HOUSING AND DEVELOPMENT (AMENDMENT) BILL

HOUSING AND DEVELOPMENT (AMENDMENT) BILL: Order for Second Reading read.

5.19 pm

The Minister for National Development (Mr Mah Bow Tan): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Members may recall that in 2008, Parliament approved the Moneylenders Bill to revamp the regulatory regime for moneylenders. The purpose was to introduce a more flexible and progressive approach to the regulation of moneylending to keep pace with the modern credit economy. Following this, the number of moneylenders licences has increased significantly.

At the same time, there has been an increasing number of HDB flat owners borrowing from moneylenders and agreeing to assign the sales proceeds from their flats as repayment. These moneylenders then lodge caveats against the flats to claim an interest in the sales proceeds. In 2008, there were 12 registered resale applications with caveats lodged by moneylenders. In 2009, the figure increased to 546. In the six months of this year alone, there were 556 such cases.

While this is permitted under the current legislative framework, the Government is concerned about this trend as it undermines the intention of the home ownership policy which seeks to provide a home for our people for long-term stay.

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Mdm Halimah Yacob raised similar concerns in Parliament in April this year. And I informed her at that time that my Ministry was reviewing this issue, and that we would be treating it with utmost urgency.

Today's Bill is to address this problem. I have introduced it with a Certificate of Urgency to quickly put in place the legislative framework to prevent more HDB flat owners from ending up with caveats on their flats, after borrowing from moneylenders.

Emphasis on long-term home ownership

Sir, before we get into the details of the Bill, let me remind Members what HDB flats are primarily intended for.

A HDB flat is for long-term home ownership. I cannot over emphasise this fact. HDB flats are heavily subsidised to allow families to purchase and own their homes. Owning the roof over one's head is a significant commitment for any family and requires the family to be financially prudent and responsible to service their mortgage and plan for the long term.

On the Government's part, we give generous subsidies to help young families and first-timers own their homes. As the flats and precincts grow older over time, we carry out upgrading and various improvement works at low cost or no cost to flat owners to help maintain the value of their flat. And finally, at old age, and this is where the long-term aspect of home ownership becomes crucial, flat owners can monetise their flats. They can supplement their retirement income either by subletting their flat, or a room, or by right-sizing to a smaller flat.

This life-cycle approach to housing works only if people do not cash out on their retirement asset prematurely. They will become homeless, if they have sold their flat and have not planned for where

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they are going to stay next. They will also have whittled away their retirement nest egg. People are especially tempted to do this when flat prices are high. Selling their HDB flat prematurely, whether to cash in on its rising prices or to settle debts, is not a wise move, unless they have other housing options. It can only lead to bigger problems in the longer term.

If Singaporeans use their flats as collateral to borrow, they risk losing their homes if they default on their loan. Since 1994, the Government has disallowed the re-mortgage of HDB flats, except for the purpose of financing the purchase of the flat. There have been periodic call for this rule to be relaxed, but we have decided after careful consideration not to do so. In view of recent developments, we need to do more to protect the homes of Singaporeans.

Disallowing caveats pursuant to use of HDB flat as security

Sir, under the current rules, moneylenders can enter into an agreement with the HDB flat owners for the sales proceeds to be assigned to them as repayment of debt, upon which the moneylenders then lodge caveats against the flats. Such caveats enable the moneylender to determine repayment owed before he agrees to withdraw the caveat to allow the sale transaction of the flat to go through.

The problem is that once the flat seller has sold off his flat and repaid the moneylender, he cannot afford to purchase his next flat. The flat seller and the other flat occupiers become homeless and pose a burden to their family and friends for their housing needs and some join HDB's queue for rental flats, when they in fact do not qualify for rental housing.

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Against this context, we have decided to go one step further now and disallow the lodging of caveats to claim an interest in the sales proceeds of the flat. And this is the focus of the Housing and Development (Amendment) Bill 2010 that is before this House now.

The Housing and Development (Amendment) Bill 2010

Currently, section 51 of the Housing and Development Act only provides that the title deeds of HDB flats cannot be used to create a security for debt. Section 51 does not prevent moneylenders from lodging caveats to claim an interest in the sales proceeds, after providing a loan.

