointly determined by buyers and sellers through negotiations. Cash-over-Valuation (COV) arises when buyers are willing to pay sellers a premium above the market valuation to secure the flat. COV is not a requirement. HDB and banks do not grant loans above the market valuation of a flat, as it is not financially prudent to do so.

Allowing HDB grants or loans to pay for COV may result in flat sellers demanding higher COVs. This will drive resale prices up and does not help flat buyers.

Those concerned about high COVs should plan ahead and apply for Build-To-Order (BTO) flats instead. New flat buyers can look forward to plenty of choices and supply this year, as HDB is prepared to launch up to 22,000 BTO flats in 2011, if demand is sustained.

I am happy to note that many young couples are planning ahead. About 30% to 40% of BTO flat buyers book their flats under the Fiance Fiancee Scheme today, where they only need to be married no later than three months after collection of keys to their new flat.

Mdm Ho Geok Choo: Thank you, Senior Minister of State. I have two supplementary questions. First question: short of sounding ageist, would the Ministry consider introducing an age quotient into the qualification criteria of this grant as such a move would encourage young couples to own a home and start a family of their own? Question two: what is the profile of the recipients and the take-up rate for the HDB grants?

Ms Grace Fu Hai Yien: Mr Speaker, as I have replied earlier, we do not think that it is appropriate for the grant to be used to finance COVs. We do not think that there are people who are using the grants now to finance the COVs. That is in relation to question two. Question one: we will consider the suggestion and we will give due consideration in our subsequent review of the policy

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