CPF APPROVED RESIDENTIAL PROPERTIES SCHEME (Withdrawal limit of Property Values)

Dr Ho Tat Kin asked the Acting Minister for Labour, since the Government has revised the Central Provident Fund regulations to allow members to withdraw up to 100% of their ordinary account balance to buy private residential properties under the Approved Residential Properties Scheme (ARPS), whether he will also consider (i) changing the total withdrawal limit of 80% of the value of the property at the time of purchase to 100% of the value of the property to make it easier for more people to upgrade to private properties, and (ii) allowing the CPF Home Protection Insurance Scheme which is currently available only to Housing and Development Board apartment owners, to be extended to ARPS owners as well.

Mr Lee Yock Suan: Mr Deputy Speaker, Sir, the Government's decision to allow CPF members to withdraw up to 100% of their ordinary account balances under the Approved Residential Properties Scheme (ARPS) has enabled those who purchased properties under the scheme to reduce their quantum of loans from commercial banks. However, it is still necessary to restrict the total amount withdrawn for any one property to 80% of the value of the property at the time of purchase. This 80% limit was imposed to ensure that, should the market price of the property fall, the CPF money will be safeguarded. This is the same prudent limit which financial institutions apply when extending loans for residential properties. Considering that property prices have fallen substantially over the last few years, it does not appear prudent to raise the limit from 80% to 100% of the value of the property.

As regards the second part of the question, properties purchased under the ARPS Scheme are excluded from the CPF Home Protection Insurance Scheme (HPIS) for two reasons:

(a) As there is no ceiling to the value of private residential properties, claims could amount to more than $500,000 for each case, many times larger than that of HDB properties. The inclusion of private properties in the scheme will impose the risk of hefty claims on the funds available. It could also result in the need to raise insurance premiums, to the detriment of the many lower income owners of HDB flats.

(b) Owners of private residential properties are generally professionals and others in the middle and higher income groups. They can insure their properties with private insurance companies if they wish.

I am therefore not in favour of including private property owners in the CPF insurance scheme.