Wednesday, 11 September 2019

Enhanced CPF Housing Grant: Higher grants, more choice for first-time HDB flat buyers from 11 September 2019

More incentives to buy resale flats; income ceiling raised to widen the pool of buyers
By Rachel Au-Yong, Housing Correspondent, The Straits Times, 11 Sep 2019

From today, first-time buyers will get higher grants and more flexibility to choose the size of their flat and where it is located.

The income ceiling for Housing Board flats has also been raised for the first time since 2015, widening the pool of eligible buyers.

Minister for National Development Lawrence Wong said yesterday that the new Enhanced CPF Housing Grant (EHG), which streamlines two older grants, gives couples more flexibility in affording a flat that suits their needs.

It also helps the authorities meet the growing demand for homes without building new flats, which is limited by a lack of land, especially in mature estates, he said.

Instead, the incentive structure has been changed to make it attractive to buy resale flats.

Mr Wong said past incentives, with subsidies and grants, encouraged first-timers to choose new flats, adding: "This is one reason why first-timers often prefer new over resale flats. So, we ought to adjust our grant structure to achieve a better balance."

The changes were hinted at by Prime Minister Lee Hsien Loong at the National Day Rally last month, when he said his younger colleagues had ideas to keep flats affordable.

Before this, 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 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.

From today (11 Sep), the AHG and SHG will be combined into the EHG of up to $80,000 and available to eligible buyers - including resale flat buyers who did not get the SHG before.

There are also no more restrictions on buyers' choice of flat type and location. "This (dropping of restrictions) means first-timers can get up to $40,000 more when they purchase a new flat," Mr Wong said.

The income ceiling for the EHG is $9,000, higher than the AHG's cap of $5,000 or the SHG's $8,500.

The caveat for the EHG is that the flat's lease must cover buyers until they are aged 95, in line with the authorities' push to get people to buy homes that can last them for life. Those who do not meet this condition will get a pro-rated amount depending on the lease.

With this change, an eligible first-timer family earning $4,800 a month and buying a new four-room flat in a mature estate from the HDB can get $45,000 in grants, compared with $5,000 previously.

As for resale flat buyers, they may get up to $160,000 in grants - a third more than before. This figure takes in the $50,000 CPF Housing Grant and $30,000 Proximity Housing Grant.

The income ceiling for Singaporean households to buy new flats and executive condominium units will be raised by $2,000 - to $14,000 and $16,000, respectively, to allow more to qualify.

Mr Wong said the HDB will likely increase the BTO supply in 2020 to meet the extra demand for public housing expected to arise from these changes. The board is on track to launch 15,000 flats this year.

Its third BTO launch of the year, initially scheduled for last month, has also been pushed to later this month to allow more home buyers to take advantage of the changes.

Property analysts, buyers and sellers said the new system not only benefits first-time buyers, but also sellers looking to upgrade.

"If you are a young graduate in a well-paying job, you benefit. If you are looking for a resale flat, you can afford it more. If you are a seller, it is more likely your flat can move now. Everybody wins," said ERA Realty key executive officer Eugene Lim.


HDB resale market may emerge big winner from the changes

Young couples with higher pay, those looking to sell flats likely to benefit most: Observers
By Rachel Au-Yong, Housing Correspondent and Grace Ho, Senior Political Correspondent, The Straits Times, 11 Sep 2019

Young couples with high incomes and those looking to offload their Housing Board flats in the resale market are likely to be the biggest beneficiaries of the new HDB policies announced yesterday, said observers.

And the resale market itself could get a lift with new incentives being extended to buyers, they added.

Yesterday, National Development Minister Lawrence Wong announced, among other things, that the income ceiling to buy HDB flats and executive condominiums (ECs) has been raised by $2,000, to $14,000 and $16,000, respectively.

ERA Realty key executive officer Eugene Lim said it is increasingly common for some fresh graduates to start with higher salaries, such as those in IT and finance.

"Couples in those sectors would hit the income ceiling quite early, so they might be priced out of the Build-To-Order market," he said, adding that the changes give such young people more choice.

"For those who don't want to spend too much on their first home, it is great. Getting your first HDB flat is a bit like national service for the guys - it is a Singaporean rite of passage."

Another major change is the new Enhanced CPF Housing Grant of up to $80,000. It replaces two previous grants, but allows more people to benefit as it has a higher income cap and does not impose any restrictions on the flat size or location.

In his speech yesterday, Mr Wong said adjusting the grant structure might make resale flats more attractive and, in turn, help the authorities meet the demand for homes.

He noted that the previous incentives for Build-To-Order flats may have been a factor in why three in four, or 75 per cent, of first-timer families bought new flats instead of resale homes last year.

