Mah Bow Tan
Singapore
“The previous generation of Singaporeans overcame huge odds together to create this improbable nation which we call home. Let this generation work as one to define our country for the next lap of our journey. Sir, on this note, I fully support the amended Motion. Page: 143”
“Like all upgrading programmes, there is a certain budget, and a certain pace at which we will build. We have completed the LUP and now we are going on towards the HIP. The Estate Upgrading Programme (EUP) is ongoing.”
“For those who cannot afford home ownership, we will provide rental flats. For the rest where there is hardship involved, that is where the safety net comes in. I do not think we should make the safety net so wide as to bring in everybody.”
“Building a studio apartment is no different from building any other HDB flat. If a person applies now and the building works start now, he can get it in two-and-a-half years to three years. We have stepped up the building of studio apartments over the last couple of years.”
“Mdm Halimah Yacob asked the Minister for Health (a) how many people have signed an Advance Medical Directive (AMD) and how many have revoked them since; and (b) whether there is a need to review the current rules on AMDs which do not require a person who has revoked the AMD to inform the Registrar, thus causing uncertainty for hospitals t…”
“Parents who wish to exert more control over the maximum mobile service charges incurred by their children may consider service options such as mobile pre-paid cards. IDA is aware of the public's concerns on mobile subscriptions, and will continually review policies and look into measures to further protect the interest of consumers.”
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“Nanyang Polytechnic, who is also a Green Mark award winner, has saved $2 million over five years by adopting "green" technologies and environment-friendly practices in managing its campus. In a highly urbanised city-state like Singapore, having energy-efficient buildings is one important contributor to having a cleaner environment. Builders and building owners must see it as both their responsibility and contribution, to help create a desirable environment for Singapore residents to live, work and play in. The way forward is to have more energy efficient buildings. The way to get there will require the efforts of both the Government and the private sector. WRITTEN ANSWERS TO QUESTIONS LOAN SHARKS (Number and profile) 1. Assoc. Prof. Ong Soh Khim asked the Minister for Home Affairs (a) how many cases of illegal money lending and harassment by loan sharks have been reported over the first six months of 2005; (b) how many loan sharks have been arrested in the first six months of 2005 for these activities; (c) what are the profiles of these loan shark runners and syndicate leaders with respect to age, gender, education level and nationality; and (d) what are the profiles of the victims with respect to age, gender, education level and nationality.”
“Both the Building and Construction Authority (BCA) and National Environment Agency (NEA) have in place various schemes to require or promote energy efficiency in new and existing buildings. Since 1979, energy conservation standards have been part of the building design requirements in the Building Control Regulations. These are minimum standards of energy efficiency that all new buildings must comply with. The standards are regularly reviewed to keep pace with technological developments. Apart from regulatory requirements, there are a number of incentives to encourage energy efficient buildings. Energy efficiency is a key assessment area under BCA's newly launched Green Mark scheme to promote environment-friendly buildings. The scheme is open to both new and existing buildings, and accords recognition to developers and building owners for building and maintaining environment-friendly buildings. Achieving the Green Mark status will not only help them save on the costs of operating their buildings, but help to raise the profile and hence, value of their properties. The NEA also has measures to promote energy efficiency in existing buildings. Its Energy Efficiency Improvement Assistance Scheme encourages and provides funding for private sector building owners and manufacturers to carry out energy appraisals. NEA is also working with Government agencies in a pilot project to engage energy services companies to implement energy saving measures. Beyond the schemes of the Government, builders and building owners themselves must realise that they have much to gain by having energy-efficient buildings. Environment-friendly buildings require less energy and water to operate, and can generate significant savings.”
“Under extenuating circumstances, we do look at it on a case-by-case basis. But I want to assure the Member that there are enough provisions such that for the cases that he has pointed out, whether it is the remaining applicant or whether it is the dependant, if there are extenuating circumstances, we will look at it. But on a normal basis, we must have this provision in the Act. Otherwise, it will be very difficult for us to implement the scheme. So, that is as far as the proposed new section 65S is concerned. Let me thank both Members again for supporting the scheme. I assure them that we will proceed with this scheme and learn lessons from it. If we can make this scheme work and iron out some of the issues, I think it would be of great benefit to public housing flat buyers. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Mah Bow Tan]. Bill considered in Committee; reported without amendment; read a Third time and passed. WEIGHTS AND MEASURES (AMENDMENT) BILL Order for Second Reading read.”
