HOME OWNERSHIP (Review of downpayment)

Dr S. Vasoo asked the Minister for National Development (a) whether the Housing and Development Board will review the down payment requirement in order to encourage more home ownership; and (b) what other steps will be taken to encourage more HDB home ownership.

The Minister of State for National Development (Dr Lee Boon Yang) (for the Minister for National Development): Mr Speaker, Sir, I am replying on behalf of my Minister.

Sir, anyone who wants to purchase an HDB flat has to pay a 20% downpayment at the time of registration. The downpayment is a good indicator of the seriousness and ability of an applicant to purchase a flat. A downpayment has always been required since HDB started selling flats. An applicant can use his or her CPF account to make the downpayment. Most purchasers, in fact, use CPF for the downpayment.

In December 1985, HDB reviewed the requirement to make it easy for the low income group to purchase homes. As a result, HDB introduced the Low Income Family Incentive Scheme. Under this scheme, applicants need to pay only:

(a) 5% downpayment to buy a 3-room or 4-room Simplified (S) flat;

(b) or if they want to buy a larger flat such as the 4-room Model A, they have to pay 10% downpayment at the time of registration and the remaining 10% when they are allocated a flat.

Besides the lower downpayments, the HDB also provides a larger mortgage loan of 95% of the sale price of the 3-room or 4S flat, instead of the normal 80% mortgage loan.

The applicants purchasing a 3-room or 4S flat can also choose to make monthly instalment repayments under one of the four HDB special repayment schemes. These special repayment schemes allow the purchasers to make smaller payments during the initial years and the amount is increased in the later years.

The following groups of applicants are eligible for the scheme:

(a) those who now live in HDB rental flats;

(b) those who are on the waiting list to rent HDB flats; and

(c) Anyone who wants to purchase an HDB flat whose gross household income does not exceed $800 per month.

As at 31st July 1987, there were 11,092 applicants who had registered to purchase flats under this incentive scheme.

In addition to the above concession, all tenants who are living in flats affected by the relocation programme can register to buy flats without any downpayment.

Sir, the above measures to encourage home ownership are considered sufficient. The HDB does not intend to introduce further measures.