LETTER TO THE EDITOR
Why can't HDB be kind, more flexible?
MY friend's HUDC flat was foreclosed in 2005, because he lost his job in 2000 during the dotcom bust. He was unable to find a full-time job until last year. He struggled to keep up with his mortgage repayments from 2000 to 2005, by doing various commissioned-based and part-time jobs.
He lost his flat, all of his and his wife's CPF, as well as cash used for the mortgage, and became penniless.
As there was a shortfall of about $100,000 when his flat was auctioned, he was required by the bank mortgagee to continue paying $700 a month.
He is now living in a rented flat with his wife, 14-year-old son, 78-year-old father and mother, who had a stroke in 2002.
The monthly rental is consuming much of his take-home pay, as CPF cannot be used. The increase in CPF contribution, and rebates for property tax, service and conservancy fees, and utilities are of no use to him unless he can buy a flat. His current lease is expiring in March 2007, and because of the recent rise in property rentals, he has not been able to get any rental flat within his means to pay.
He has written to the HDB several times, appealing to be allowed to buy a flat from HDB, or a resale flat with an HDB concessionary loan. The HDB rejected all his appeals, saying that he had already used up the two concessionary loans allowed, because he had upgraded his HDB flat once.
Since no bank will lend him a loan to buy a resale flat because his flat was foreclosed before, he may soon be homeless.
I think my friend is, in a sense, a victim of circumstances, rather than an irresponsible man who upgraded his flat beyond his means. I think there may be many Singaporeans who are in a similar predicament.
We have been told time and again that hardship cases will be viewed on a case-by-case basis by the HDB.
So, why can't the HDB be more compassionate and flexible, and help him by either allowing him to buy a new flat, or a resale flat with a concessionary loan?
When we read in the media occasionally of people living on the beach, by the canals, in void decks, or in a lorry, perhaps some of them really had no choice because they couldn't afford to rent a flat, and were not eligible for an HDB rental flat, new HDB flat, or resale flat (because no bank loan could be obtained).
Can anyone please help to tell my friend and his family of five, what other options are available for him to continue to have a roof over their heads?
Leong Sze Hian
Singapore
Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved.
This story was printed from TODAYonline
HDB resale woes
Tuesday • February 27, 2007
Letter from Leong Sze Hian
I refer to the article, "Once unwanted, some HDB flats get a new lease on shelf life" (Feb 23).
A close friend who has been paying his HDB mortgage repayments intermittently over the last two years because of financial difficulties has received a letter from the HDB offering him the following three options:
1. Pay the resale levy of $50,000 and buy another subsidised flat from HDB. A subsidised two-room flat is about $58,000, resulting in a new housing loan of $105,100 (95 per cent of $58,000 for the new flat plus $50,000 resale levy).
2. Waive the 30-month debarment period following the sale of his current flat, so that he can proceed to rent a subsidised two-room flat from HDB. Buy a resale flat later when his family's finances have improved.
3. HDB is prepared to consider his request for another concessionary loan if he is unable to secure a bank loan to buy a smaller two-room resale flat, with a lower 5 per cent downpayment subject to special approval.
When he booked his current flat which was completed in February 2000, the purchase price paid to HDB was $416,400. The current valuation is only $338,000.
His current outstanding HDB loan is $335,000. He has been trying to sell his flat for $336,000, but to no avail. His neighbouring flat, which has been vacant for six years since it was built, is now being offered for sale at only $273,200 by HDB.
Since the HDB sold him the flat in 2000 for $416,400, and his neighbouring flat is now being offered for sale at only $273,200 by HDB, how can the HDB justify charging him a resale levy of $50,000 for the original "subsidy" purchase price given?
Shortly after being offered the rental flat option, the HDB announced a change in policy for its rental flats. Under the new "2nd timer applicant — ever owned a HDB flat" policy, the two-room rental for him has gone up from $123-165 to $205-275.
His flat is in one of the estates which the HDB has just announced that 250 flats are being offered for sale through four housing agencies. If the HDB can change its own policy to sell new flats as resale flats in order to widen the pool of eligible buyers, at prices which are about 30 per cent less than the original price a few years ago, why can't the HDB waive the $50,000 resale levy, and allow him to buy a subsidised two-room flat from HDB with a concessionary loan?
How many Singaporeans are in a similar predicament like my friend?
Copyright MediaCorp Press Ltd. All rights reserved.
Paper: Business Times, The (Singapore)
Title: HDB subsidises those with most needs
Author: Tay Boon Sun, for Director, Corporate Development, Housing
& Development Board
Date: November 17, 2005
I REFER to the letter 'Relax HDB policies to help lower-income group'
by Leong Sze Hian (BT, Nov 9). The writer felt that HDB's policies on
rental flats and resale levy have made it difficult for lower-income
people to downgrade and realise their home equity.
HDB's policies have a major objective - to distribute public housing
subsidies to people who need them most. HDB provides subsidised rental
housing to the lowest-income people who have no other housing option.
The rents charged are much cheaper than those in the open market
because they are heavily subsidised by the government to ensure affordability
for the very poor.
Those who already own an HDB flat and want to cash out and rent can use
the sale proceeds to rent a room or a flat in the open market,
according to what they can afford. There is no waiting period for those who
rent from the market.
Similarly, the resale levy only applies if a flat owner is buying a
second new flat from HDB. In such a case, the owner is enjoying a second
housing subsidy from government.
A levy on the sale proceeds from the first flat reduces the second
subsidy. This enables the government to provide more subsidies for new
first-time buyers. The flat owner does not have to pay the levy if he is
selling his first subsidised flat and buying a resale flat.
HDB has made it easier for flat owners to downgrade and encash their
home equity. We have resumed building three-room flats and reduced
waiting time for households buying a second subsidised flat from 10 to five
years. HDB studio apartment sales conditions have also been relaxed.
HDB is currently reviewing the resale levy policy and exploring with
financial institutions reverse mortgage arrangements for elderly flat
owners.
Finally, while these policies are in place to ensure that subsidised
housing is provided only to those who are eligible, HDB does consider
appeals from those who are in financial difficulty and who have no other
option such as staying with family members.
Author: Tay Boon Sun, for Director, Corporate Development, Housing
& Development Board
Copyright, 2005, Singapore Press Holdings Limited
Paper: Business Times, The (Singapore)
Title: Relax HDB policies to help lower-income group
Author: Leong Sze Hian, Singapore
Date: November 9, 2005
I REFER to the editorial 'Boost for the bottom rungs' (BT, Nov 2) which
makes mention of NTUC's call to exempt low-income workers from making
CPF contributions.
As has been pointed out by others, the move could erode the fundamental
policy of helping lower-income people own homes.
The lower-income group may, in a sense, find themselves in a Catch-22
situation because when they retire or lose their jobs, they would not be
able to realise the $100,000 or so average equity that homeowners are
said to have in their homes unless they sell them - which means they
would have nowhere to live.