“The reason why we have it and why it is not in the Residential Property Act for private property transactions is because of one simple fact. In a private property transaction, you do not have issues of eligibility conditions, whereas for buying an HDB flat and an executive condominium, you must fulfil certain eligibility conditions before you can buy. That is the reason why we need this clause in the EC Housing Scheme Act and now, in the Housing and Development Act for DBSS purposes. What are these eligibility conditions? Income ceiling, family nucleus, citizenship - these are the three basic ones. These are provided in the Bill under the proposed new section 65R. We do not want to inadvertently have a situation whereby, as a result of an unfortunate demise of one of the applicants, the remaining applicant is not eligible to buy the flat because of one or other conditions earlier. So we craft it in such a way that it is mandatory to cancel the sale and purchase (S&P) agreement. However, I would like to mention here that, in practice, what happens is that the developer will not need to cancel the S&P agreement straightaway. What he does is that he will consult HDB to check whether that person, who is inheriting the contract, is eligible to purchase. If he is, he will then refer the matter to the Minister and the Minister will exercise the discretion that is in the Act to allow him to proceed. But if he is not, then, unfortunately, he has to proceed to cancel the S&P agreement. Of course, having said that, we do get appeals from time to time from people who are not eligible, but, as a result of a demise, they cannot get another person to jointly purchase and as a result of which, he may actually lose the flat.”
“We want to make sure that the quality is there, and that is one of the reasons why I did not want to use the reverse tender mechanism, because all my friends in Hong Kong tell me, "If you do this, developers are going to take advantage of it." We will maintain the quality because the private-sector developers will continue to be governed by all the housing construction standards that are set by BCA, the technical standards that are set by HDB and not just standards on housing quality. We will be setting standards on durability and maintainability, because one of the features of the scheme is that these flats will be handed over and vested to HDB and will be maintained by the Town Council. So, we do not want to have a situation where a flat is built - it may look very good for the first, second or third year - and thereafter, Town Councils will be landed with the "baby", as it were. Standards on durability and maintainability are standards which apply to HDB flats and which we willl apply to the DBSS flats as well. In summary, as far as Dr Khor's concerns are concerned, I think they are very valid concerns and we will certainly take note of them. We will proceed with the first project with our eyes wide open and we will talk to all concerned - buyers, developers and, of course, HDB - and we will see how we can improve upon it. The objective behind this scheme is a good one and that is why I am pushing for it, but, at the same time, we know that there are certain pitfalls which we have to be careful about. Let me now turn to the concern of Mr Ahmad Khalis. He talked about the proposed new section 65S. First of all, let me say that this clause is also in the Executive Condominium (EC) Housing Scheme Act.”
“It is something that allows first-timers to purchase a HDB flat in the place and at a time of his choosing and yet, at the same time, benefit or enjoy the CPF housing grant from the Government. And we have reviewed it from time to time. We have reviewed it as and when the market situation or the economy has changed. We will continue to do so. And so it is with the resale levy. I believe many Members have commented on the resale levy in this House, and I have indicated that we are going to do a review of the resale levy. So I would just like to repeat that again. I think there are certain anomalies in the system which have arisen as a result of changing circumstances and changing market conditions, and I agree that it is timely for us to do a review of the resale levy. But let me just say this again that the principle of the resale levy, which is that we want to make sure that subsidies are not over-consumed by any single person, still remains. But how we implement the resale levy, eg, how we apply it, what are the percentages and so on, I think that we can review. Finally, the question about quality - better design and yet trying to keep it affordable. It is a bit strange listening to Dr Khor, but I guess it is a tribute also to HDB that she is a bit worried about the quality of flats that will be built by the private sector. Usually, it is the other way around. Usually, people say that HDB flats are not as good as those in the private sector. But I think it is a tribute. For the same price, the HDB can build a good quality flat, and I would like to thank her for acknowledging this fact, although in an indirect way. I thought I would put it a bit more directly to her. But it is a concern that we have.”
“We will also let the developer decide on the allocation of the flats, whether it is through ballotting or first-come-first-served. Again, we do not want to restrict the developer in how he chooses. Of course, they will have to comply with the policies of HDB, such as the ethnic integration policy. They will have to provide a higher weightage or preference for first-timers and provide some priority for those under the Married Child Priority Scheme and so on. So, all the priority schemes that HDB is currently operating for its own flats will also be required of them. Within that parameter, how they go about allocating, whether it is through a walk-in selection or whatever, we will leave it to them. I think that one of the primary difficulties of this scheme is that while we want to make sure that the rules and regulations do not depart too much from those for the current HDB flats, at the same time, we do not want them to be exactly the same because, if they are exactly the same, then a lot of the purpose of the DBSS would be lost. So, we want to allow the private developers to do as much as they can and to free up as much as possible, without violating the fundamental principles of the public housing scheme, such as minimum occupation period and the ethnic integration policy. The third concern that Dr Khor had was on the housing subsidy and the resale levy. On the issue of the housing subsidy and whether the housing grant needs to be reviewed from time to time, if you look at the history of the CPF housing grant, it has actually been reviewed from time to time. It is a useful mechanism.”