OrangeTee & Tie's head of research and consultancy Christine Sun said the change was timely, given that a large number of flats - about 25,000 a year - are expected to reach their minimum occupation period and go on the resale market in each of the next few years.

Without the change, sellers might see prices of their flats go down.

"But with more grants, some buyers will seriously consider resale flats, and this should help to absorb the supply," she said, adding that the latest moves will complement changes in May to let home buyers use more Central Provident Fund savings and get bigger loans to buy ageing HDB flats.

PropNex chief executive officer Ismail Gafoor said existing home owners may get to fulfil their upgrading dream once they sell their flats. Instead of one in four people buying resale flats, he expects the grants to increase the ratio to one in three.

"And once these owners sell their flats, they are likely to buy a private condo, so the whole property cycle benefits," said Mr Ismail.

Mr Louis Ng, MP for Nee Soon GRC, said the enhanced grant is a win-win for both buyers and sellers, adding: "The people who are trying to sell can sell, and the people who need a flat urgently can better afford it."

Other people who would benefit from the changes are those who are interested in ECs.

Mr Ismail said: "The increase of $2,000 will not only allow more people to qualify, but also allow them to get approximately an additional $120,000 of loan amount based on the current mortgage servicing ratio capped at 30 per cent."

"I would expect a number of people at the Piermont Grand showroom this weekend," he added, referring to the 820-unit Punggol EC - the sole EC launch of the year - which has only crossed the 50 per cent sales mark.

In the medium term, Huttons Asia research director Lee Sze Teck said the grant changes would ease the burden of owning a home for young couples.

"Hopefully, it will help nudge families to have more kids," he added.

Overall, analysts see the changes as a major boon for both buyers and sellers.

As ERA's Mr Lim put it: "I guess elections are coming, right?"

The Straits Times, 11 Sep 2019

August 2015

• Income ceilings for new and resale flats raised from $10,000 to $12,000 for families and from $5,000 to $6,000 for singles.

• Proximity Housing Grant (PHG) of up to $20,000 introduced.

December 2016

• Fresh Start Housing Scheme for families in public rental flats launched.

February 2018

• PHG raised to up to $30,000; proximity condition revised from 2km to 4km, and singles who buy flats to live near their parents are included.

May 2018

• Deferred income assessment for grant applications takes effect.

August 2018

• Prime Minister Lee Hsien Loong announces expanded Home Improvement Programme and Voluntary Early Redevelopment Scheme.

November 2018

• First batch of Build-to-Order flats with shorter waiting time launched.

May 2019

• Shorter waiting times for applicants to receive ballot results implemented.

• New projects announced six months ahead instead of three.

• Larger HDB loans and relaxed rules on Central Provident Fund (CPF) usage for older flats implemented.

• Step-Up CPF Housing Grant and enhancements to Fresh Start Housing Scheme introduced for lower-income families.

Changes to HDB grants: More options now for couple who failed to get a flat last year
By Rei Kurohi, The Straits Times, 11 Sep 2019

In May last year, Ms Tan Li Shuan, 24, and her boyfriend of eight years, Mr Jerren Chua, 28, applied for a four-room flat during a Sale of Balance Flats exercise.

They were unsuccessful, but the couple, who are first-time buyers, now consider themselves lucky.

Under changes to the Housing Board's grant schemes that take effect today, they now qualify for about $25,000 more in grants than they would have if they had bought a flat last year.

Under the previous grant schemes, Ms Tan, a human resources administrator, and Mr Chua, a hawker who runs a juice stall at the National University of Singapore, did not qualify for the Additional CPF Housing Grant (AHG) as their combined income exceeded the $5,000 maximum.

Ms Tan said they tried for a four-room flat in Bedok as she had hoped to secure a flat near her parents' home in Kembangan, so they could help take care of the couple's future children.

As Bedok is a mature estate, they also did not qualify for the Special CPF Housing Grant (SHG), which is restricted to four-room or smaller flats in non-mature estates and has an income ceiling of $8,500.

Both schemes have now been combined under the new Enhanced CPF Housing Grant (EHG) scheme, which has a higher income ceiling of $9,000.

The maximum amount available under the grants has not changed - the EHG offers up to $80,000, the same as the AHG and SHG combined. But Ms Tan said the higher income ceiling is good news as more people will be able to benefit.

"With the median salary increasing every year, it is quite common for newlywed couples to hit the $5,000 income ceiling," she said.

And unlike the SHG, the EHG does not restrict buyers in terms of flat size or estate.

"I think the changes will definitely allow us to consider more options," said Ms Tan, adding that she and Mr Chua would now consider trying for five-room flats as well.

In addition to new flats, the EHG will also apply to resale flats, making them a more appealing option for first-time buyers.