Clause 5 of the Bill repeals the existing section 51 and re-enacts the section. It continues to disallow HDB flat owners from using their HDB flat as security or collateral for any debt, or obligation, or claim. One key difference with this new clause is that this prohibition now includes the sales proceeds from the HDB flat. The re-enacted section 51 also implements a new rule that voids any contract or agreement to use HDB flats, including the sales proceeds, as security or collateral. The changes do not affect banks and financial institutions, who can continue to grant loans on the security of the flat for the purpose of financing its purchase.

Besides providing that any contract using the HDB flat as security for debt is null and void, the Bill also provides that any Act, deed, instrument or document which protects rights under such a contract has no effect. This means that caveats against HDB flats for the payment of debt can no longer be lodged after the Bill is enacted. Existing contracts with valid caveats lodged would not be affected. This is in recognition of the sanctity of contracts that are already legally entered into.

Financial prudence

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Sir, this policy change does not mean that HDB flat owners can no longer borrow from moneylenders. They can continue to do so. But they cannot use their HDB flat as a security, and they must find other ways to ensure that they repay their debts.

In preventing moneylenders from lodging future caveats against HDB flats, we are emphasising – and re-emphasising in fact this fact – that the HDB flat is meant for home ownership and it is a long-term asset for retirement. It is not to be used for short-term profit-taking or to cover debts. The new section 51 underscores this point, and it is urgently needed to curb future abuses.

Sir, I am also taking this opportunity to introduce in the Bill two unrelated operational amendments to allow HDB to discharge its statutory duties better. Clause 4 aligns HDB's punitive powers for public rental flats with that of sold flats. It allows for subsidiary legislation prescribing penalties for those who illegally sublet their public rental flats, in the same way that penalties can be prescribed for flat owners who do not comply with conditions relating to flats sold by HDB.

Currently, for misuse of public rental flats such as illegal subletting, the only recourse is for HDB to take back the rental flat and to debar the tenant for a fixed period. HDB has no further powers beyond this. Their experience shows that taking back the rental flat and debarring the tenant is not a sufficient deterrent. This amendment will allow HDB to impose penalties and more effectively safeguard the heavily-subsidised rental flats for those who really need them.

Lastly, clauses 2 and 3 amend the Housing and Development Act to allow HDB to provide much sought after

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technical and consultancy services, locally and internationally, on matters within its expertise. The amendments also allow HDB to act as a Government's agent to service request, to share its expertise in public housing development, both within and outside Singapore. HDB would also be able to develop, sell and acquire intellectual property rights on a commercial basis.

Sir, I beg to move.

Question proposed.

5.29 pm

Mdm Halimah Yacob: Mr Deputy Speaker, Sir, I rise in strong support of this Bill.

I would, first of all, like to thank Minister Mah and the Ministry of National Development for coming up with this Bill within such a short period of time by invoking a Certificate of Urgency, a process which by itself is unusual. All because I think the Ministry clearly believes there is an urgent need to protect the interests of our HDB flat owners. In April this year, I had raised my concerns over the antics of moneylenders who had used their borrowers’ HDB flats as collaterals. Although this practice is legal, it is clearly contrary to our home ownership goals, as Mr Mah has clearly pointed out, and unconscionable, and this Bill now rectifies this situation.

Section 51 now makes any contract or agreement to directly or indirectly use protected property as security or collateral for any debt obligation or claim null and void.

Sir, the situation is really serious. As Minister Mah had mentioned, there were only 12 resale flat applications with caveats lodged by moneylenders for the whole of 2008 but this has exploded to 556 applications for the first six months of this year alone. Even with so much

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publicity and warnings that such unethical practices should stop, without a law prohibiting them, moneylenders have continued to lure borrowers by using their flats as collaterals. This irresponsible behaviour of some licensed moneylenders had caused grave hardship to many. They use hard sell tactics such as advertising in newspapers as well as making use of housing agents to get more borrowers. Often, the borrowers do not clearly understand how the interest rates are computed and that there are other hidden costs, such as commissions paid to the housing agents to secure a borrower for the moneylender or legal fees, administrative costs and other costs. In the end, instead of just the 1.5% interest that was touted before they took the loan, they ended up paying as much as a 15% interest in some cases. Their shock starts when they discover that they had nothing left after paying off their debts to the moneylenders, which they had to first clear since it is protected by the caveat.

