HDB FLATS

HDB FLATS:

(Number repossessed by HDB): 11.

Mr Zainudin Nordin asked the Minister for National Development (a) how many flats have been repossessed by HDB in the last three years and how many more is HDB expecting to repossess; (b) what are the follow up actions to assist the affected families; and (c) since the introduction of the HDB Loan Eligibility scheme how many applicants have been rejected and what were the main reasons for their rejection.

Column: 1482

12.

Ms Denise Phua Lay Peng asked the Minister for National Development if priority can be granted to rental flat applications by applicants who had to force-sell their flats due to financial hardship and high arrears with HDB.

Dr Mohamad Maliki Bin Osman (for the Minister for National Development): Sir, may I take Question Nos. 11 and 12 together as they are related?

Mr Speaker: Yes.

Dr Mohamad Maliki Bin Osman: Sir, both Mr Zainudin Nordin and Ms Denise Phua asked about assistance for HDB lessees affected by compulsory acquisition due to mortgage arrears.

HDB has spared no effort to help households in difficulty arrive at a financially sustainable solution. Some of the solutions that HDB explore with these households include: (a) subletting a spare room; (b) including working family members to share the loan burden; and (c) reducing the monthly instalments by extending the loan repayment period.

Notwithstanding these options, if they still cannot afford to keep their flat, HDB will help them to downgrade, by providing them an additional loan that they can afford. However, despite providing ample time and assistance, HDB occasionally encounters lessees who are not willing to work towards a sustainable financial solution. In such cases, HDB has no choice but to undertake compulsory acquisition but, only as a last resort, to prevent their debt from accumulating further. Even after HDB issues its letter of intent to compulsorily acquire the flat, HDB will still allow the lessee to sell his flat in the open market if he is serious about doing so without further delay. This is evident from the small number of flats recovered by HDB compared with the number of accounts in arrears.

Since

Column: 1483

2007, HDB has recovered 1,260 flats due to arrears. This is 0.3% of the total number of outstanding HDB loans.

Compulsory acquisition will continue to be our last resort, to be used only when necessary. We will ensure that those affected by compulsory acquisition have alternative accommodation, including a rental flat if necessary. Indeed, most of the 1,260 cases were allocated a rental flat as they have no other viable option. I should stress that rental flats are heavily subsidised and should be reserved for only the truly needy with no alternative accommodation.

Mr Zainudin Nordin also asked about the HDB Loan Eligibility (HLE) Letter. This was introduced in January 2007 to encourage financial prudence and forward planning among flat buyers. To date, 8% of HLE applications have been rejected. A third of those rejected were financially not ready to commit to a home loan. The rest were ineligible for a HDB loan.

Mr Zainudin Nordin: Supplementary question, Sir. May I know what HDB did with the 1,260 flats after repossession, please?

Dr Mohamad Maliki Bin Osman: The flats were subsequently put up for sale under our balloting exercise.

Ms Denise Phua Lay Peng: Thank you, Senior Parliamentary Secretary. I have come across residents whose flats are not acquired by compulsion by HDB, but they have been advised to actually sell their flats in the resale market and these are residents who subsequently have problems getting an alternative accommodation. Can the Senior Parliamentary Secretary please explain that?

Dr Mohamad Maliki Bin Osman: Sir, I understand Ms Denise Phua's concern and

Column: 1484

in fact, I think many Members of the House have come across many similar cases where residents came to them and said that HDB forced them or asked them to sell their flats. Sir, HDB's intention is really not to displace families. HDB's intention is to help families manage their arrear situation, and many of them have accumulated their arrears quite significantly. What HDB is trying to do is to prevent them from accumulating their arrears further so that they do not come into a situation where their outstanding loan becomes larger than their original loan, which means that they have accumulated so much interest that the loan has become larger or that the property value is lower than the outstanding loan, which means they are in negative equity. So when HDB advises them to sell their flats, it is effectively to advise them to downgrade hopefully to a flat that is more affordable to them. How does HDB help them? They will look at some of the possible alternatives after that. Firstly, we look at the possibility of granting them another loan. If they are really in financial difficulties, HDB is prepared to give them another loan to downgrade. Some of the challenges that these families have are that their income is not high enough or they are not able to afford a loan that will allow them to purchase another flat, which means that they are not ready to own another home, as I mentioned earlier in the reply. As such, we look at other options. Do they have family members who are able to accommodate them while they try to save to improve on their financial situation and purchase another flat? Secondly, we will also refer them to the CDCs to see whether they can improve on their earning capacity so that they are able to get another loan from HDB subsequently. The other alternative that we have is to offer them interim rental housing which is a scheme that HDB has put in place where the managing agents of HDB flats manage some of these flats and they will refer these families for interim housing. We do

Column: 1485

not want the families to be entrenched in such interim housing but it is meant for temporary accommodation while they work towards longer-term solutions. So, effectively, there are options available for some of these families. If they really cannot find other options, we will consider them for rental flats.

Mr Low Thia Khiang (Hougang): I would like to ask the Senior Parliamentary Secretary under the following circumstances, what will be the alternative for the residents. The resident is asked to sell the flat because the arrear is too high or HDB has to resell or repossess the flat. He could not get a HLE, a loan from HDB, because he is not qualified or he is required to upgrade, but obviously he cannot upgrade; he has no relative or family member to share accommodation with and he has no financial means to go and rent premises from the open market because the rent is too high. So what is the alternative?

Dr Mohamad Maliki Bin Osman: Sir, as I have mentioned earlier, given the description by Mr Low, one of the options that we will offer them is the interim rental housing. This is a short-term rental housing to help them with accommodation if, as Mr Low mentioned, they really do not have any other rental accommodation options. Of course, we would prefer that they continue to stay with their family, if they have family members to support them. While they are staying in the interim rental housing, we will look and explore other possibilities, like how we can support and help them. The reasons why they are not earning or not working will have to be explored. These are situations where we need case management by the social service sector to be able to help some of these families. I think if Mr Low has a specific case in mind and would like to refer it to us, we would be more than glad to review the case.