There is a two-and-a-half year wait to rent a Housing and Development
Board flat after down-grading, and the alternative of renting a flat in
the open market for about $800 a month is not viable.
Buying a smaller HDB flat may also be out, because $100,000 is not
enough to buy the cheapest three-room flat, which costs about $150,000.
Furthermore, those who have bought two flats direct from HDB are not
eligible to rent a flat. So in a way, the $100,000 may be a paper asset
only.
Have prices of three-room flats gone up so much over the years that
lower-income people can no longer afford them?
The bulk of the $100,000 in equity that homeowners hold is likely not
due to market forces. Rather, it is derived from the amount of CPF funds
used to repay housing loan principal and interest rate sums over the
years.
Many lower-income people have very little CPF balances because they
have been consumed by mortgage repayments.
This begs the question as to whether lower-income people would have
been better off renting one-room flats - for $26 a month - or two-room
flats - for $50 a month - and accumulating excess funds in their CPF with
accrued interest. This option would have enabled them to have funds for
retirement without having to give up the roofs over their heads to
realise the equity in their homes.
There are about 3,600 vacant HDB rental flats and about 9,000 HDB flats
that have remained unsold for many years.
Why not reduce the two-and-a-half-year waiting period and relax the
'two flats purchase' rules for lower-income people?
The primary role and mission of HDB should be to provide affordable
housing - more so for lower-income people.
Author: Leong Sze Hian, Singapore
Copyright, 2005, Singapore Press Holdings Limited
****************************************************
Paper: Straits Times, The (Singapore)
Title: Relax rules on HDB homes to help low income group
Date: November 3, 2005
I refer to the articles 'Raising CPF ceiling won't help workers in long
run' by Ken Kwek (ST Oct 24) and '9 in 10 of S'pore's poor own homes'
by Daryl Loo (ST Oct 11).
They say that the NTUC's call to exempt low-income workers from making
CPF contributions will erode the fundamental policy of helping them to
own homes.
The lower-income group may in a sense be in a catch-22 situation
because it cannot realise the average $100,000 home equity without foregoing
a home to live in when people retire or lose their jobs.
Because of the two-and-a-half-year waiting period to rent a HDB flat
after downgrading, the alternative of renting another flat in the open
market for about $800 a month is not a viable option for lower-income
households.
The downgrade alternative may also not be viable because $100,000 is
not enough to buy the cheapest three-room flat, which costs about
$150,000 (Some flat owners can't afford to downgrade, ST Oct 11).
Those who have purchased two flats directly from the HDB are also not
eligible to rent a flat. Thus in a way, the $100,000 may be an asset on
paper that may not be realised.
Does this mean that the prices of three-room flats have gone up so much
over the years that the lower-income group can no longer afford them,
or has the current property market resulted in the home equity of the
lower-income group being relatively below current three-room prices?
The bulk of the $100,000 home equity may not be due to property price
appreciation. Rather, it is derived from the CPF used to pay for the
housing loan principal and interest over the years.
Consequently, many lower-income Singaporeans may have very little CPF
savings because they were consumed by the mortgage repayments.
This begs the question as to whether the lower-income would have been
better off had these people rented a one-room flat from $26 a month (it
was only $10 about 10 years ago) or two-room flat from $50 monthly, and
accumulated their CPF and accrued interest instead?
This option would enable them to have funds for retirement without
having to be in the predicament of having no roof over their head in the
case of realising their home equity.
As there are around 3,600 vacant HDB rented flats and about 9,000 HDB
flats that have remained unsold for many years, why not relax the
two-and-a-half-year waiting period and two flats purchase ineligibility rules
for the lower income group?
Policies like the resale levy and ethnic quota where applicable may
also reduce the home equity that can be realised.
The primary role and mission of the HDB should be to provide affordable
housing for Singaporeans, perhaps more so for the lower-income group.
I think its priorities are somewhat misplaced when it can decide to
waive the resale levy in an attempt to gradually sell off its surplus
flats but still not allow waivers for the poor (Surplus flats: HDB to offer
only 400 units in 9 months, ST Oct 27).
The survey found that the equity-to-income ratio was highest for those
in the lowest 20 per cent of households at 9.8, compared to only 1.7
for the top 20 per cent.
This may not be an indication that the lower-income group is better off
because the higher ratio may be due to the drop in income of the
lower-income relative to the rise in income of the higher-income group, as
shown in the survey.
It is indicative that whilst HDB dwellers were generally better off,
the average household income of the lower-income group dropped.
The lower-income folk are also more susceptible to losing their homes
and CPF when they are unable to service their housing loans.
This was highlighted by the approximately 23,000 flatowners who were in
arrears in their housing loans during the last economic downturn. Many
may have selected or switched to bank loans for the lower interest
rates in the first two years compared to HDB's concessionary loan rate
without being fully aware of the higher risks in giving first charge on
their flat to the bank.
There are 4.4 per cent of households, which is about 38,700 HDB
flatowners, which are in arrears on their service and conservancy charges.
How many HDB flatowners are currently in arrears in their housing loans
(HDB and banks) and how many are in the lower-income group?
How many HDB flats have been repossessed in the history of the HDB, in
addition to the 176 flats that have been or are in the process of being
repossessed by banks since January 2003?
Leong Sze Hian
Copyright, 2005, Singapore Press Holdings Limited
****************************************************
Paper: Straits Times, The (Singapore)
Title: Let CPF top-ups be used to pay flats' rental
Date: August 26, 2005
I REFER to the articles, 'New home grant will be on top of older
schemes' (ST, Aug 24) and 'CPF home grant for needy brings cheer' (ST, Aug
22).
Topping up the CPF of lower-income families to help them buy Housing
Board flats is well intentioned. However, I believe that the most
frequent and pressing financial problem of lower-income families is servicing
their monthly mortgage repayments.
A few years ago, there were about 25,000 HDB flat owners who were in
arrears of more than three months on their mortgage repayments. How many
are currently in arrears, and what proportion belong to the
lower-income group?
As lower-income families are generally more susceptible to job losses,
wage cuts, involuntary early retirement, etc, they may not have cash or
CPF reserves to fall back on to service their housing loans in times of
financial difficulty. Consequently, I would suggest that the CPF
top-ups be allowed to be used to pay the rental on HDB flats. Otherwise,
those who do not utilise the top-ups may feel left out.
Lower-income families may be better off renting, instead of owning
flats whose mortgage they may not be able to service without disruption for
decades, such as for a 30-year housing-loan period.
I understand that the HDB's policy now is to recover an outstanding HDB
housing loan before refunding any balance from the flat repossession to
one's CPF account. For bank loans, the bank will have first charge on
the HDB flat upon foreclosure. This means that only the balance, after
offsetting the outstanding housing loan against the sales proceeds, will
be returned to one's CPF account.