Sir, many moneylenders actively seek out and pay housing agents commissions to secure borrowers for them from among those who want to sell their flats but who need immediate cash as the sale transaction may take up to six months to complete. We all know that ultimately it is the HDB flat seller who is paying for the commission offered by the moneylender to the housing agent, and this adds to the flat seller's debt. I was told that housing agents are paid 3% commission on every loan that they help to secure. So for a loan of $20,000, for instance, the housing agent can earn a commission of $600 per month for up to six months, a very lucrative sum for very little effort. Most of the borrowers are low-income earners who mostly borrow amounts of between $10,000 and $20,000 but end up paying much, much more than this amount when they sell their flats. I recall a case that was reported in the media of a

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Mr Rahim, a cleaner, who received only $250 from the housing agent, which the housing agent described as a donation to him, after the sale of his 3-room flat in Yishun last November. The 46-year old man had to camp at East Coast Park as he could not afford to buy a smaller flat as there was nothing left from the sale of his flat nor could he rent from the private market.

I am really worried, Sir, that these 556 cases registered in the first six months of this year will be the cases that we will see at our Meet the People sessions asking for yet another loan from the HDB that they cannot afford to pay for or for a rental flat that they do not qualify for. In the end, the real victims will be the children. I have seen many of them, who are moved like nomads from place to place, relative to relative, until their parents outlive their welcome and whose studies are completely disrupted. There is no doubt that this exploitation of the current loophole in our law by moneylenders, have contributed to the problem of homelessness in Singapore. Although I know that this law cannot have retroactive effect, I would like to ask the Minister whether there is anything that the Ministry can do to help these 556 cases, in terms of negotiating for lower interest rates or mediating between them and the moneylenders. At the same time, I also feel that there is a clear need to raise the standards of professionalism and ethics among housing agents. MND has announced that a new statutory board will be established to oversee the real estate landscape. This is sorely needed as it is obvious that the industry cannot regulate itself. Even housing agents who have been convicted of offences related to property deals can freely advertise and continue as agents after their release without any consequences whatsoever. The barriers to entry are non existent. Anyone who signs up with an agency is allowed to sell homes almost immediately. I was told that even foreigners who can

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barely speak English, and who would therefore not be in a position to properly advise their clients on the option form or the sales and purchase agreement, have jumped onto the bandwagon.

In practice, few agencies are prepared to sack an unethical but high performing agent because they bring in good money for the agencies. Such situations of conflict do not augur well for the industry and significantly compromises the interest of flat owners. So, I would like to ask the Minister when this statutory board will be set up and how soon will regulations be formulated to control the unethical conduct of real estate agencies? I really believe that the moneylenders acting alone would not have resulted in 556 applications caveats being lodged. They certainly must be working together with the housing agents and therefore we really need to look at the issue in a wider perspective.

Finally, Sir, we cannot completely absolve flat owners who borrow from moneylenders from responsibility. They have caused much hardship to themselves and their family through their own actions and for which they must bear some responsibility. Even as I urge the Ministry to focus on flat owners' education as an integral part of our home ownership scheme, so that they understand that flats are meant to be long term investments for their security and old age, I do realise that no amount of education can stop flat owners from selling their flats and using it to finance their other needs or uses, if they so insist. Ultimately, borrowers must understand that the Government cannot free them from their legal obligation to repay the debts which they have incurred. In this case, the law can only disallow the use of the HDB flat or sale proceeds from being used as collateral for the loan. HDB knows of many instances where home owners incur debts with other creditors, such as credit card companies, and sell

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their flats as a way to settle their debts and they end up with bigger problems as they do not have alternative accommodation. So, flat owners must accept personal responsibility and exercise financial prudence in whatever lifestyle choices that they make. They too have a duty to protect the roof over their heads.

