HOUSING AND DEVELOPMENT BOARD FLATS (Use as mortgages for bank loans)

Mr Tay Beng Chuan asked the Minister for National Development whether the Housing and Development Board (HDB) will permit HDB lessees to use their HDB flats as mortgages for bank loans as a means to finance their businesses.

The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, HDB flats are intended for owner occupation. As such, HDB will not allow its lessees to use their HDB flats as mortgage for bank loans to finance their businesses. This is because they run the risk of losing their homes, thereby causing hardship to themselves and their families, if they are unable to service their bank loans.

Mr Tay Beng Chuan (Nominated Member): Sir, the flat is their only tangible asset. If they are not allowed to mortgage their flats, then their businesses will be in difficulties.

Mr Mah Bow Tan: Sir, HDB flats are very heavily subsidised by the Government. They are special in that sense, and the Government takes great pains to ensure that their flats are protected. For example, even in the situation where the lessee is made a bankrupt, his creditors cannot touch his flat. That is the extent to which the Government would like to make sure that lessees' flats are protected. So it does not make sense, under such circumstances, to then allow the banks to give a loan based upon the flats. Because, obviously, the banks would want to have the ability to seize the flats if the loans are not serviced. Under the Housing and Development Act, it is made very clear that creditors are not allowed to touch the flats even if, as I said, the lessees are made bankrupt. Therefore, with that kind of protection, it does not make sense for the Government to allow the banks to issue loans on that basis.