As the residential property market is still in a nine-year bear market,
it is a lesson for Singaporeans that asset enhancement by way of home
ownership may not always work out for everyone.
There is the risk of retiring with one's property in negative equity
and having used up most of one's CPF in the working years.
Leong Sze Hian
Copyright, 2005, Singapore Press Holdings Limited
****************************************************
Paper: Straits Times, The (Singapore)
Title: Three CPF shocks await property owners
Author: Leong Sze Hian
Date: July 21, 2005
THE Central Provident Fund Board's reply, 'Minimum Sum: Use excess to
pay for housing' (ST, July 6), to Madam Kordial Kor's letter, '55th-year
CPF shock for property owners' (ST, June 25), states:
'We would like to correct Madam Kor's misperception that the 'Ordinary
Account becomes zero' when one reaches age 55 and members are left with
no savings to service their housing loans... They have the option to
withdraw any excess balance after setting aside the Minimum Sum or keep
it in their CPF account to continue servicing their housing loan.'
This does not address Madam Kor's predicament because she has no excess
after setting aside the current Minimum Sum of $90,000. The Minimum Sum
will increase to $120,000, and the Medisave Minimum Requirement to
$25,000, by 2013.
I believe it has been estimated that about a third of CPF members may
not have any excess to withdraw at age 55. This means that if they still
have outstanding housing loans, their CPF cannot be used to make the
monthly mortgage payments, and future CPF contributions may also not be
utilised if there was a shortfall in their Minimum Sum at age 55.
Does this mean that one should use whatever balance is in the Ordinary
Account to make a lump-sum housing-loan payment just before age 55?
When one takes a 20- or 30-year housing loan, it is difficult to know
whether there will be any CPF excess to continue to pay the mortgage after
age 55.
Another policy that may 'shock' home owners is the current 138 per cent
cap on the use of CPF for HDB or private-property bank loans. This will
be reduced by 6 per cent a year until it reaches 120 per cent by Jan 1,
2008, for new and re-financed bank home loans. When the cap is reached,
CPF will no longer be allowed for servicing one's mortgage.
It is also difficult to plan 20 or 30 years ahead for this CPF cap,
because it depends on the movement of interest rates during the loan
period.
When the cap becomes 120 per cent in three years' time, it is estimated
that all home owners would be hit at some point in a 30-year housing
loan.
One other policy that may 'shock' home owners is the Available Housing
Withdrawal Limit, which also does not allow CPF to be used when it is
reached.
It is also difficult to plan for this limit, as it is dependent on the
Minimum Sum increase, CPF balance, total CPF contribution, amounts
withdrawn for non-housing use, etc.
Although the CPF Board 'has made available a comprehensive education
programme to explain to members the importance of planning for
retirement, including planning for their housing needs', some may end up in a
situation similar to Madam Kor's, as there are many unknown variables,
such as job loss, wage reduction, interest rates and what the Minimum Sum
will be in 20 or 30 years.
Author: Leong Sze Hian
Copyright, 2005, Singapore Press Holdings Limited
Paper: Business Times, The (Singapore)
Title: Relax rental rules given glut of vacant HDB flats
Author: Leong Sze Hian, Singapore
Date: June 9, 2005
I REFER to HDB's reply, 'HDB: Vacancy rate irrelevant to rent issue'
(BT, May 31), to my letter, 'Hello? Anybody listening?' (BT, May 25).
It states that 'the issue is, therefore, not how many vacant rental
flats HDB has, but what is the government's policy on the provision of
subsidised rental housing'.
Recently, HDB announced the relaxation of its policy for singles,
permanent residents, downgraders and private property sellers to buy new
subsidised HDB flats, but only for some of the 10,000 flats that has been
vacant for about five years.
By the same token, the 'relevance of my question to the issue' is: Now
that we know 'there were about 5,700 vacant one and two-room rental
flats available for rental under the Public Rental Scheme as of July 31,
2003, and that as of April 30 this year, the number was 3,600', why
doesn't HDB relax its rental policy for elderly singles too, since there
are still so many vacant flats? And since 'data on the number of vacant
rental HDB flats is publicly available', why was my question not
answered in the first place?
An important principle is at issue here. If a public agency arbitrarily
decides whether or not to answer a question seeking 'publicly available
information' depending on its 'relevance to government policy', then
what is the point of asking for feedback from the public?
As an analogy, can you imagine a question tabled in Parliament or a
meet-the-people feedback session, getting the answer, 'I choose not to
answer because this publicly available information is irrelevant to the
policy issue'.
Author: Leong Sze Hian, Singapore
Copyright, 2005, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: HDB: Vacancy rate irrelevant to rent issue
Date: May 31, 2005
I REFER to Leong Sze Hian's letter 'Hello? Anybody listening?' (BT, May
25). Mr Leong said the Housing and Development Board did not reply to
his question in a previous letter about the number of vacant rental
flats.
The focus of Mr Leong's previous letter was that the government should
relax its rules to allow singles to rent vacant rental flats from HDB
on their own.
In fact, we addressed this issue in our letter of Feb 4, in which we
explained that HDB requires singles to pair up to rent a flat because our
rental flats are heavily subsidised and there is a need to optimise
usage. Such an arrangement also facilitates mutual care and support among
tenants, which is especially important for elderly singles.
The issue is, therefore, not how many vacant rental flats HDB has, but
what is the government's policy on the provision of subsidised rental
housing.
Data on the number of vacant rental HDB flats is publicly available.
The Minister for National Development said in Parliament that there were
about 5,700 vacant one and two-room rental flats available for rental
under the Public Rental Scheme as of July 31, 2003. As of April 30 this
year, the number was 3,600.
Terence Ho Deputy Director (Rental Housing) Housing and Development
Board
Copyright, 2005, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: Hello? Anybody listening?
Author: Leong Sze Hian, Singapore
Date: May 25, 2005
I REFER to the editorial 'The matter of governance' (BT, May 13) and
the article 'Singapore slips, but still high in political governance'
(BT, May 16).
For 'voice and accountability', Singapore was placed in the 43.2
percentile rank last year.
In response to the media, the Public Service Division, Prime Minister's
Office, said that public agencies are required to reply to all
feedback.
But in the Ministry of Health's (MOH) replies, 'Mistaken views on
MediShield' (BT, March 1) to my letter 'Suggestions for MediShield' (BT, Feb
23), and 'MediShield's financial status must be protected' (ST, Feb
16), to my letter 'Cap co-insurance, so Class C patients pay less' (ST,
Feb 11), my question, 'Now that MediShield Plus will be hived off to a
private insurer, will the surplus accumulated be transferred to
MediShield and, if so, what is the estimated amount?', has not been answered.
In the Housing and Development Board's reply, 'It's still no to singles
renting HDB flats singly' (ST, Feb 4) to my letter, 'Let singles rent
vacant flats without pairing up' (ST, Jan 20), the question that I asked
about how many rental flats are vacant in addition to the 10,000 unsold
flats, has still not been answered.