Sir, I agree with a strong emphasis on the importance of viewing HDB flats as a long-term investment. And I am really happy that this Bill will send a very strong signal to flat owners as well as to moneylenders and others who are interested, that they should similarly view the flats that they have as a very important shelter for them and their family.

Sir, on this note, I support this Bill, and I once again thank the MND for its quick response to protect our flat owners.

5.38 pm

Mdm Ho Geok Choo: Mr Deputy Speaker, Sir, the HDB (Amendment) Bill seeks to prevent caveats from being lodged against HDB flats and the proposed restriction to disallow HDB flat owners from using their flats as security for any debt, obligation or claim. Sir, I would like to commend the Ministry for taking quick action in responding to the issue of moneylenders issuing loans to home owners who use their HDB homes as collateral for easy cash to support lifestyle choices rather than for the purpose of financial exigencies for livelihood.

This loophole needs immediate plugging, given the exponential increase in the cases reported since 2008 till to date. Sir, according to press reports, these moneylending activities have been targeted specifically and openly at "HDB home sellers only", sometimes with the connivance of housing agents. Mr David Poh, the President of the Moneylenders Association of Singapore, had openly stated that it is not so secure for

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moneylenders to provide a loan based on the lenders' income as there is a possibility that they may also lose their jobs anytime. Mr James Lee, founder of James Lee Credit, also said that this is a "legal process that is all in black and white", further illustrating the current legal loophole.

Sir, what complicates the issue is that the moneylending industry is not the only one that is under scrutiny here. Real estate agents also work hand in hand. They would introduce flat sellers, sometimes desperate sellers, to the moneylenders and then get a referral fee of about $500 in return. Housing agents may claim that the sum may not be big and it is up to the home owners not to go through with the arrangement. But home owners, saddled with mounting debts, may see this collusion as the easy way out without realising the implications. Hence, it is obviously a win-win situation for both the moneylender and the estate agent but what of the poor home owner who may stand to lose all.

I agree with Dr Tan Tee Khoon, CEO of the Singapore Accredited Estate Agencies that estate agents have to satisfy several duties, one of which is to help HDB sellers work out their estimated sales proceeds before selling, a practice prevalent among financial planners. Agents also have the duty to advise sellers to plan for their next home before selling the flat. Sir, the amendment emphasises the need for flat owners to be responsible and prudent in their financial planning and well-being which otherwise would become a burden for society. Very often, flat owners resort to moneylenders and go on credit with credit cards, handphone subscriptions and hire purchases to service a highend life style with scant consideration for their housing loan obligations. Once heavily in debt,

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they turn to the moneylenders resulting in the predicament that many face today.

Also, house owners should be cautioned against joining the bandwagon in this hot property market to make profits from the sale of their HDB flats. They then find themselves landing up in interim public rental housing or private rental flats, which quickly deplete the gains made from the sale of their HDB flats. They then join the queue at the Meet-the-People Session (MPS) to ask for heavily subsidised public rental flats. On this note, I would like to draw the Ministry's attention to the root of this entire moneylending issue. We ask ourselves, why were the moneylenders able to attract these voluntary HDB sellers? Sir, I am sure that no HDB owner would want to put a flat down as security for such debts unless there is no other way out and that there is an extremely urgent need for cash, in some cases. Save for the compulsive gamblers and those with unnecessary credit-card debts, some may actually have a valid and urgent reason to borrow cash. For instance, this may include the need to pay for an expensive operation or medical treatment. Of course, there could be a million endless possible reasons for borrowing cash, such as loss of jobs or death of the sole bread winner but the bottom line is whether there are other avenues for thrift loans to help these people who are in genuine financial need. Accordingly, would it be necessary to first find out how many such HDB owners have actually borrowed from moneylenders and the reasons for borrowing? Would HDB extend beyond the current practice of two concessionary loans for hardship cases?

