Written by: Marissa Saini
2019 saw quite a number of significant rules and policy changes that have positively impacted public housing demand.
The main takeaway? More people are buying HDB flats.
According to HDB’s Public Housing Data for Q4 2019, HDB resale transactions – the number of flats changing hands – climbed by 2.7% to 23,714 flats, as compared to 23,099 flats in 2018.
“For the whole of 2019, resale transaction volume was lively with a 2.7% increase while prices remained largely unchanged edging up only by 0.1%. It is also interesting to observe that prices between mature and non-mature estates narrowing its gap with their price indices decreasing and increasing respectively,” said Darren Teo, Director of Real Estate Services at Ohmyhome.
If 2019 seems like a decade ago already, here’s a brief recap:
CPF rule changes
Before the CPF rule changes, buyers who wish to purchase an old resale flat with less than 60 years left to its lease face the following rules:
- A buyer can use his CPF to finance the flat if his age combined with the remaining lease adds up to 80 and above
- If a property’s lease is < 30 years, it is not fully payable via CPF
Since the new CPF rules took effect on 10 May 2019, the criteria for CPF and HDB housing loans have changed. It is now based on whether the property’s remaining lease can cover the youngest homebuyer up to the age of at least 95 years old.
The total amount of CPF that can be used is no longer dependent on the balance lease of the property but on whether the remaining lease can last until the youngest buyer turns 95. This is a stark contrast to the old rules where you can only use the maximum amount of CPF allowed if the property has a minimum of 60 years left to its balance lease. However, if the balance lease is less than 60 years, the Buyer is only allowed to use CPF if the Buyer’s age and balance lease add up to at least 80 years.
Under the new rules, if the criteria are met, the buyer is able to obtain maximum CPF usage of 90% Loan-to-Value (LTV) limit. Owning or buying a home that meets the criteria will also allow the buyer (from age 55) to be eligible to withdraw CPF savings above the Basic Retirement Sum.
If the property’s balance lease could not cover the buyer until the age of 95, he/she is still able to obtain an HDB loan but on a pro-rated basis. They will also be allowed to withdraw CPF upon reaching the age of 55.
These rule changes are applicable to the following:
- HDB flat applications received on or after 10 May 2019
- CPF withdrawal applications received on or after 10 May 2019
- Private Option to Purchase or Sales and Purchase Agreement signed on or after 10 May 2019
Re-offer of Balance Flats (ROF)
Another significant implementation was the ROF. Consisting of a wide range of flat types – from two-room Flexi to Executive – and across both mature and non-mature towns, the ROF selection is made up flats from past BTO launches and Sale of Balance Flats exercises.
A defining characteristic of ROF is that flats don’t typically come with a long waiting period, unlike BTOs. If you have a tight timeline when it comes to securing a new flat, ROF lets you book a flat by the next working day. You can check out the flats available for open booking on HDB InfoWEB.
Enhanced CPF Housing Grant (EHG)
Announced as a replacement of the Additional CPF Housing Grant and Special CPF Housing Grant – you can even think of it as a combination of the two – the EHG boasts a higher income ceiling to include more families looking to buy a home for the first time.
First-timer families with a monthly household income of up to $9,000 can look forward to a Grant amount of up to $80,000. This is based on the condition that the home’s balance lease will be able to last them up to the age of 95. If the balance lease falls short of this, the EHG amount will be pro-rated.
This less restrictive version of your run-of-the-mill housing Grant allows families looking to buy bigger flats (eg. five-room) in mature towns to fall under the eligibility criteria too.
These rule changes, new policies, and scheme enhancements may have played an integral role in the increased number of HDB resale transactions in 2019.
Undoubtedly, they allow greater flexibility for buyers and make homeownership a lot more accessible for Singaporeans!
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