HOUSING AND DEVELOPMENT BOARD FLATS (New concessionary loan policies)

HOUSING AND DEVELOPMENT BOARD FLATS:

(New concessionary loan policies): 1.

Dr Mohamad Maliki Bin Osman asked the Minister for National Development since the implementation of HDB's new concessionary loan policies in January 2003, (a) how many applicants have appealed for such concessionary loans because of their failure to secure such housing loans from commercial banks; (b) how many of these appeals have been successful; and (c) whether HDB will

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review its policy further in light of the cases for concessionary loans.

The Minister of State for National Development (Dr Vivian Balakrishnan) (for the Minister for National Development): Mr Speaker, Sir, since 1st January 2003, HDB has ceased to provide market rate loans for certain categories of buyers. These include permanent residents, private property owners and high-income earners. In addition, those who have already enjoyed two concessionary loans and 2nd-timer households who have already enjoyed a concessionary loan and are buying a flat of the same or a smaller size are also ineligible. As HDB concessionary loans are subsidised by the Government, HDB has to ensure that they are given to those who need them most.

So far, HDB has processed 401 appeals for concessionary loans of which 51 were approved. The majority of the unsuccessful appeals were rejected because they could finance their flat purchases from the sales proceeds of their existing flats, or because they were not financially ready to buy a flat at that point in time usually because they did not have a steady income or their current income was insufficient to meet HDB's credit guidelines. Of the remaining cases, many had alternative accommodation. And there were also some existing lessees who had difficulty in servicing their mortgage instalments, whom HDB advised to remain in their existing flats and instead take up one of the various assistance schemes that the HDB has in place.

HDB has no plans to change its current mortgage loan policy. Nonetheless, it will continue to exercise flexibility and take into account the individual

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circumstances of the buyers when they are considering requests for HDB concessionary loans.

Dr Mohamad Maliki Bin Osman (Sembawang): Sir, with regard to those who choose to downgrade, one of the reasons is that they are not able to manage their current obligation. Would the HDB consider this on grounds that they actually are not able to pay, that is why they want to downgrade? But the restriction disallows them to do so.

Dr Vivian Balakrishnan: Mr Speaker, Sir, we are aware that some need to downgrade because of financial circumstances. Our policy is to review each and every single case carefully. And, in particular, if any person has problems because of retrenchment, a severe pay cut, business failure, prolonged illness or death of the sole breadwinner, these are the types of cases which we would certainly look at very sympathetically. If any of the Members have residents in these circumstances, please support their appeals.

Assoc. Prof. Chin Tet Yung (Sembawang): May I ask the Minister whether he knows of cases where residents are unable to get loans from commercial banks and as a result wanted to have an HDB loan, whether it is concessionary loan or not, and they would like HDB to assist. Is there any policy regarding such cases?

Dr Vivian Balakrishnan: Mr Speaker, Sir, I think we need to study those cases carefully. Sometimes when a bank declines to issue a loan, it often indicates that perhaps it is not an opportune time for that person to purchase a flat of that size. He or she might be overextending himself or herself and really we are not doing them a favour. For cases like these, they often have to look either for alternatives or look for a smaller flat. Very

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often, the sales proceeds from the existing flat are sufficient for them to buy a smaller flat, although it may not be in a location or a size of their preference. But like I said earlier, wherever possible, we will exercise maximum flexibility in applying this policy.

Dr Mohamad Maliki Bin Osman: Sir, is it true that residents who would like to add a family member as a co-lessee, because they are not able to pay the current mortgage loan and their child perhaps may be able to help, such transaction is considered as a new transaction and therefore they would have to apply for a commercial bank loan and not be entitled to another HDB loan?

Dr Vivian Balakrishnan: Mr Speaker, Sir, we have assistance schemes. One of them is to include more family members so that they can help to pay for the loan. In those cases, we would certainly help them maximally, in order for them not to have any disruption and not to have to move out of the flat that they are living in.

Mr Steve Chia Kiah Hong (Non-Constituency Member): Mr Speaker, Sir, can I clarify with the Minister? Where a child's name is added to the list, the child is actually considered as a first-time purchaser and he would not actually qualify for concessionary loans in future if he is getting married and buying another property. Am I correct to say that?

Dr Vivian Balakrishnan: If his name is added, it would be tagged as having enjoyed his first bite of the subsidy cherry. If he subsequently purchases a flat, then we would have to review the case again and make sure that he has not inordinately consumed housing subsidies. But like I said, I think the main point which I want to emphasise, and I want to repeat, is that although this policy is in place, the HDB is bending backwards to exercise flexibility to help

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people who truly need help.

But let us also be cognisant of the fact that some people who, at a certain point in time, should not over-extend themselves and should not be purchasing a flat that is beyond their means. As long as we remember these two extremes and we help people in the most appropriate fashion, no Singaporeans would be deprived of housing; no Singaporeans would be turfed out unnecessarily. The key point is to help people appropriately.

Mr Steve Chia Kiah Hong: Mr Speaker, Sir, if a family member is asked to lend his name to help the family in a crisis so that they can actually tide over the loan, how can that be considered as him taking a first bite of the cherry when he has not set up his family in the future?

Dr Vivian Balakrishnan: Mr Speaker, I do not want to get too involved in a technical discussion which I can take off-line. There are many ways to help. If a person is just helping by contributing money to pay for the loan, he is not tagged as an owner. If he is not listed as an owner and is not using his CPF account, he is not tagged at all as having consumed his first bite of the subsidy cherry. But I think these are cases where we have to look at individually. And I would assure all Members that we will do our best to assist each and every family in the unlikely event that they run into problems.