ST : Rules will benefit all in longer term

Oct 28, 2010

NEW HOUSING MEASURES

Rules will benefit all in longer term

WE REFER to Sunday's article ('HDB flat sellers left in tight spot by new rules').

The new measures announced on Aug 30 are designed to stabilise the property market and help more first-time home buyers. They seek to dampen demand from potential buyers not in urgent need of housing.

Specifically, the lower loan-to-valuation (LTV) limit of 70 per cent for those with outstanding loans encourages them to exercise greater financial prudence in their next housing purchase.

Resale flat buyers eligible for HDB concessionary loans are not affected by the measures, as they can get up to 90 per cent LTV, subject to credit assessment. Those who do not have an existing mortgage loan are also not affected by the new rules.

The article reported that sellers in more than half of resale transactions today are illegally overstaying in their flats after sale, due to the lower LTV requirement. This cannot be true. While more than half of resale transactions involve bank loans, the new rule applies only to buyers who take bank loans while they still have an existing loan for their current property. This group comprises less than 15 per cent of HDB resale transactions today. This was so even before Aug 30.

Moreover, among them, some buyers are eligible for HDB concessionary loans, but choose to take bank loans instead. While some flat sellers may also buy a private property, this is not a large number. Lastly, not all who are affected have interim housing problems.

The new rules are meant to encourage financial prudence. Buyers who do not have sufficient cash down payment due to the lower loan eligibility should reconsider buying another flat now, in order to avoid overstretching themselves. Sellers should carry out proper financial planning and ensure they have made subsequent housing arrangements before selling their flats.

To date, HDB has not received any appeal for special approval for the flat seller to continue staying in the flat temporarily after completion of sale.

We wish to highlight that while flat owners cannot sublet the entire flat within the minimum occupation period, they may sublet room(s). Those in doubt should check with HDB or seek advice from their agents. Agents should give correct and proper advice to their clients and not be involved in unauthorised subletting arrangements.

We wish to reiterate that the recent property measures will help to promote a more stable and sustainable property market over the longer term. This will benefit all parties, including those who may be temporarily inconvenienced.

Loh Swee Heng
Deputy Director (Resale)
Housing & Development Board