Sir, I would like to ask Minister what time frame is given to honour the existing contracts between the flat owners and moneylenders and for the group that is affected after the time period, how would the Ministry be helping the flat owners in fulfilling the payment of their outstanding

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loans to the moneylenders, especially in cases where they have borrowed because of financial circumstances and not so much as to support lifestyle choices.

Mr Deputy Speaker Sir, this is not a one-dimensional problem. A proper solution should involve many parties, namely the moneylending industry, the real estate industry, HDB home owners and HDB itself. Sir, the proposed changes are to be welcomed, as they are in line with the policy concerns and purpose behind HDB flats. These flats are certainly not meant for short-term profit, nor to be used as security for any debt, obligation or claim. Rather, HDB flats are built to provide affordable homes to Singaporeans and to provide for them in their old age. Sir, with reference to clause 4 of the proposed amendments, the current penalties for illegal subletting of public rental flats, I support the move to take more stringent measures against lessees who abuse heavily subsidised public rental housing. But I would like the Minister to enlighten us on what these more stringent measures are all about.

Sir, I would like to also ask Minister how many cases of illegal subletting public rental flats is HDB dealing with to date and how many lessees have been evicted? For those evicted or to be evicted and who are not able to find another affordable lodging, how is HDB helping them? Other than evicting, are there any other measures that HDB is taking with regard to counselling and educating them on their responsibilities? Very often, we see these evicted cases at MPS where they threaten to bring the family to sleep at the beach or at the void decks, giving the impression that HDB is heartless when in actual fact HDB has compassion for those in need. Perhaps HDB should not shy away from doing more PR work of what it has been doing to help the homeless in need of public housing.

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Clauses 2 and 3 of the Bill allow HDB to provide its much sought-after technical and consultancy services internationally.

I applaud the Ministry’s move to allow HDB to foray into the international markets. This is a remarkable achievement which all Singaporeans should be proud of. I would like to ask if there are any plans for HDB to collaborate with our local SMEs in the construction and other related industries, which wish to internationalise. Such partnerships would enhance the competitiveness and status of our SMEs and may also help create a local MNC by levelling up the expertise, as set forth in the ESC recommendation.

On this, Sir, I support the Bill.

5.46 pm

Er Lee Bee Wah: Mr Deputy Speaker, Sir, I endorse the move by the Minister to plug the holes so as to suffocate these loan sharks from their wicked activities. It is commendable that the Minister is moving the Bill on a certificate of urgency. I applaud the Minister and his team. We can see there is a certain level of sophistication by these illegal moneylenders and they know where to look for the jugular veins to satisfy their needs. The damage inflicted by these loansharks hurt more than just the borrowers. The injury is inflicted on innocent neighbours as well. Hence, I am all for the Government’s action to weaken these syndicates and their henchmen.

As I stand here to speak in support of the Bill, I would also like to ask HDB to do more to help residents who are in dire needs by taking a more generous stance to request for rental flats. HDB should look through its policy and see how to allow more applicants to qualify for such flats, particularly those who are in urgent need, such as those whose marriages have broken up and are saddled with many children. Another suggestion is for HDB to review its current list of occupiers of rental flats and get those who no

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longer require their flats, perhaps because their financial or social circumstances have improved, to move on so as to create more units available for more urgent cases. This can help shorten the waiting time for applicants.

From the public standpoint, it is an irony to see foreign workers happily tucked into HDB blocks which have been turned into foreign workers dormitories, but Singaporeans are left hanging out on the waiting list. I know there is a difference between foreign workers’ dormitories and HDB rental flats. However, it is the public’s perception of HDB policy that I am concerned about. From the public standpoint, why are flats turned into dormitories when HDB says it does not have enough units for Singaporeans? Why did HDB not, in the first instance, turn these blocks, for example in Toa Payoh, into rental flats to provide shelter to those Singaporeans who genuinely need them? Why can the Ministry not consider converting some other old buildings into temporary HDB rental housing for Singaporeans, if it can respond so swiftly to convert disused school buildings into offices when there was a demand?

On the move to allow HDB to offer its technical and consultancy services abroad and locally and take on commercial jobs, I must register my concern on this point. I will first declare my interest as a professional engineer.

