Heard about the brand-new Enhanced CPF Housing Grant (EHG)? EHG streamlines two older grants; Additional CPF Housing Grant (AHG) and Special CPF Housing Grant (SHG).
Benefits of EHG
- Grant amount for both BTO and resale flat buyer are the same
- Grant amount up to $80,000
- EHG available for families with monthly incomes up to $9,000
- No restriction on location/estate and flat types
What are the changes after EHG?
1. Resale flats are more attractive for first-time buyers
The incentive structure has been changed to make resale flats more attractive to buy, unlike the past incentives which have always encouraged first-time HDB buyers to choose new flats. In 2019, 75% of first-timers purchased a Build-To-Order (BTO) flat instead of a resale flat due to the unaffordability of the latter. This is especially common among young couples just entering the workforce.
Choosing a BTO means they have to compromise on their desired location and flat size due to limited options. The government recognised that it would be beneficial to make resale flats more affordable for first-timers and balance the supply of new flats with the demand.
2. Combination of grants
Previously, there were three types of grants: The CPF Housing Grant of $50,000 for resale flats, the Additional CPF Housing Grant (AHG) of up to $40,000 for those earning $5,000 and below, and the Special CPF Housing Grant (SHG) of up to $40,000 for those earning $8,500 and below and were looking to buy a four-room or smaller flats in non-mature estates. Those buying Build-To-Order (BTO) flats may have been eligible for the AHG and SHG, while those buying resale homes could get only the CPF Housing Grant and AHG.
With AHG and SHG combined into EHG, the grant of up to $80,000 is made available to eligible buyers- including resale flat buyers who did not get the SHG before.
3. Income ceiling and remaining flat lease
As long as your combined income is under $9,000, you will receive the EHG grant for your HDB flat purchase. However, you can only get the full EHG grant if the flat lease can cover you and your spouse to the age of 95. Families who buy flats with shorter leases will have their grants pro-rated. This is to encourage home seekers to buy flats that they can live comfortably; to have a home that can last them for life.
“For a couple that is both 30 years old, they will need to buy a flat with 65 years or more of remaining lease to receive the full grant,” said Minister of National Development Lawrence Wong.
“Those who choose to buy a flat that does not cover them to the age of 95 can still receive the EHG, but it will be pro-rated based on the extent to which the flat can cover them to age 95, using the same formula that we are now using for the pro-ration of CPF and housing loan quantum for older resale flats, which we have recently introduced,” he said.
The income ceiling for Singaporean households to buy new flats and executive condominium units will also be raised by $2,000 – to $14,000 and $16,000, respectively, to allow more to qualify.
4. Open to all flat types
Options such as resale flats, 5-room flats, or flats in mature estates used to be unobtainable if you have a relatively low-income ceiling of $5,000, even if you wanted to maximise your grants. However, with EHG, the maximum grant ($80,000) and income ceiling ($9,000) is higher, and it is open to all flat types and estates. That means that it no longer matters if it is a BTO or resale.
With these changes, could 2019 be the best year to buy a resale flat?
Since EHG provides higher grant amounts at a higher income ceiling, there is significantly more flexibility. More Singaporeans can now afford a flat that suits their needs. Homeowners who are looking to sell even older flats can sell, while those who need a flat can afford it, and occupy it immediately. No wonder resale flat transactions went up by 18% in Oct 2019.
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