HOUSING AND DEVELOPMENT BOARD (Sale of flat before five years)

Mr Chiam See Tong asked the Minister for National Development under what circumstances can a purchaser of a Housing and Development Board flat sell the flat upon taking possession without the need to wait for five years.

The Minister of State for National Development (Mr Lim Hng Kiang) (for the Minister for National Development): Under the HDB's Home Ownership Scheme, a purchaser of a HDB flat has to complete a requisite occupation period before he can sell the flat in the open market. The requisite occupation period is five years if the flat is bought directly from HDB and 30 months if it is bought in the open market.

However, the following categories of flat owners are allowed to sell their flats in the open market without completing the requisite occupation period. The first category are owners of 1-room and 2-room flats. The second category are owners of 3-, 4-, 5- and Executive flats who qualify to sell their flats under the Third Child Priority (TCP) Scheme, and the third category are owners of HUDC flats.

Mr Chiam See Tong: Sir, I want to clarify with the Minister whether, under these three categories, a purchaser can immediately upon taking possession sell the flat in the open market? Or must he sell it back to the HDB?

Mr Lim Hng Kiang: I thought my answer states specifically that owners of these categories are allowed to sell their flats in the open market.

Mr Chiam See Tong: And are they required to pay a levy on the sale price? If so, how much?

Mr Lim Hng Kiang: The levy on the sale price is a policy by HDB, ie, 10% for a 3-room flat, 15% for a 4-room flat, and 20% for a 5-room flat.

Mr Chiam See Tong: Is there a bar on these sellers of flats that they do not have to wait for five years to purchase another HDB flat?

Mr Lim Hng Kiang: Whether the seller is eligible to buy a second flat from HDB depends on whether the flat he is selling is the first or second flat. In essence, the Government policy on subsidy gives the Singapore citizen two chances to buy from HDB. So if the flat he sells is his first flat, he can sell it, pay a levy, and apply for a second flat. But if the flat he is selling is the second flat, then he cannot come back to HDB.

Mr Chiam See Tong: Since it is upon the sale of the first flat and purchase of the second flat, can he immediately also sell the second flat?

Mr Lim Hng Kiang: It depends on the second flat that he buys. If the second flat falls in this category, he can sell the second flat, as allowed under these three categories.

Mr Chiam See Tong: Then he can carry on ad infinitum and enjoy the profits?

Mr Lim Hng Kiang: Under these three categories, if a person is buying a 1- or 2-room flat, he can buy and sell. We do not restrict him because we consider the 1- and 2-room flat as transitionary housing. Most Singaporeans will only buy the 1- or 2-room flat as the first step before buying a 3-room or bigger flat. So it is not likely that there are persons who want to buy and sell 1- and 2-room flats. He will not buy and sell and make a profit. There is very little profit in buying and selling 1- and 2-room flats. So the reason why we have waived the occupation period for the 1- and 2-room flats is that we want to give the poorer segment of Singaporeans a chance to upgrade quickly. So they buy a 1- or 2-room flat and after one or two years, they find that their wages have gone up, they can afford a 3-room flat, they can sell their 1- or 2-room flat in the open market and move on to a 3-room flat without waiting for the five-year requisite occupation period. So that policy is intended to help the lower segment of the population. And I doubt if there are many Singaporeans who will continue to buy and sell 1- and 2-room flats.

Similarly for HUDC flats. They can buy and sell HUDC flats because, essentially, HUDC flats are very close to the private sector. There is no control on the occupation period of private sector flats. So an HUDC flat is a transition between a HDB flat and a private sector flat and the rules of occupation period have been liberalised so that they are more or less like private sector flats.

For the third child category, he cannot buy and sell freely. Under the third child policy, you are only allowed to sell your first flat provided you have applied under the third child policy and under that policy, you are allowed to sell your first flat with a waiver of the occupation period. The second flat you get you have to stay in it for five years. So again, under the category of the third child policy, it is not possible for a person to keep on buying and selling the flat and claim the benefits.

Mr Chiam See Tong: Under the first and third categories, it is not a question of whether he can or cannot move out. The question is whether, under the HDB scheme, he can freely continue to sell the flat upon taking possession. It is not a question of whether he wants or does not want or whether he can or cannot. The issue is whether he can.

Mr Lim Hng Kiang: The answer is yes. For the first and third categories, the answer is yes.

Mr Chiam See Tong: So he can do it.

Mr Lim Hng Kiang: He can do it.