I think for HDB to take this journey is to side step its original noble mission to build and provide Singaporeans with affordable housing, and to build townships for the people. The "people" here refers to Singaporeans. If HDB is allowed to move away from its core responsibilities, then what is there to stop every Government or statutory agency to go into commercial business? Ultimately,

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the focus of the top brass will be on generating income which will pay them fat bonuses, rather than in channelling their minds to seeking solutions for local residents. This is inevitable. There are lessons to take home from what happened to Wall Street head honchos whose focus was on getting the big bucks at the expense of all other considerations.

Look at some of our transport operators. They are going the way of Wall Street. What happens? Local people are not served to satisfaction. More and more space in MRT stations have been converted to income-generating commercial space at the expense of the comfort of commuters. Fares continue to increase though the company makes more money and pays out fat bonuses to the top brass. After securing a stable home-based customer to guarantee regular revenue, they begin to lose sight of their original mandate. Anyone would, too, if this is the way to earn big bonuses and pay cheques. Yes, there are Singapore companies that have ventured abroad though they originally started as local enterprises. Perhaps PSA is one good example; SATS is the other; but these are different entities. Their basis is not to serve the Singapore population as HDB is required to do so.

What was the original intention of shedding a big chunk of HDB staff to set up Surbana Consultants? Can Surbana not do the job of providing international consultancy? If HDB is so keen to share its expertise and experience, then why not transfer its knowledge to local engineers and architects who are bidding for overseas projects? This, I think, would be a better way for HDB to impart its know-how to help local professionals venture abroad. At least we know at the same time HDB is helping to build a talent pool in public housing and township management.

I would like to seriously urge HDB to be focused in providing a roof to all

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Singaporeans and to do it well, without the leaking roofs.

5.53 pm

Mr Ang Mong Seng (Hong Kah): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Deputy Speaker, HDB has been implementing the "Home Ownership" policy which aims to provide a good home for everyone and to meet Singaporeans' aspiration of owning their own property assets. Currently, 85% of Singaporeans have benefited from this policy and HDB has provided more than one million HDB flats to Singaporeans. This is a unique achievement, thanks to HDB’s efforts of providing nice homes to our people for the last 50 years.

For Singaporeans, an HDB flat is not only an important asset which appreciates over time but it also provides security for old age. As such, Singaporeans generally would not take the risk of mortgaging their HDB flat. Yet in 2008, 12 HDB residents mortgaged their flats and were forced to sell because they were unable to pay their debts. As a result, they became homeless. In 2009, the number rose to a staggering 546 cases. Although this number is negligible compared to the one million HDB flats that we have, we have to take precautionary measures. I must applaud the HDB for making fast and decisive moves to amend this law. Hence, I support this Amendment Bill.

However, the Amendment Bill may not address the root cause of this problem. The reason why Singaporeans resort to mortgaging their HDB flat is that they have to raise money when facing financial difficulties. They are not able to get a loan from the bank, nor can they borrow from their friends or relatives. They have no choice but to make a risky decision by turning to moneylenders. In order to help Singaporeans in such predicament, I have the following three suggestions:

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Firstly, the Government should provide more ComCare fund to help those residents who are really in financial troubles and assist them to tide over the difficult times through proper channels. This will prevent them from making a wrong decision out of desperation.

Secondly, we lack non-profit organisations to provide low interest loans for people who are in difficulties. I made the same suggestion during the Budget debate in 2008. In 1976, Bangladesh economist Muhammad Yunus set up a micro-credit bank called Grameen Bank for the benefit of rural residents, after seeing that they were exploited by loan sharks. In the beginning, people were laughing at him and thinking he would run into big losses by providing loans without collateral to the poor. But Grameen Bank proved to be a success and have maintained profits for more than 10 years. It has since become a model of combining profit-making with public interest. More than six million people have borrowed from the bank, and 58% of them, together with their family members, have risen above the poverty line. Muhammad Yunus and the Grameen Bank were awarded the Nobel Prize in 2006 because of this effort. I hope the Government would also set up micro-loan facilities to provide Singaporeans with an additional loan option. The New Paper had reported my suggestion positively at that time.

