RESALE OF HUDC FLATS (Assistance to Owners)

[Mr Speaker in the Chair]

Dr Wong Kwei Cheong asked the Minister for National Development (a) what was the total number of HUDC units built; (b) what was the total number of units sold as at the latest convenient date; (c) what kind of financial assistance is provided for HUDC flat owners who are not able to sell back their flats to the Housing and Development Board (HDB) and who find it difficult to service their existing loans; and (d) if the HDB will consider lowering the prices of the unsold HUDC units.

The Minister for National Development (Mr Teh Cheang Wan): Mr Speaker, Sir, the HDB has built 5,275 units of HUDC flats. As at 30th June 1986, 4,105 units of HUDC flats have been sold.

The HDB does not provide mortgage loans to purchasers of HUDC flats. Purchasers of HUDC flats obtain loans from Credit POSB Pte Ltd or other financial institutions. HUDC flat owners who find it difficult to service their existing loans with Credit POSB Pte Ltd may request for:

(i) temporary suspension of monthly instalments; or

(ii) lower monthly instalments for a period of six months; or

(iii) extension of loan repayment period for a maximum period of five years. The above requests will be considered by Credit POSB on a case-by-case basis.

The HDB's role in building HUDC flats is to provide long-term accommodation for middle-income people who cannot afford private residential properties. In fulfilling this role, the HDB has provided a range of HUDC flats for prospective owners to purchase what they can afford.

70% of the 1,170 vacant HUDC flats are being sold below $220,000 each, which is well below the market price for private flats of comparable size in similar locations. The HDB will not lower the prices of the unsold HUDC flats as it is not the Government's policy to compete with the private sector in the property market.

Dr Wong Kwei Cheong (Cairnhill): Mr Speaker, Sir, since about 1,000 units of HUDC flats, at an average price of about $250,000 each are left unsold, there is a sum of about $250 million of public funds left idle. May I ask the Minister how does his Ministry plan to make use of these unsold units?

Mr Teh Cheang Wan: Mr Speaker, Sir, the plan is to sell these flats slowly.

Mr Chiam See Tong (Potong Pasir): Sir, it was an announced policy that the policy of the HUDC will be governed by the rules of the HDB. Why is it that the financing of HUDC flats cannot come from the HDB but rather from Credit POSB? Is this not a deviation from the policy?

Mr Teh Cheang Wan: Mr Speaker, Sir, most of the policies governing public housing are quite similar for the HDB and HUDC but they are not identical. HUDC has certain separate rules which are different from HDB, and loans for the purchase of HUDC flats is one of them.

Mr Chiam See Tong: Mr Speaker, Sir, the Minister seems to be twisting all the time. There is a clear-cut policy in which the policy of the HUDC ---

Mr Speaker: Let us have your supplementary question, Mr Chiam.

Mr Chiam See Tong: Yes, I am coming to it.

Mr Speaker: You are not. You are making a speech.

Mr Chiam See Tong: It is very clear that the policy, as enunciated by the Minister in 1983, is that the HUDC flats will be governed by the rules of the HDB.

Mr Speaker: Where is your supplementary question, Mr Chiam? Let us not waste time.

Mr Chiam See Tong: Why is this exception made in regard to financing of HUDC flats?

Mr Teh Cheang Wan: Mr Speaker, Sir, as I have explained on several occasions, HUDC flats and HDB flats are generally governed by similar rules, in the majority of cases. But there are some differences between HDB and HUDC and providing loans for the purchase of HUDC flats is one of these differences. They are not identical, as I have explained earlier. They are generally the same. That means HDB undertakes the management of the estates. HDB does the cleansing work. HDB collects the service and conservancy charges. HDB plants the trees. I can go on for hours on the similarity of the management of HDB and HUDC estates but, at the same time, they are not identical. Not everything is the same. There are some differences. The provision of loans is one of the differences.

Mr Chiam See Tong: May I ask the Minister this. You make a rule, make a policy, and you deviate from it whenever it suits your convenience. Is it not so?

Mr Teh Cheang Wan: That is not true.