As the above two questions are merely requests for factual and
statistical information, I would like to ask why is there no reply after so
many months?
This issue was highlighted by media reports about Madam Cynthia Phua
(Aljunied GRC), who recounted in Parliament the difficulties of getting
civil servants to respond to the public.
Members of the public have also repeatedly raised this issue.
In the April 2005 quarterly newsletter of the Feedback Unit, Feedback
News, Dr Wang Kai Yuen, chairman of the Feedback Supervisory Panel,
wrote with reference to the Feedback Unit's Annual Conference of Feedback
Groups in January, that the government must strive to meet the public's
four 'great expectations':
Singaporeans want to be consulted;
Close the feedback loop
Singaporeans want quality government responses to their feedback
Singaporeans want open discussions and they want the feedback process
to be transparent and inclusive.
By the same token, as a citizen giving feedback, I feel that my
expectations of 'close the feedback loop' and 'quality responses' have not
been fulfilled. The article, 'Singapore among world's best in government
services: Responsiveness to citizens among factors rated highly in
Accenture study of 22 countries' by Raju Chellam (BT, April 27), underscores
the need for Singapore to improve its 'voice and accountability'
ranking, in order to maintain its 'responsiveness to citizens' rating.
In the Economist magazine (March 26 issue), it said that in the United
Kingdom, 'recent data suggests there is a need to restore public faith
in the numbers'.
In an opinion poll last October, 68 per cent of respondents said they
believed official figures were changed to support a particular argument;
58 per cent thought there was political interference in their
production.
It isn't just the statisticians whose reputations suffer as a result.
The government hoped to use figures to prove to voters how well it was
doing. But if the voters don't believe the numbers, it can't.
When will I get a reply to my two questions?
Author: Leong Sze Hian, Singapore
Copyright, 2005, Singapore Press Holdings Limited
Paper: Straits Times, The (Singapore)
Title: It's still 'no' to singles renting HDB flats singly
Author: Tay Boon Sun Senior Public Relations Officer For Director
(Corporate Development) Housing and Development Board[BY] I REFER to Mr
Leong Sze Hian's letter, 'Let singles rent vacant flats without pairing
up' (ST, Jan 20) . HDB has a limited stock of rental housing. As they are
heavily subsidised, they are meant to cater to the housing needs of
lower-income families. Singles who want to rent a flat from HDB can do so
under the Joint Singles Scheme. They are required to 'pair up' to
optimise usage and to facilitate mutual care and support. For singles who
prefer not to share a flat, there are other options. They can rent a room
or a unit from HDB flat owners. With the easing of HDB's subletting
policy, more HDB flat owners can sublet a room or the whole flat. It is
not prudent to let out the vacant flats to singles just to address the
situation of unsold stock. The stock arose during the economic downturn
when applicants dropped out of the waiting list. These flats are !
now in the process of being taken up. [END]
Date: February 4, 2005
I REFER to Mr Leong Sze Hian's letter, 'Let singles rent vacant flats
without pairing up' (ST, Jan 20).
HDB has a limited stock of rental housing. As they are heavily
subsidised, they are meant to cater to the housing needs of lower-income
families. Singles who want to rent a flat from HDB can do so under the Joint
Singles Scheme. They are required to 'pair up' to optimise usage and to
facilitate mutual care and support.
For singles who prefer not to share a flat, there are other options.
They can rent a room or a unit from HDB flat owners. With the easing of
HDB's subletting policy, more HDB flat owners can sublet a room or the
whole flat.
It is not prudent to let out the vacant flats to singles just to
address the situation of unsold stock. The stock arose during the economic
downturn when applicants dropped out of the waiting list. These flats are
now in the process of being taken up.
Author: Tay Boon Sun Senior Public Relations Officer For Director
(Corporate Development) Housing and Development Board[BY] I REFER to Mr
Leong Sze Hian's letter, 'Let singles rent vacant flats without pairing
up' (ST, Jan 20) . HDB has a limited stock of rental housing. As they are
heavily subsidised, they are meant to cater to the housing needs of
lower-income families. Singles who want to rent a flat from HDB can do so
under the Joint Singles Scheme. They are required to 'pair up' to
optimise usage and to facilitate mutual care and support. For singles who
prefer not to share a flat, there are other options. They can rent a room
or a unit from HDB flat owners. With the easing of HDB's subletting
policy, more HDB flat owners can sublet a room or the whole flat. It is
not prudent to let out the vacant flats to singles just to address the
situation of unsold stock. The stock arose during the economic downturn
when applicants dropped out of the waiting list. These flats are !
now in the process of being taken up. [END]
Copyright, 2005, Singapore Press Holdings Limited
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Paper: Straits Times, The (Singapore)
Title: Let singles rent vacant flats without pairing up
Author: Leong Sze Hian
Date: January 20, 2005
I REFER to the letter, 'Why build more flats when many are unoccupied'
(ST, Jan 17); the President's Address, 'Building a better home for all'
(ST, Jan 13); and the report, 'Joint Singles Scheme stays' (ST, Nov
27).
On Jan 12, the President's Address called for ensuring a place for
everyone and for the needs of all Singaporeans from all strata of society
to be looked at.
In a previous parliamentary session, Minister of State for National
Development Cedric Foo said that if singles were allowed to rent flats
without pairing up, the doubling of resources could require an additional
investment of some $900 million from the Government.
I understand that there are about 10,000 HDB flats that have remained
vacant for many years because the HDB has been unable to find buyers.
I suggest that some of these flats be made available for rental to
singles.
Why talk about the cost of building new flats to meet the demand of
singles when there are so many unwanted vacant flats?
I understand that there are also many vacant HDB rental flats. For
example, in Block 100, Aljunied Crescent, I believe about half of the 224
one-room rental flats have been vacant for many years.
I would like to ask what is the number of vacant HDB rental flats, in
addition to the many unsold HDB flats?
Why do we continue to maintain public housing policies that deny needy
single Singaporeans a roof over their heads when there are so many
vacant rental and unsold HDB flats?
If it costs $900 million to build 9,400 new flats to meet the singles'
demand, what is the cost of keeping 10,000 flats vacant for so many
years? Would it not make business sense to rent them out till they can be
sold?
It is hard enough to be old, single and earning not very much. On top
of that, they have to endure the indignity of having to find a stranger
to live with - the Joint Singles Scheme requires two singles whose
combined monthly income is below $1,500 - just to be able to qualify to
rent a flat.
If you are earning $900, you will have to find another single who does
not earn more than $600 to qualify. How many Singaporeans earn less
than $600 a month?
The HDB gives a six-month grace period for the remaining tenant to find
a new flat-mate if the two singles cannot get along. Can you imagine
the pressure and stress on the elderly single with low income when such
situations arise?