HDB should also consider introducing a one-week cooling-off period for all HDB sales. During this period, HDB should consult HDB flat sellers and explain to them the relevant policies; for example, they cannot buy or rent an HDB flat within 30 months after they sell the flat and explain to them on the HDB’s housing loan policy. After the cooling-off period, flat sellers can make a final decision. Some unscrupulous housing agents would use various means to persuade people to sell their flats in order to earn

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commission. They would tell the owners that should they have any problems, just see the MPs. As a result, many of our parliamentary colleagues have had to face many residents who had sold their flats hastily without realising the consequences. I hope that the Minister would consider my suggestion.

On this note, I support the Bill.

*Cols. 835-838.

5.58 pm

Mdm Cynthia Phua: ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] I fully support the Minister for invoking the Certificate of Urgency to quickly plug the loophole in our current law and to prevent illegal moneylenders from filing caveats on HDB flats. I do hope this urgent Bill will be passed, because I do not want to see people losing the only shelter they have for their spouses, children and even parents by mortgaging their flats to illegal moneylenders. We must make sure that those illegal moneylenders do not walk away unpunished after they have exploited the borrower. At the same time, we must also ponder why these people resort to borrowing from illegal moneylenders. This is, of course, not HDB’s problem alone.

Mr Deputy Speaker, I hope HDB can step into the home owner’s shoes when formulating and implementing new policies. A case in point is the introduction of a new rule early this year whereby people who buy a second flat after selling the existing one can only use his remaining CPF and 50% of the cash proceeds from the sale. While I support this policy, many HDB owners and I are puzzled by its implementation timeline. Under the new policy, a person who sold his flat, for example, four years ago in 2006 and now wants to buy a new one will be required to use only 50% of cash proceeds from the last sale to pay for his new flat. This

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is unfair. When someone makes a sale four years ago, he or she did not expect to fork out 50% from the proceeds to pay for his new flat. He may already have spent the money on medical expenses, children’s education and other expenses. He may not even have 10% of the proceeds left. I think this policy should apply only to flats sold after the policy took effect in March this year so that people can do their financial planning accordingly. Otherwise you are just laying a snare to trap them, forcing them to turn to the loan sharks.

( In English ): Lastly, let us understand what HDB sets out to do. I quote briefly from the HDB website, the three key missions – one, "providing affordable, quality homes for Singaporeans"; two, "ensuring vibrant towns"; and, three, "focusing on the community".

In this Bill, HDB is also seeking to go into sharing its expertise in public housing development outside of Singapore. It also wants to develop, sell and acquire intellectual property rights on a commercial basis. It was not long ago that the Ministry, after paying much retrenchment benefits, hived off Surbana and PWD, which has now become CPG, which is in the business of providing advice on technical and consultancy services, and on the development, upkeep and maintenance of housing estates.

There is also newly launched Singbridge International. Earlier, we had the Singapore Cooperation Enterprise (SCE). This is not HDB's core function. Surbana, I believe, was set up to fulfil this role of going overseas. Moreover, does HDB have adequate manpower resources to place such staff overseas? Most clients would want the consultants to be based there for a few years, and not travel there from time to time. Yes, HDB can share, teach or franchise its technical operations and other policy expertise and systems to

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organisations like Surbana, Singbridge and SCE, for them to do the work.

HDB should, therefore, be better placed, to concentrate on what it is set up to do for Singaporeans – focus on building good and competitively-priced homes. It should not distract its staff and resources from its core functions. There are many issues which need to be resolved on the home ground.

HDB should channel its spare energy by focusing on promoting social graces and values amongst flat dwellers in highrise buildings, research and address issues like why flat dwellers are indiscriminately throwing food and other stuff out of the kitchen windows and soiling other's laundries. HDB can also conduct research on the lifestyles of the residents and, if need be, redesign the flats to address these problems. Look at the demand for more carparks. We have been appealing to the Ministry to look at that. We are getting more and more requests at the MPS.

