HOUSING AND DEVELOPMENT BOARD (Waiver of resale flat levy)

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HOUSING AND DEVELOPMENT BOARD:

(Waiver of resale flat levy): 12.

Mr Chiam See Tong asked the Minister for National Development whether he is willing to waive all resale levy in relation to all relevant dealings of Housing and Development Board flats whether they are compulsorily acquired under Selective En-bloc Redevelopment Scheme or other Government policies or resale.

The Minister for National Development (Mr Mah Bow Tan): Sir, let me first explain the purpose of the resale levy. It

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is a payment imposed on those who buy a second subsidised flat from HDB after they have sold their first subsidised flat. The resale levy reduces the subsidy on the second flat, thus ensuring that public housing subsidies are given more to first-timers, who have not yet enjoyed any subsidy.

The resale levy is not a "tax" to cream off any profit from the sale of the first flat. It is payable only if a lessee buys a second subsidised flat from HDB. Those who buy private housing or a resale HDB flat, ie, a non-subsidised flat, would not have to pay the levy and they can keep the full sales proceeds from their first subsidised flat.

Lessees whose flats are affected by the Selective En-bloc Redevelopment Scheme (SERS) receive market compensation for their flats. They are also offered a new replacement flat, which is subsidised, plus an additional discount of up to $30,000, if they are eligible.

If the SERS flat is his first subsidised flat, the flat lessee need not pay the resale levy when he buys the new replacement flat from HDB. However, some SERS lessees had previously sold a subsidised HDB flat, before owning their current flat. These lessees had signed an agreement to pay the resale levy should they buy another subsidised flat from HDB. Thus, they have to pay the levy before buying the SERS replacement flat from HDB. Alternatively, they can opt to convert the resale levy into a premium on the price of the new flat. For those who are eligible for the additional $30,000 discount off the replacement flat, they can also forgo the discount in lieu of paying the levy, which effectively caps the levy payable at $30,000.

Sir, home ownership is an important facet of our public housing policies. The

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resale levy ensures that public housing subsidies are allocated fairly and go to those who need them more, in other words, first-timer families. As such, we will not waive the levy. We will, however, review the resale levy regularly to ensure that it remains relevant and meets our overall objectives.

Mr Chiam See Tong (Potong Pasir): Sir, I have got two supplementary questions. Firstly, in these days of low HDB resale value of flats, many HDB flat owners who even want to downgrade make a loss and this causes hardship to them because they cannot afford even to purchase a smaller flat. Secondly, I would like to ask whether the Minister is agreeable to let an owner of a flat to be charged a resale levy, based on a percentage of the profit made. And for those resale flats that make a loss, the resale levy should be waived altogether.

Mr Mah Bow Tan: Sir, the resale levy is, as I have indicated earlier, not a tax on profits made. If it was so, then the Member would be correct to say that if there is a loss, there should be no levy charged. As it is not a tax, but a levy to cream off the subsidy on the next flat, there is no justification for acceding to the request of the Member, which is to charge a levy based on the percentage of profits made. That is to answer his second question.

On his first question, if a downgrader wishes to sell his first flat and buy a second flat, there are several options available to him. First, he can use the proceeds from the sale of the first flat, which is substantial, to purchase a second subsidised flat. Or if he does not wish to pay the resale levy, which I think is what the Member is trying to say, he can always buy a second resale flat, ie, a smaller resale flat, in which case, he can keep all the proceeds from the sale of his first flat. He does not need to worry about paying a levy.