THE EXPERIENCE OF FIRST-TIME 3- AND 4-ROOM HDB BTO FLAT APPLICANTS
Recent news of HDB flats in the heartlands fetching prices of over $1 m have caused concerns amongst several Bukit Batok residents whom I met. The primary concern they had was whether their children would be able to afford HDB flats in the future. As is well known, our Government, through provision of housing grants, ensures that BTO flats remain affordable for 1st time buyers. Generally, their mortgage servicing ratio is under 25%, which is well below the international benchmark of affordable housing of between 30 to 35%. I filed a PQ with the Minister for National Development on how many 1st time buyers for 3-room and 4-room HDB BTO flats were unable to secure sufficient loans to purchase their flats. I used 3 and 4 room flats as a proxy for basic housing requirements. The Minister’s reply was instructive. In the last 5 years, 99.6% of applicants were able to complete the purchase of their flats based on the applicable criteria. For those who did not satisfy the criteria, HDB, through further measures, were able to help 2/3 of them secure housing. In other words, HDB was able to help about 99.9% of 1st time applicants complete their purchases of 3 or 4 room flats. This underlines our Government’s commitment to help Singaporeans, especially our young couples, own their 1st home.
— — — — — — — — — — — — — — — — — — — — — — — —
Mr Murali Pillai asked the Minister for National Development in each of the past five years (a) how many first-time applicants purchasing 3-room and 4-room HDB BTO flats who fulfill the eligibility criteria for HDB Home Loan Eligibility, are nonetheless unable to secure sufficient loan quantum to complete the purchase of their flats; (b) what are the reasons for them not being able to secure the loans; and © what housing options are provided to them and what is the take-up rate of these options.
Mr Desmond Lee: New flat buyers who wish to take up an HDB housing loan for their flat purchase need to have a valid HDB Loan Eligibility (HLE) letter when they book the flat. The HLE letter informs buyers of the HDB housing loan amount that they are eligible for, so that they can size up their housing budget, and book a flat that is within their budget.
When the keys to the new flat are ready for collection, HDB will review the flat buyers’ financial situation and disburse the housing loan amount they are eligible for based on their updated circumstances, for them to complete the flat purchase. This is to ensure that flat buyers have the means to service their housing loans. In addition to the housing loan, flat buyers can use their CPF and cash savings to complete their purchase.
From 2017 to 2021, about 0.4% of First-Timer 3-room and 4-room Build-To-Order (BTO) flat buyers, or between 13 to 84 cases per year (Table 1), were unable to complete their flat purchase due to insufficient loan. These flat buyers could have experienced changes to their financial situation, such as retrenchment, reduction in income, bankruptcy, or indebtedness, which resulted in them being unable to qualify for a loan of sufficient quantum to complete the flat purchase. Others may have booked a flat that was outside their budget, and their incomes had not risen to levels that would allow them to complete the purchase.
For such cases, HDB assists them with various measures, on a case-by-case basis depending on their specific circumstances, such as a waiver of the financial forfeiture and the one-year wait-out period after cancellation of their flat booking, or allowing them to switch to a flat that is within their budget. About two thirds of home buyers in such cases have taken up these measures.
We encourage all flat buyers to exercise financial prudence and book a flat within their means.
