Our thoughts: We have experienced this before and just thought how come it takes so long for the authority to implement this facilitation. Even in private home transaction, many buyers and sellers will negotiate for such terms before exercising the sales & purchase agreement.
For HDB, we know that the incoming buyer cannot let the whole unit, so this new move do bring in some dollars into their pockets too.
To sum up this news in 3 pointers:
- What is this new move? – Previously, under HDB rules, seller had to move out of the flat once the key was handed over to the buyer. HDB has since relaxed this rule to allow for a maximum of 3 months stay by the seller. The buyer and seller will enter into a private agreement on this temporary stay.
- When did it takes effect? – This new move took effect in JUly 2014
- What is the take-up rate so far? – SO far 176 flat sellers have applied for the extension of stay. HDB estimates about 15 per cent of resale transaction will stand to benefit from this new move..
For the full article from ChannelNewsAsia here
In the past month, 176 flat sellers have requested for a temporary extension of stay in their flats, an arrangement which allows them to stay in their former homes for up to three months.
The Housing and Development Board (HDB) introduced this practice in July, which is intended to help sellers who are transiting to their new homes, such as those who may need more time for renovation or those awaiting funds from the sale of their current flats. Previously, sellers had to move out immediately after handing over the keys to the buyer.
One person who has benefited from this arrangement is 51-year-old Madam Tan Mui Leng. Following the sale of her flat, Madam Tan has to hand over her flat to the buyer in October. Her new home in Woodlands will only be ready in November, but Madam Tan gets to stay on in her flat for another month under the new HDB rule. She had applied to HDB for a temporary extension of stay after getting the buyer’s consent.
She said: “It is more convenient for me because I do not have to shift house twice. It saves me from packing and unpacking twice, and it also helps me save on moving costs. Secondly, to rent a place for two to three months is not easy and the rent is higher.”
HOW THE SCHEME WORKS
The seller and buyer fill in a form to request for the seller’s temporary extension of stay in the flat. Both parties have to provide documents to prove the sale of the flat did take place. This includes the Option to Purchase which has been exercised, and a duly executed Sale and Purchase Agreement. The form is then submitted to HDB at the time of the resale application for approval.
But details of the agreement between the seller and buyer – such as the period of stay and monetary compensation – are privately arranged between the two parties. Thus, they are not required to keep HDB informed. This means that HDB will not intervene if there is a dispute between buyers and sellers arising from this private arrangement.
The temporary extension of stay for sellers was not uncommon even before the policy was introduced. Previously, sellers and buyers would do so on the quiet but real estate agency PropNex said many more will sign on, now that the option is made official.
“We have witnessed many mutual agreements on the 23rd hour falling flat, the buyers changing their minds and people becoming homeless. We have seen families crying over this or quarrelling over this. Now that this scheme is in place, I think this will create a greater number of people who will consider going though the proper process,” said Mr Mohamed Ismail, PropNex Realty’s CEO.
The HDB estimates that about 15 per cent of total resale transactions – about 2,700 households a year – will stand to benefit from this new rule.