According to a study ('Link between stress and ageing found'; ST, Dec
1, 2004) by Dr Elissa Epel of the University of California, San
Francisco, stress leads to physiological ageing, poor health and a depressed
immune system.
Perhaps those who decide on the singles housing policy could try to put
themselves in the place of those who are elderly and single, with low
income and no shelter, to truly appreciate their plight.
Author: Leong Sze Hian
Copyright, 2005, Singapore Press Holdings Limited
****************************************************
Paper: Straits Times, The (Singapore)
Title: Objectivity ensured in MoneySense programme
Author: Angelina Fernandez (Ms) Director (Communications) Monetary
Authority of Singapore On behalf of the Money, Sense, Financial Education
Steering Committee Ong-Ang Ai Boon (Mrs) Director, The Association of
Banks in Singapore Seah Seng Choon, Executive Director Consumers
Association of Singapore
Date: January 3, 2005
WE REFER to the letter, 'Banks not best body to give credit advice'
(ST, Dec 22), by Mr Leong Sze Hian.
MoneySense is a national programme that brings together collaborative
efforts by the private, public and people sectors, including the
financial planning associations mentioned by Mr Leong, to enhance the basic
financial literacy of consumers.
We have established procedures to ensure that the MoneySense programme
is objective and does not promote any specific commercial interest.
The articles mentioned are part of a six-part series, entitled Loans
& You, published in Streats and Lianhe Wanbao in November and
December last year.
The series was a collaborative effort by the Consumers Association of
Singapore (Case) and the Association of Banks in Singapore (ABS). Case
engaged an indepen- dent writer while ABS checked the accuracy of the
content.
Instead of focusing on specific loan products, the series aims to give
an overview of the types of loans available in the market and
highlights the associated risks that consumers should consider before taking any
loan.
The articles are not intended as a comprehensive guide on the different
types of loans but they do indicate where consumers can get additional
information to make better-informed decisions.
We would also like to correct two inaccuracies raised by Mr Leong:
In the event of a default in an HDB loan, the loan has to be repaid
before any monies are refunded into the borrower's Central Provident Fund
(CPF) account.
The Valuation Limit, which is the lower of the purchase price or the
valuation of the flat at the time of purchase, is also applicable to
resale Housing Board flats financed with an HDB loan.
Details are available in the Public Housing handbook at the CPF website
www.cpf.gov.sg
Author: Angelina Fernandez (Ms) Director (Communications) Monetary
Authority of Singapore On behalf of the Money, Sense, Financial Education
Steering Committee Ong-Ang Ai Boon (Mrs) Director, The Association of
Banks in Singapore Seah Seng Choon, Executive Director Consumers
Association of Singapore
Copyright, 2005, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: Do banks' HDB loans make mockery of MAS rules?
Author: Leong Sze Hian, Singapore
Date: December 30, 2004
I REFER to the Monetary Authority of Singapore's (MAS) reply (BT, Dec
28), 'Borrower must meet minimum cash downpayment'', to my letter.
It states that 'under the MAS's Notices on Housing Loans, banks and
other financial institutions are required to compute their housing loan
quantums so that the borrower would have to make a cash downpayment of at
least 10 per cent for private property purchases and 2 per cent (to be
revised to 4 per cent from Jan 1, 2005) for HDB flat purchases'.
I visited the website of a bank and called to enquire about HDB home
loans.
I was told that one could get Cash-Back of 2.5 per cent of the
disbursed loan amount, about three months after signing the option to purchase
an HDB flat.
However, the interest rates for the first and second years are 2 and
0.6 per cent higher respectively compared with the same loan without
Cash-Back.
I could also apply at the same time for an unsecured credit line of up
to double my monthly income.
I would also be given, as part of the HDB loan package, a free credit
card with the annual fee waived for the first year.
Moreover, I could also opt for an 'interest-only plan' to reduce the
monthly cash repayments by paying only the interest on the loan for the
first three years.
So, even if I do not have the cash to pay the 4 per cent cash
downpayment, I could apply for unsecured credit lines or credit cards for up to
two months of my income from several banks until I have the cash
downpayment. If I want to be considered for a higher credit line of more than
two months' income, I need to apply with a joint applicant who must
earn at least $30,000 per annum.
In any case, I only have to wait about three months to get 2.5 per cent
Cash-Back, and pay the balance 1.5 per cent drawn on the credit line by
monthly instalments at an interest rate of around 1.14 per cent a month
(13.7 per cent a year), with a low minimum repayment of only 2.5 per
cent of the total outstanding, plus a credit line whose first-year annual
fee of $60 is waived.
Does the above not make a mockery of the MAS's Notices on Housing Loans
regarding the cash downpayment requirement?
Author: Leong Sze Hian, Singapore
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: Borrower must meet minimum cash downpayment
Author: Christina Tan Deputy director (Communications) Monetary
Authority of Singapore
Date: December 28, 2004
I REFER to the letter, 'Why is cash-back okay for housing loans?', by
Leong Sze Hian (BT, Dec 17, 2004).
Under the Monetary Authority of Singapore's Notices on Housing Loans,
banks and other financial institutions are required to compute their
housing loan quantums so that the borrower would have to make a cash
downpayment of at least 10 per cent for private property purchases and 2 per
cent (to be revised to 4 per cent from Jan 1, 2005) for HDB flat
purchases.
MAS does not allow cash back and other schemes that have the effect of
assisting the borrower to meet the minimum cash downpayment.
Author: Christina Tan Deputy director (Communications) Monetary
Authority of Singapore
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Straits Times, The (Singapore)
Title: Banks not best body to give credit advice
Date: December 22, 2004
UNDER the MoneySense national financial education programme, the
Monetary Authority of Singapore works with the Association of Banks in
Singapore (ABS) to educate consumers on credit.
Giving this task primarily to the ABS may not be the most appropriate
because, in a way, there is an inherent conflict of interest or bias.
After all, banks have the most to gain by selling credit.
An example is the full-page information sheet, 'Housing Loans: Be
prudent when taking large loans', which has been appearing in newspapers,
bearing the ABS and Case logos. This consumer education document has
detailed sections on 'Borrowing from the bank', 'Borrowing from HDB',
'Refinancing' and 'Default'.
However, there is no mention of information that is important for
borrowers to know, such as:
In bank loans, the bank has first charge on the HDB flat before the
Central Provident Fund (CPF) Board. This means that in the event of
default, a borrower's CPF and accrued interest need not be returned to his
CPF account, before the bank takes what is owing to it. For HDB loans, a
borrower's CPF is protected.
For refinancing using bank loans, a borrower would typically lose the
first charge to the bank. This means that while his flat may now enjoy
the protection of his CPF in the event of default, refinancing may
increase the risks of losing his CPF and flat.