Another feedback that we are receiving with increasing frequency from residents is noise from neighbours. Can we look at the concrete slab between flats and between the floors? Should we not use cell-blocks for slabs in between floors to reduce noise from passing through solid concrete? Japan is using this new technology. HDB should now concentrate on issues faced by residents in high-rise living. These are ongoing and changing. As the only public housing authority in Singapore, its responsibility to Singaporeans is heavy.

*Cols. 839-840.

6.05 pm

Mr Christopher de Souza: Mr Deputy Speaker, thank you for allowing me to join in this debate.

It is not often that the passage of a Bill is sped through a Certificate of Urgency so that all three readings are

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effected in one parliamentary sitting. This attests to the urgency and seriousness of the problem at hand, namely, the increasing number of moneylenders giving loans to HDB flat owners at very high interest rates with the borrowers' flats as collateral. It also shows how decisively, determinedly and thoroughly MND is acting to nip the problem in the bud. I think the approach the Ministry is taking will be effective in curbing this unhealthy development and addressing the root of the problem.

To date, a number of unscrupulous moneylenders have been exploiting a loophole in our legislation. Presently, there is no restriction on the types of caveats that can be lodged. These lenders have hence made agreements with their borrowers to lodge caveats against their flats. This way, they have the first claim on the sales proceeds. It is all perfectly legal and above board; and the lenders have security in recovering the principle sums loaned plus an obscene amount of interest.

In April this year, the Minister, in response to Mdm Halimah Yacob, had mentioned that he was considering "strengthening the regulatory framework to protect public interest". However, the focus then was on regulating the real estate agents such lenders have colluded with.

With the introduction of clause 5 of the Bill, repealing the existing section 51 and enacting a new section 51, caveats can no longer be lodged against HDB flats for the payment of debt. Any contract using a HDB flat as a security or collateral for any debt other than as mortgage for the purpose of financing the purchase of the flat will be null and void. I agree with this approach for two reasons.

Firstly, it short-circuits the entire process of trying to catch the errant real estate agents and their partners – who

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are the moneylenders. Secondly, we address the issue of the moneylenders laying claim to the sales proceeds, protected by the law, as the loans are not secured on the flats. This is in line with the objective of public housing.

This Amendment Bill will ensure that HDB flats will continue to be used primarily as homes by HDB flat owners. Housing is one of the human race's four basic needs, succinctly summarised in a Chinese proverb " yi shi zhu xing " – clothing, food, housing and transportation. Without housing, it is difficult for one to hang on to a job or provide protection and stability for one's family. The Government set up HDB with the objective of housing every Singaporean. Affordable public housing has always been HDB's mission.

The amendment will give effect to HDB’s core mission of providing good quality and affordable public housing for Singaporeans. Not many other countries have achieved the rate of quality public housing that we have. More than roofs over their heads, HDB flats are also safe assets, stores of value which appreciate in value over time and provide security for retirement. Our HDB flats are well-maintained and upgraded regularly. Residents need not fear deterioration of their living environments as HDB continues to be committed to upkeeping and maintaining HDB flats and estates.

Therefore, HDB flats should not be used as security or collateral for other loans or as instruments for profit by unscrupulous moneylenders. Such practices are clearly an abuse of the system and we must put an immediate stop to this.

In addition, I support the Ministry's decision to introduce an amendment through clause 4 to safeguard our heavily subsidised rental flats for the very poor and needy. The amendment will allow for

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subsidiary legislation to deter and punish those who are considering or who are already subletting their rental flats illegally. Such an abuse of our public rental housing system should not be tolerated as it deprives the truly needy as the errant tenants make a profit at the expense of the taxpayers.

In light of this, Sir, I support the Bill.

Ms Sylvia Lim: Sir, I have a very specific clarification to seek regarding the proposed section 51. It is stated that under section 51(4), certain creditors will still be able to take HDB flats as security, for example, the Board itself, approved financial institutions and such other persons as the Minister may prescribe. According to the explanatory note, "this is to protect the right of HDB and mortgagees who have financed the purchase of the flats". Besides HDB and mortgagees, why is there a need to have a further category of persons to be prescribed by the Minister? Could the Minister please elaborate on this?