HDB HOME OWNERSHIP SCHEME (Waiver of deposit)

Dr S. Vasoo asked the Minister for National Development whether the Housing and Development Board will consider waiving the deposit required under the home ownership scheme, particularly for those living in one-room and two-room rental flats who wish to upgrade themselves.

Mr Dhanabalan: Mr Speaker, Sir, buying a house or flat requires a long term financial commitment and the purchaser should show some ability to plan his expenditure before taking on such a commitment. A downpayment should therefore be made. The HDB recognizes that certain categories of applicants, particularly those living in 1-room and 2-room rental flats who wish to upgrade themselves, may not be able to afford the usual initial downpayment of 20%. Therefore, they need only pay 5% downpayment to purchase a 4-room Simplified flat or a smaller flat and 10% downpayment if they want to buy a 4-room Model A flat or a bigger flat. These concessions are applicable to the following groups of people:

(a) Tenants of rental flats;

(b) Applicants in the HDB Rental Waiting List;

(c) Applicants in the Sales Waiting List whose current gross household incomes do not exceed $800 per month.

In view of this concession, the HDB will not totally waive the deposit required under the Home Ownership Scheme, except for tenants who are affected by redevelopment. Those who are affected by redevelopment do not have to make a downpayment.

Dr S. Vasoo (Bo Wen): Sir, would not waiving the deposit help to reduce the problem of over supply of flats that we face at the moment and at the same time help to upgrade the social conditions of these people who are living in 1- and 2-room flats?

Mr Dhanabalan: Mr Speaker, Sir, yes, we would like to encourage as many as possible to buy these flats. But we should not encourage people who are not able to plan their finances to buy these flats because, having bought the flats, they then may have difficulty in financing their monthly instalment payments. That is why we have decided that at least a minimum of 5% or 10%, as I have described, should be required. The downpayment is not hefty for a 3-room or 4-room Simplified flat, say, in the new towns. The downpayment would be about $1,700 for a 3-room flat and $2,100 for a 4-S flat; that is working on 5%. It is really not very much. And this, of course, can be paid out of the CPF in the case of people who do have CPF balances. In addition to these downpayment concessions, there are other concessions on the monthly instalment payment to enable such people to afford the purchase of these flats. At the present moment, we are satisfied that these concessions are sufficient to enable most of the people who are renting flats and most of those who earn less than $800 per month to afford HDB flats.