Bank loans are subject to the valuation limit, which limits the use of
CPF to 144 per cent of the flat's purchase price or valuation,
whichever is lower. The valuation limit will drop to 138 per cent next year,
and by 6 per cent a year until it reaches 120 per cent by 2008. The
valuation limit that is applied depends on the date of purchase of the flat
or refinancing. In contrast, the valuation limit does not apply to HDB
loans.
When a person applies for a credit card, he is given a one-sheet
leaflet 'Credit Cards: What you should know', which says things like 'Do I
know what are the various fees, interest, finance changes and penalties
that accompany the use of the credit card?' and 'If I do not make the
minimum payment for one month, what are all the interest and other
charges that I will have to pay?'
How many people would take the trouble to call the bank to ask these
questions?
Would it not be better to include simple things in the leaflet, such as
'The interest charge can be as high as 24 per cent per annum, and 29.9
per cent per annum if late payment penalties are incurred'?
Perhaps MoneySense may make more sense if the task of educating
consumers on credit is channelled more to organisations like the Credit
Counselling Service, Association of Financial Advisers, Financial Planning
Association of Singapore, and Insurance and Financial Practitioners
Association of Singapore, instead of the ABS.
Leong Sze Hian
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: Why is cash-back okay for housing loans?
Date: December 17, 2004
I REFER to the article 'Banks shifting strategy on home mortgages' by
Siow Li Sen (BT, Dec 16).
Currently, HDB flat buyers who cannot qualify for HDB loans, or choose
to borrow from banks, have to pay 2 per cent of the downpayment in
cash. From Jan 1, this will increase to 4 per cent, followed by a further 2
per cent increase until it reaches 10 per cent on Jan 1, 2008. More
banks seem to be offering cash-back for housing loans.
Cash-backs also appear to be more generous now in that they may be
based on the purchase price instead of the loan amount which is normally 20
per cent lower.
Does this mean that even if you do not have the required cash
downpayment, it is less of a problem now because the bank will give you
cash-back? Will this not nullify the original objective of the policy change
for increasing HDB cash downpayments, so that flat buyers may be more
financially prudent in that they can only buy a flat when they have enough
cash for the downpayment?
If cash-back is not allowed for CPF investments, why is it allowed for
housing loans?
In the end, the net effect of requiring higher cash downpayments may be
that flat buyers may actually be borrowing more and/or paying higher
interest rates and/or committing to longer redemption penalty lock-in
periods, in order to get cash-back. This may mean more financial stress in
future as the monthly mortgage repayments may be correspondingly
higher.
Perhaps we should consider going back to the old policy of allowing the
full downpayment to be paid out of CPF?Leong Sze Hian Singapore
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: From 2007, HDB Corp will be a competitor
Author: Leong Sze Hian, Singapore
Date: December 10, 2004
I REFER to HDB's reply 'HDB Corp sale done at arm's length' and the
article 'HDB reveals HDB Corp sold to Temasek for $117m' by Andrea Tan
(BT, Dec 7).
It states that 'in this instance, no new enterprise is being set up by
HDB' and that 'the sale is consistent with the 'yellow pages' rule,
which says that statutory boards should not set up enterprises to perform
activities that could be performed by the private sector'.
Although no new enterprise is being set up by HDB, through the sale of
HDB Corp, it in effect is a fact that HDB Corp, a substantial former
part of a statutory board, will be competing with the private sector in
Singapore from 2007.
It also states that 'There is no question of loss of value to taxpayers
as the transaction was carried out between two entities wholly owned by
the government that are required under the Constitution to protect
their past reserves... This also means that should Temasek divest HDB Corp
in the future, the fair market value then for HDB Corp would be
preserved as past reserves under Temasek'.
If public assets are passed on between public entities at prices that
may not reflect 'fair market value', how does one figure out the rate of
return on assets which is dependent on the original costs of
acquisition?
As an analogy, if members of a family pass on money from one member to
another without knowing exactly how much value is being passed, how
does one figure out how well each member had done with the sum whilst it
was in their care?
Eventually, even when assets are divested in the future, the 'fair
market value' then obtained may in effect distort the true rate of return
for the period from the time of acquisition to divestment.
Public assets are in a sense a store of value which have been derived
from the public, such as by way of HDB flat sales, conservancy fees and
service charges, etc.
Only a public tender for 'fair market value' can return the realised
value to Singaporeans by way of lower charges and fees for the use of
related public services, from which value was derived in the first place.
Otherwise, the prices of public goods and services for consumers may
become distorted. Should this be a fundamental principle of transparency
and accountability which should be considered in the context of
governance in the public sector?
Author: Leong Sze Hian, Singapore
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: HDB Corp sale done at arm's length
Author: Tay Boon Sun Senior public relations officer for Director
Corporate Development HDB
Date: December 7, 2004
WE refer to the letters 'How does a tender 'disrupt' HDB' by Leong Sze
Hian and the commentary 'Shouldn't HDB deal be on commercial basis?' by
Andrea Tan.
Mr Leong and Ms Tan asked why there was no tender for the sale of HDB
Corp to Temasek.
A tender was not called because the aim of the divestment was to give
the recently corporatised HDB Corp autonomy and flexibility as it
evolves and ventures into housing development projects overseas while
avoiding any disruption in services to HDB residents.
HDB Corp has been assigned responsibility for the design and
development of all HDB projects until June 2006.
As a value-adding shareholder, Temasek has the relevant experience to
nurture HDB Corp into a successful regional enterprise while ensuring
that HDB Corp will continue to deliver the same high quality of service
to HDB and its residents.
The sale of HDB Corp to Temasek was carried out at arm's length.
HDB Corp was sold to Temasek at its net tangible asset (NTA) value, a
price which both HDB and Temasek regarded as fair. There is no question
of loss of value to taxpayers as the transaction was carried out
between two entities wholly owned by government (namely, HDB and Temasek)
that are required under the Constitution to protect their past reserves.
HDB Corp will continue to be protected as past reserves under Temasek
after the sale. This also means that should Temasek divest HDB Corp in
the future, the fair market value then for HDB Corp would be preserved
as past reserves under Temasek.
Mr Leong also asked whether the sale was consistent with the 'yellow
pages' rule; it is.
The 'yellow pages' rule states that statutory boards should not set up
enterprises to perform activities that could be performed by the
private sector. In this instance, no new enterprise is being set up by HDB.
If anything, the move by HDB to corporatise its building arm will
eventually provide more opportunities for the private sector to participate
in providing and developing public housing in Singapore.
Author: Tay Boon Sun Senior public relations officer for Director
Corporate Development HDB
Copyright, 2004, Singapore Press Holdings Limited
Paper: Business Times, The (Singapore)
Title: Events lacking transparency
Author: Leong Sze Hian Singapore
Date: December 7, 2004
THREE recent seemingly unrelated events in a way have one thing in
common - the lack of transparency in Singapore.
The first is that the votes cast for the two Singapore Idol finalists
remain a secret, despite calls by the public to disclose this
information. In the American Idol, the breakdown of votes was announced in every
show.