Mr J.B. Jeyaretnam (Anson): Mr Speaker, Sir, may I ask the Hon. Minister a supplementary question touching upon his answer to part (c) of the question asked by the hon. Member. Would he agree that he had not really directed his answer to the point of the question, which is, assistance provided for flat owners who are not able to sell back their flats to the Housing and Development Board? My supplementary question to the Minister is this. Would the Minister say whether, until the recent announcement was made by the HDB, HUDC owners were compelled to sell back their apartments to the HUDC or HDB now if they proposed to sell them within the prescribed period?

Mr Teh Cheang Wan: Mr Speaker, Sir, no. Anybody who looks at the lease of the HUDC flats will know that there is no such rule that the owners who want to sell their HUDC flats in the first five years must sell them to HDB. They have to give HDB the first option, and it is up to the HDB whether it wants to buy or not. As a professional lawyer in practice, I think the Member for Anson and the Member for Potong Pasir must have come across sales agreements on properties and it is not unusual to put conditions on the property to be transacted. I have come across many agreements which say that if Mr A is selling a property to Mr B at a certain price, maybe at a certain concessionary price, and if Mr B wants to sell that property again he has to give Mr A the first option to purchase, and it is for Mr A to decide whether he wants to buy back that property or not. If Mr A decides not to buy back that property, then Mr B is allowed to sell the property to a third party. This is the usual clause.

Mr Jeyaretnam: Does the Minister concede now that he says it is in the agreement? Yesterday I thought he said there was nothing written about it. Does he concede that any intending vendor of an HUDC apartment within the prescribed period had to first offer it to the HUDC and without offering it to the HUDC could not sell it outside?

Mr Teh Cheang Wan: Mr Speaker, as I have explained, to start with, in the first five years they are not allowed to sell. That is the rule. If they want to sell, they have to offer to HDB and, in this particular instance, HDB is unable to buy back the flat. This has been quite clearly explained on several occasions by the Government and I do not wish to waste the time of this House by repeating again. However, the Government has allowed HUDC flat owners to sell the flats to a qualified buyer of their own choice. On top of that, Government has waived the levy of 30%. Usually, anybody who sells the HUDC flat to a third party has to pay a levy of 30% to the Government. The Government has also waived that levy.

Mr Jeyaretnam: Will the Minister, without any further ado, concede that it is dishonest for the HDB now to refuse to buy back these flats from intending vendors where they had in the past compelled them to offer the flats to the HUDC? Does he not agree that it is dishonest where these HUDC flat owners may have suffered loss as a result of the policy of the HDB?

Mr Teh Cheang Wan: Mr Speaker, Sir, I think I admit that the Member for Anson is dishonest. He is trying to mislead the public. Nowhere is this stated in the lease agreement and perhaps I will senda copy of the lease agreement for the enlightenment of both the Member for Anson and Member for Potong Pasir. Nowhere is it stated in the lease agreement that HDB has to buy back the flats from the HUDC flat owners. Also, nowhere is it stated that HDB has to buy back these flats at the original selling price. So the Member for Anson is trying to dishonestly, in his usual tactic of rumour -mongering, mislead the people by inserting that clause that HDB has such an obligation. I challenge the Member for Anson to produce the lease agreement which states that HDB has to buy back the flat and HDB has to pay the original price of the HUDC flats when HDB buys back from the owners. Please produce that lease agreement.

Mr Jeyaretnam: Will the Hon. Minister concede that only a little while ago he said that they were not allowed to sell their flats within the first five years and they had to offer them to the HUDC or the HDB as the case may be? Did he not say that?

Mr Teh Cheang Wan: Mr Speaker, Sir, yes, I said that. They have to offer to HDB but it is up to the HDB whether it wants to buy the flats or not. But nowhere in the lease agreement does it say that HDB must buy back the HUDC flats and that HDB must pay the original purchase price for the HUDC flats and that is what the Member for Anson is trying to mislead the people.

Mr Jeyaretnam: Can the Minister not see that, as a result of the policy reversal by the HUDC or the HDB, several of these owners who intended to sell them may have suffered considerable damages, loss? Does he not see that? And does he not think it dishonest on the part of the HDB to reverse this policy just because it does not suit the HDB?

Mr Teh Cheang Wan: Mr Speaker, Sir, I do not wish to continue to repeat the same thing. What I want to say is that HDB is strictly following the lease agreement and if the Member for Anson can produce to me the lease agreement which says that HDB has not honoured its obligation, then I will concede that he is correct.

Mr Speaker: Let us have the second question.