ST : Cooling-off period for flat sellers

Oct 19, 2010

Cooling-off period for flat sellers

By Esther Teo & Cheryl Ong



PEOPLE intending to sell their Housing Board (HDB) flats from Nov 1 will have to observe a seven-day cooling-off period before the deal can proceed.

If the designated waiting time has not been met, the HDB will reject the resale application. The seven-day period starts from the time the resale checklist has been completed until the granting of the option to purchase.

The new rules announced yesterday underline the need for financial prudence before buying or selling a home, said the HDB. It noted that its flats are meant for long-term owner occupation and that buying or selling one is a significant decision that should be considered carefully.

The cooling-off move is part of a series of enhancements to the resale checklist and sale procedures to help buyers and sellers make informed decisions, the HDB said.

Checklists were introduced in 2008 to ensure that both parties in a transaction know the key resale and financial policies before they sign on the dotted line.

People who intend to sell their flats should consider their finances carefully and plan for their next accommodation, while buyers should also exercise financial prudence, the HDB said.

The new rules will require buyers and sellers to be a bit more hands-on with the checklist. New requirements include:

· Sellers will have to state their next housing arrangement. If they intend to buy another flat, they will have to work out the estimated sales proceeds of the existing home and submit a financial plan for their next purchase, said the HDB.

· Sellers must deposit a soft-copy of the checklist and supporting documents such as estimated sales proceeds and their financial plan at the HDB's website by the following day after they complete the resale checklist.

· They will then need to submit the original copy of the checklist together with the option-to-purchase (OTP) at the first resale appointment. This is scheduled with HDB for the resale transaction to be processed.

'If the date on the original copy differs from the soft-copy submitted through (the HDB website), or if the OTP is dated within seven days from the checklist, the resale application will be rejected,' the HDB said.

· Buyers of resale flats who are not using an agent will also have to submit the resale checklist together with the resale application form. Previously, only buyers with agents had to.

Some of the changes were advocated in Parliament by MPs, including Mr Ang Mong Seng (Hong Kah GRC), who suggested earlier in the year that a one-week cooling-off period be imposed.

Madam Halimah Yacob (Jurong GRC) said yesterday that people would now get a chance to reassess their situation, especially if they were subject to pressure to buy or sell their flat fast.

She cited a couple with four young children who sold their flat as they could not service the loan and wanted to downgrade. But they went into a business venture using the sales proceeds and lost everything. The couple could not get a bank loan and had to look for a rental flat.

'It's such a sad situation because it could have been avoided had they been given proper financial advice, or some time to think it through,' she said.

Madam Halimah added that the resale checklist was also very important as many people do not realise that a portion of the sales proceeds go back to their Central Provident Fund accounts.

HSR chief executive Patrick Liew said that he would occasionally hear of sellers who had not done their calculations well and had sold their property despite being unable to afford another.

HDB flat owner Stella Ong said that although she has no plans to sell her flat, the rules were welcome as they would give her more time to think through the complicated sale process.

'At least now I know that there's a temporary exit door to take if I ever feel uncomfortable with a transaction after thinking about it,' she said.