Previously, resale buyers could apply for various grants, including the Proximity Housing Grant and the AHG, but not the SHG.

The change means resale buyers will now be able to get up to a total of $160,000 in grants, compared with $120,000 previously.

Ms Tan said she had previously considered resale flats, which are more expensive than new flats, as a last resort.

She added: "If our applications keep coming back unsuccessful, we can fall back on resale flats, knowing that the grants have been adjusted and that we are now eligible."

New one-stop HDB sales portal by end of 2020
By Grace Ho, Senior Political Correspondent, The Straits Times, 11 Sep 2019

A new Housing Board portal is set to be rolled out by the end of next year for buyers and sellers to transact HDB flats on a single platform.

It will have a flat-listing service for buyers to find information on current and upcoming flats sold by HDB, and compare them with resale alternatives, Minister for National Development Lawrence Wong said yesterday.

Sellers will be able to list and advertise their flats on the portal, and continue to complete the resale application on the same platform.

This new portal follows an earlier move by HDB last year to revamp its online portal for HDB resale flats, resulting in the transaction time being halved to eight weeks when there are no hitches.

Speaking at the HDB Awards ceremony at Marina Bay Sands last night, Mr Wong said the portal will allow buyers to make detailed comparisons among shortlisted options and see which flats are within their budget or have sufficient leases to cover them for life.

This will help them make informed decisions when buying their homes, he added.

Additional features in the works for the portal include financial calculators with customised information so buyers can estimate their housing budget and sellers can estimate their sales proceeds.

Mr Wong said HDB will engage industry players and stakeholders to share more details and see how to work together with them. "I believe the HDB portal can complement existing property portals and the work of property agents to make real estate transactions more convenient and efficient," he added.

The minister also announced a new Enhanced CPF Housing Grant to streamline two existing grants, and higher income ceilings for first-time buyers. It is a major step forward in making HDB flats more affordable for all first-timers, he said.

Mr Wong noted that while the Government has to ensure an adequate supply of new flats, it will not be possible to meet all of the growing demand with new flats alone as there is limited land in mature estates.

Last year, 75 per cent of first-timers purchased new flats, and the remaining one-quarter bought resale flats, he said. This is much higher than 10 years ago, when only 55 per cent bought new flats, and 45 per cent chose resale flats.

The incentive structure, he said, currently encourages first-timers to buy new flats.

"So, we really ought to adjust our grant structure to achieve a better balance between new and resale flats."

*  First-time resale flat buyers: Singaporeans aged 21 and above with non-citizen spouses now eligible for housing grants of up to $40,000
Age criterion lowered for enhanced housing grant
By Michelle Ng, The Straits Times, 30 Oct 2019

Singaporeans aged 21 and above who are married to non-citizens are now eligible for additional housing grants of up to $40,000 when they buy a resale flat for the first time.

The age criterion was lowered from last Saturday. Previously, only those aged at least 35 were eligible for the Enhanced CPF Housing Grant (Singles) when they bought a resale flat under the Non-Citizen Spouse Scheme, which allows a Singaporean whose spouse is neither a citizen nor a permanent resident (PR) to buy a flat.

The grant will be calculated based on half of the couple's average monthly household income, subject to an income ceiling of $4,500.

Last month, Minister for National Development Lawrence Wong unveiled the new Enhanced CPF Housing Grant (EHG), which streamlines two older grants - the Additional CPF Housing Grant (AHG) and Special CPF Housing Grant (SHG) - with a higher income ceiling of $9,000, compared with AHG's cap of $5,000 or the SHG's $8,500.

The new, enhanced grant, for first-time buyers of flats, gives couples more flexibility in choosing and affording a home that suits their needs as it has a higher income cap and does not impose any restrictions on the flat size or location.

When the EHG came into effect on Sept 11, HDB received a total of 2,300 resale applications over the next month, of which 1,110 were from first-time buyers.

Of these, about half were eligible for the EHG, a significantly higher number than last year's monthly average of 160 households who bought a resale flat for the first time and received the AHG.

The caveat for the EHG is that the flat's lease must cover buyers until they are aged 95, in the Government's push to get people to buy homes that can last them for life. Those who do not meet this condition will get a pro-rated amount depending on the lease.

Mr Nicholas Mak, head of research and consultancy at ERA Realty, said the move to lower the age criterion for Singaporeans with non-citizen spouses could increase demand in the HDB resale market, but he did not expect purchase prices to fluctuate widely as a result.

"I don't think numbers under this scheme are that huge. Neither would such couples rush out to buy a resale flat, so we shouldn't see much of an effect," he said.

"However, it does level the playing field and make the rules more equitable for these cross-nationality couples to be able to afford an HDB flat of their choice and start a family earlier."


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