The second event is HDB's sale of HDB Corp to Temasek for an
'undisclosed sum' and 'mutually agreed price' , without calling for a tender. A
tender may have resulted in a higher price, which may mean that HDB
conservancy and services charges which were increased this year could be
lower.
The third is that China Aviation Oil's (CAO) parent sold a 15 per cent
stake without disclosing that it knew about CAO's massive derivative
trading losses amounting to over $900 million.
The Prime Minister has called for Singapore to make bold, new moves to
become a global city. He has challenged us to experiment, set new
standards, push new frontiers (BT, Dec 4).
To compete in the global arena, we cannot afford to be world class in
so many things, and yet have a Third World mindset in terms of
transparency.
There has been much hooha about Corporate Social Responsibility (CSR)
and changes to the Code of Governance for corporations.
Words must be matched by action!
In a sense, it is somewhat ironic that Singapore is ranked number one
in Asia by Transparency International.
With the advent of the US-Singapore Free Trade Agreement (FTA), this
'veil of secrecy' mindset must go away, and this process can only be
expedited if concerted efforts are made by the public and private sectors,
civil society, etc.
To borrow the Prime Minister's words, we must 'set new standards' and
'push new frontiers' in transparency.
Then only can Singapore be a truly 'global city', not just in the
physical sense, but in spirit too.
Author: Leong Sze Hian Singapore
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: How does a tender 'disrupt' HDB?
Author: Leong Sze Hian
Date: December 2, 2004
I REFER to the article 'Temasek buys HDB Corp for undisclosed sum in
surprise deal' (BT, Dec 1).
It says that the Housing & Development Board is selling its
corporatised arm, HDB Corporation, to Singapore investment company Temasek
Holdings for an undisclosed sum. Media reports say that the deal caught
the market by surprise as no tender was called for the sale.
An HDB spokesman was quoted saying: 'We did not call a tender as one of
HDB's primary concerns when considering the sale of HDB Corp was to
avoid any disruption in services to HDB residents after the company is
sold.'
I am puzzled as to how the calling of a tender for the sale could have
caused 'any disruption in services to HDB residents after the company
is sold'.
Once a company has been sold and the winner of the tender is known,
what has 'calling a tender' got to do with 'disruption in services to HDB
residents'?
The HDB is a statutory board, and in a sense, the price that it gets
for selling HDB Corp is money that belongs to the citizens of Singapore.
Could a tender have resulted in a higher price?
As I understand that Temasek is a private exempt company, the
disclosure requirements are different from publicly listed companies or
statutory boards. An important principle and issue before us is whether such
sale of public assets should be at a 'mutually agreed price' and for an
'undisclosed sum'.
Since HDB Corp will be allowed access to the private sector from 2007,
whatever happened to the 'yellow pages rule'? The latter, as I
understand it, is to prevent the public sector from competing with the private
sector as far as possible in the domestic market.
Author: Leong Sze Hian
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: Can a bankrupt lose his HDB flat to banks?
Author: Leong Sze Hian, Singapore
Date: October 8, 2004
I REFER to reports quoting a study titled Credit Cards and Consumer
Lending in Asia-Pacific 2003-2005 by the Lafferty Group saying that
Singapore is one of the smallest consumer credit markets in Asia. However, it
has one of the highest levels of consumer debt per person in the world.
The debt of the average Singaporean was estimated to be 122 per cent of
his personal disposable income, up 2 per cent from a year earlier.
Bankruptcies are at a record high in Singapore, despite an improving
economy, and the first-ever study of credit card usage patterns released
on Sept 30 by the Consumer Credit Bureau said that about 30,000 credit
card holders have outstanding balances of over $20,000 each.
With oil prices at an all-time high and rising interest rates, the
costs of servicing debts may rise, and this may result in more
bankruptcies.
I also refer to media reports that if one becomes bankrupt, the housing
loan mortgagee bank will have to foreclose and realise their security
within six months of the date of the bankruptcy order, or such extended
time as the Official Assignee may allow.
I understand that third-party creditors, such as credit card companies,
cannot take possession of an HDB flat even if the flat owners are
unable to pay their debts because such debts are not secured against the HDB
flat. On the other hand, the bank which granted the mortgage loan can
recall the loan and sell the flat if the loan agreement allows it to do
so in the event of bankruptcy.
If one has credit card debts, is made a bankrupt and the bank sells the
flat because the loan agreement allows it to do so in the event of
bankruptcy, does it not mean that one can lose one's HDB flat due to other
non-HDB mortgage debts?
So, does or doesn't one run the risk of losing one's HDB flat to banks,
even if one does not default on the housing loan monthly repayments?
Author: Leong Sze Hian, Singapore
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Business Times, The (Singapore)
Title: Little use for property pledging soon
Author: Leong Sze Hian Singapore
Date: September 22, 2004
I REFER to 'CPF says it won't review housing withdrawal limit' (BT,
Sept 20).
Although property can still be pledged for up to half of the Minimum
Sum of $120,000 in 2013, this may in effect be negated by the following:
CPF members who have between $10,001 and $240,000 will, by 2013, no
longer be able to withdraw up to 50 per cent of the total balance in the
Special and Ordinary Accounts. This is because from Jan 1, 2009, those
who reach 55 can only withdraw 40 per cent of their account balances
after meeting the Minimum Sum and required Medisave Minimum Sum. The
percentage of withdrawal will go down by 10 per cent each year until it
becomes zero in 2013.
Currently, if you have less than the Medisave Minimum Sum of $25,000,
you are not required to top it up from your Ordinary or Special
Accounts. However, from 2004, you must top up your Medisave Account for the
required amount of $2,500, increasing by $2,500 a year until $25,000 in
2013. In other words, by 2013, the Minimum Sum is $120,000 plus $25,000
for the Medisave Account. As the Medisave Minimum Sum is adjusted for
inflation every year, it was increased to $25,500 on July 1, 2004.
Therefore, the required Medisave Minimum Sum may be much higher by 2013.
For the pledging of private property, it is the lower of the purchase
price or valuation, subject to the outstanding housing loan. The Minimum
Sum and Medisave Minimum Sum keep going up every year, and since
private property prices are 40 per cent below their 1996 peak, are we not
being disadvantaged? Even when prices do rise above the original purchase
price in the future, we may still be disadvantaged because it is the
lower original purchase price that will then be taken. In contrast, for
HDB flats, it is the HDB's quarterly average valuation price. Why are
private properties being treated differently, and, in a sense, being
discriminated against?
Since the current Minimum Sum of $85,000 will increase by $35,000 to
2013, plus the Medisave Minimum Sum top-up requirement of $25,000, making
a total of $60,000, this in effect erodes entirely the $60,000 that can
be pledged with property.
Perhaps in many ways, as highlighted above, it is as good as saying
that the pledging of property for some Singaporeans may count for very
little in the future.
