Our thoughts: Perhaps this new arrangement should have some strings attached such as only for elderly folks or those from low-income group.
On the other hand, since this arrangement facilitates HDB owners to downsize more easily, will this reduce the demand for the recently introduced lease buyback scheme?
To sum up this news in 3 pointers:
- What is this new arrangement? – Those who do not take loan or take up an HDB loan will need to pay a 5 per cent downpayment upfront, down from the current 10 per cent. For those who take up loans with financial institutions, a 10 per cent downpayment will have to be paid upfront, down from the existing 20 per cent.
- Who is eligible for it? – Existing owners who wish to purchase a new two- or three-room flat in a non-mature town or estate are eligible.
- When does it takes effect? – This new staggered downpayment arrangement takes effect from the latest Build-to-Order (BTO) exercise.
For the full article from ChannelNewsAsia here
Existing flat owners who “right-size” to a new two- or three-room flat in a non-mature town or estate can now choose to pay a lower downpayment upfront, the Housing and Development Board (HDB) said on Wednesday (Sep 24).
This new staggered downpayment arrangement takes effect from the latest Build-to-Order (BTO) exercise, which began on Wednesday.
Flat owners who are not taking up a loan or who choose to take up an HDB loan will need to pay a 5 per cent downpayment upfront, down from the current 10 per cent. For those who are taking up a loan with financial institutions, a 10 per cent downpayment will have to be paid upfront, down from the existing 20 per cent.
They will only need to pay the other half of the downpayment together with the balance purchase price of the new flat when they collect the keys for the new flat, HDB said.
According to HDB, the new staggered downpayment arrangement aims to assist flat owners who wish to “right-size” to a new flat but have their funds tied up in the existing flat.
CHANGE TO HELP THOSE WITH CASH-FLOW PROBLEMS
National Development Minister Khaw Boon Wan wrote in a blogpost that he was glad about the change.
“At Meet-the-People sessions, I sometimes meet elderly residents who intend to right-size to a smaller flat but face some cash-flow difficulties in the process,” he wrote.
“The sale proceeds for their existing (larger) flat will be enough to pay for the new (smaller) flat, but they need to sell the flat first to raise the funds for the new purchase. For example, they have to make a downpayment for their new flat, which is at least 10 per cent of the purchase price.”
In 2013, 47 elderly people cancelled their new flat bookings because they were unable to raise the downpayment, Mr Khaw noted.
Dr Lily Neo, MP of Tanjong Pagar GRC, who has many elderly residents in her constituency, welcomed the rule change.
“I have come across cases of seniors coming to me saying that they would like to downsize, but at the same time they have their own reservations in view of financial difficulties or even leaving a legacy behind for their children. Majority of them do not have a lot of savings,” she said.
Residents Channel NewsAsia spoke to also gave the thumbs up to the new rules. One said the five per cent downpayment should be “very reasonable”, as there is no need to fork out so much money upfront.
LATEST BTO EXERCISE LAUNCHED
Separately, a total of 4,630 new flats, spread across six projects in the non-mature towns of Bukit Batok, Hougang and Jurong West, and the mature town of Kallang Whampoa, were launched in the September 2014 BTO exercise.
At Bukit Batok, 1,793 two- to five-room units are on offer. Jurong West has about 907 two- to four-room flats available. Two projects at Buangkok will have almost 1,192 units comprising two- to five-room and Three-Generation flats.
According to real estate agency HSR, the 738-unit project at Kallang Whampoa will be the most popular as it is the only project located in a mature estate.
“It is also near to a lot of amenities and the MRT station. It will definitely create a lot of interest which I also believe is why the price, as indicated on HDB’s website, is higher than the rest,” said HSR’s head of Singapore projects, Mr Alan Tan.
“Jurong West will be the other one which will also attract high interest … due to the redevelopment of the area,” he added.
Eligible first-timer singles have the option of applying for a two-room flat in Buangkok Square, West Terra @ Bukit Batok, Yung Ho Spring I or Yung Ho Spring II. For large families, Three-Generation flats are available at Buangkok Edgeview, Buangkok Square, St George’s Towers, West Terra @ Bukit Batok, Yung Ho Spring I or Yung Ho Spring II, HDB added.
Half of the studio apartments at St George’s Towers in Kallang Whampoa will be set aside for seniors living in the same town or within 2 kilometres of their current flat or property, or those applying for a studio apartment to live near or with their parents or married child.
Applications start on Wednesday and will close on Sep 30.
Another 4,290 flats in Sembawang, Sengkang, Tampines and Yishun will be launched in the next BTO exercise in November. Another 3,000 flats will be offered in a concurrent Sale of Balance Flats exercise, HDB added.