HDB RESALE FLATS (Housing loans)

Dr S. Vasoo asked the Acting Minister for National Development whether he will consider the grant of higher housing loans to those who purchase Housing and Development Board resale flats in older housing estates to live near their parents.

Mr Lim Hng Kiang: Mr Speaker, Sir, HDB provides mortgage loan financing to resale flat buyers of up to 80% of the market value or 80% of the declared resale value, whichever is lower. The interest rate on the loans, pegged at 0.1% above the CPF rate, is much lower than the housing loan rates charged by banks. For low-income families whose monthly household incomes do not exceed $1,000 per month, HDB provides an even higher quantum of mortgage loan, of up to 95% of the market value or declared resale value, whichever is lower.

In addition, those who purchase resale flats to live with their parents in older estates are eligible for a $30,000 grant under the CPF Housing Grant Scheme, if they are first-time purchasers buying an HDB resale flat in the same new town or within 2 kilometres of where their parents are staying. The grant is credited into their CPF accounts for the reduction of the principal sum of their mortgage loan.

As HDB already subsidizes those who buy resale flats to stay close to their parents both through its generous loan terms and through the CPF Housing Grant Scheme, my Ministry does not see the need for an additional subsidy in the form of higher housing loans.

Dr Vasoo: Sir, is the Minister not aware that it is the cash upfront that young people got to pay that makes it difficult for them to live with their parents in older housing estates? Therefore, I would like to ask two supplementary questions: (1) Could the Buy-Back Scheme, with some proviso, be extended to this group of people? (2) Could the Minister also look into the ballooning repayment scheme by extending it to this group?

Mr Lim Hng Kiang: Sir, HDB is aware that in the resale market, the current market practice is for purchasers to pay cash upfront to the sellers. This is not a very healthy practice and HDB would take steps to try and reduce the prevalence of such a practice. However, granting higher loans does not help the purchaser if cash upfront is a market practice.

With regard to the Buy-Back Scheme, so far we have about 2,800 applicants for the 3-room flats. HDB has plans to buy back 1,500 3-room flats in the first year of its operation. HDB is looking at ways to increase the number of 3-room flats that it can purchase under the Buy-Back Scheme so that those who apply for these flats can get their flats earlier.

With regard to the ballooning repayment scheme, this is available for low income purchasers, but not to people with more than $1,000 per month income.