Author: Leong Sze Hian Singapore
Copyright, 2004, Singapore Press Holdings Limited
Paper: Straits Times, The (Singapore)
Title: Time to revise housing withdrawal limit
Author: LEONG SZE HIAN
Date: September 7, 2004
FOR HDB-flat loans, the use of CPF is capped by the Available Housing
Withdrawal Limit (AHWL). The AHWL is 80 per cent of the gross CPF
savings in a member's Ordinary and Special accounts in excess of the Minimum
Sum. Gross savings include savings already withdrawn for housing,
investment and education.
Some HDB-flat loan borrowers, who have made lump-sum CPF partial
redemptions to reduce their outstanding mortgage, have suddenly been informed
by the CPF Board that as their AHWL limit has been reached, they can no
longer use CPF to pay the monthly mortgage repayments.
Another problem is that despite the CPF cuts, lower contribution for
older workers, increasing Minimum Sum, and the fact that property can no
longer be pledged for half the Minimum Sum by 2013, the AHWL
computation has remained the same. This may mean that more Singaporeans will
breach the AHWL, and realise too late that their entire monthly mortgage
has to be paid in cash, even if they have funds in their CPF account.
The AHWL needs to be revised to reflect the effects of policy changes
like CPF cuts.
Author: LEONG SZE HIAN
Copyright, 2004, Singapore Press Holdings Limited
****************************************************
Paper: Straits Times, The (Singapore)
Title: Down-payment standard practice when buying home
Author: TAY BOON SUN, Senior Public Relations Officer, for Director
Corporate Development, Housing and Development Board
Date: June 11, 2004
I REFER to the letter, 'Going 'cash poor' now doesn't make sense' (ST,
June 3), by Mr Leong Sze Hian.
He commented that the 10 per cent cash down-payment for Housing Board
flats financed with bank loans, currently being phased in over five
years, makes it harder for people to buy HDB flats.
In contrast, recent policy changes have made it easier for people to
buy cars and get credit cards.
There is no basis to compare the cash down-payment requirement for home
purchases with the liberalised rules for car loans or credit card
applications.
A home is a basic need and is a bigger and longer-term commitment than
that of a car. Buying a home requires careful financial planning and
financial prudence on the part of buyers.
For this reason, the down-payment is a standard requirement for all HDB
flats and private properties bought with bank loans.
Without it, buyers may face more difficulties and even risk losing
their homes, should their financial situation change subsequently.
Where non-basic needs are concerned, however, such as with the purchase
of cars or use of credit cards, Singaporeans are given greater scope to
make their own decisions, in line with the Government's move to
encourage greater self-reliance.
We would like to highlight that in line with the home ownership
objective, the HDB continues to provide concessionary loans to eligible
first-timers who are setting up home, as well as second-timers upgrading to a
larger flat. They are allowed to use their CPF savings for the
down-payment.
Only those ineligible for HDB concessionary loans and who have to take
bank loans are affected by the cash down-payment requirement.
These include families with monthly income exceeding $8,000, private
property owners and permanent residents. Such buyers are generally
financially better off and the affordability of the cash down-payment would
be a lesser concern for them.
Author: TAY BOON SUN, Senior Public Relations Officer, for Director
Corporate Development, Housing and Development Board
Copyright, 2004, Singapore Press Holdings Limited
Paper: Straits Times, The (Singapore)
Title: Going 'cash poor' now doesn't make sense
Author: LEONG SZE HIAN
Date: June 3, 2004
I REFER to the articles, 'Buy a car, and get cash back' (ST, May 22)
and 'Spending on the edge' (ST, May 23). One can now buy a car with no
down payment, immediate cash back or no instalment payments for the first
10 months.
Recent policy changes have made it easier to buy cars and get
supplementary credit cards, but harder to buy an HDB flat. A 10 per cent cash
down payment on HDB flats financed with bank loans is being phased in at
two percentage points a year over five years, starting from Jan 1 this
year. The reason given for the policy change was to protect Central
Provident Fund (CPF) savings against losses in a property market downturn.
The requirement for increased cash down payments may result in more
Singaporeans becoming 'cash poor'. In financial planning, it is
recommended to have six months of one's expenses as emergency cash reserves. More
Singaporeans will not be having this because of the higher cash down
payments. In the event of job loss, more are going to be in immediate
financial trouble.
Also, some may resort to buying a car to get cash back or borrow to pay
the cash down payment for flats.
Some may even get into the habit of making minimum monthly credit card
debt repayments to retain maximum cash. This may in turn lead to higher
bankruptcies.
More may become 'CPF rich' at the expense of being 'cash poor'.
Which is the bigger problem? Having less CPF savings - which have ample
time to let the property market recover - or having more CPF savings
but less cash to start a family, have children or further one's
education.
In a sense, we are merely shifting temporary losses from CPF savings to
cash losses. Most can ill-afford cash losses now compared to temporary
CPF losses.
This may even affect population growth when we are trying to encourage
procreation, and bring about a less educated work force when we are
trying to encourage life-long learning.
With the recent changes allowing HDB owners to rent out their flats
after 10 years, CPF savings can now, in a sense, be available as current
income.
So we should not be making it harder for Singaporeans to buy HDB flats,
as compared to say encouraging people to invest under the CPF
Investment Scheme (CPFIS).
Since the CPFIS kicked off in 1993, only 35 per cent of CPF investors
made profits that exceeded the risk-free CPF Ordinary Account interest
rate on a cumulative basis.
Are we not, in a way, overreacting to the property market downturn?
Perhaps, it is better to be 'cash rich' now rather than be 'CPF rich'
in the future.
Author: LEONG SZE HIAN
Copyright, 2004, Singapore Press Holdings Limited
Paper: Straits Times, The (Singapore)
Title: HDB has no reserves to offer free MUP
Date: August 21, 2003
I REFER to the letter, 'Give Pandan Gardens another chance later' (ST,
Aug 15). Letter-writer Leong Sze Hian has compared the Main Upgrading
Programme (MUP) with the Estate Upgrading Programme (EUP) for private
residential estates, and asked why EUP but not MUP is free for the
residents.
Improvement works under EUP are limited to the common areas and more
restricted in scope compared with MUP, which offers the full range of
improvements both inside and outside a flat. The two are therefore not
comparable.
EUP would be more similar to HDB's Interim Upgrading Programme (IUP),
where upgrading works are carried out only in the common area and is
free for HDB residents.
Mr Leong has suggested that HDB use its 'profits and accumulated
reserves over the years' so that flats could be upgraded for free or for
less.
As the public housing authority, HDB provides subsidised housing for
Singaporeans and manages the Government's various estate renewal
programmes, including the heavily subsidised MUP. The HDB does not have any
retained earnings. The Government funds HDB's deficit.
TAY BOON SUNSenior Public Relations OfficerFor Director (Corporate
Development)Housing and Development Board
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