“The DBSS scheme is another way for us to provide HDB flats by allowing private developers to step into the shoes of the HDB and to provide a different kind of HDB flat but, at the end of the day, still a form of public housing. It is not private housing like in the Executive Condominium Scheme, but it is a form of public housing. On whether developers will be free to set prices, yes, I think I have mentioned earlier, we will allow developers to set prices but the developer really has to take into account many factors when he does so, eg, the surrounding flats, the comparables, as they call it, not just new HDB flats built by HDB but also resale HDB flats in the surrounding areas. So, the prices of flats will be set by the developer. We have decided not to fix the price of the flats, which I think some Members in this House suggested when I first mooted the scheme in the debate in the Committee of Supply, the so-called reverse tender scheme whereby we fix a price and then we ask the developer to tender for it. I explained in the House at that time that I thought it was not a very good idea because housing authorities, such as those in Hong Kong, for example, who did try this, and found that, by setting a cap on the price, the only way the developers could make money or maximise profit was really to try and scrimp on the quality, which obviously is not in our interest. So we think that by freeing up the ceiling on prices, by letting the developers set prices but yet at the same time providing sufficient competition to them, they will be able to set prices at a level that the market can bear and which, with all the other considerations, will make it affordable to housing buyers.”
“Indeed, the DBSS scheme, even if we proceed after the pilot project, will remain a very small but a very meaningful part of the public housing programme. In this way, Singaporeans can be assured that HDB flat prices will remain affordable, because the Government will still remain a major provider of public housing. The second way is through the eligibility rules for buyers of DBSS. We will continue to set the eligibility rules so tight, eg, the housing income ceiling, the family nucleus and other rules like the 5-year minimum occupation period, because these are, at the end of the day, public flats. It is part of the public housing programme. So, the target market for the developers in the DBSS programme will be limited to these groups of people. Again, I dare say that this will be another way for us to make sure that the prices of DBSS flats will remain affordable. The third way that we will make public housing affordable under the DBSS scheme will be through the provision of the CPF housing grant. So, whatever the price set by the developer, any first-timer who comes and buys a flat under this scheme will immediately be able to get a $30,000 or $40,000 grant. So, these are the three ways which I would like to assure the Member that we will continue to make public housing affordability an objective of the DBSS scheme. We will make sure that there is sufficient competition through HDB to ensure that there is a price comparable, that there are benchmarks and that the private developer is not able to set whatever price he wants. Secondly, we want to make sure that the group that is buying the DBSS flats will be a restricted group. Thirdly, there would be the CPF housing grant.”
“It is not determined by HDB. How the land will be allocated will be determined, as per normal, through the highest land bid, and how many developers will take part in the exercise and what their bid is and so on will be left to the market. I hope that, through this initial project, we will be able to learn many lessons. But the main point of Dr Khor's concern here is not so much how much the developer is going to bid, but really how to make sure that HDB flats remain affordable. I think that is really the nub of the issue. Here I must say that it is not the intention of the DBSS to raise the price of HDB flats. Certainly, it is not in the Government's interest to do so. We want HDB flats to be affordable and, in the case of the DBSS, this objective remains paramount. But at the same time, we also want to inject that flexibility into the market to try and see whether the private sector can actually add value to the whole process of the provision of public housing. HDB has been at it for 40 years, and it has done a marvellous job. But I think there is scope for us, in a limited way, to allow the private sector to be involved in the provision of public housing. I do not see the DBSS scheme will be the overwhelming way for the HDB or the Government to sell HDB flats. There are three ways that we will continue to do so, even after DBSS. The first, of course, is for HDB itself to develop public housing, and this HDB will continue to do. Second, is the design-and-build method where HDB will remain the developer but will sub-contract or outsource the design and building of the flats to the private sector. The third way, of course, is DBSS. I foresee that the bulk of the public housing programme will still remain with HDB for the foreseeable future.”
“Mr Deputy Speaker, Sir, let me thank Dr Amy Khor and Mr Ahmad Khalis for their comments which are very relevant, and I hope to allay some of their concerns regarding the points that they have raised. First of all, Dr Amy Khor raised four concerns. Let me address each of them in turn. On the issue of land allocation and reserve price, as Dr Khor mentioned in her speech, it is true that the Government will be tendering out land for the DBSS. We will award the tender to the highest bidder, in the same way that we award land for other Government land sales programmes but, of course, subject to their meeting the reserve price. Regarding the question of what the reserve price will be, Dr Khor is an eminent valuer, and she has suggested that one way of arriving at a suitable reserve price is the residual value method. I am not a valuer, but I am sure that the Chief Valuer, whose duty it is to set the reserve price, will know what to do. But the point really is that the land allocation and the land price that is determined in this manner will be determined by the developers themselves. It will be determined by them doing their sums, looking at the prices of flats in the surrounding area, calculating their profit margin and their own particular situation, and then making a bid for it. It is a pilot project. As Dr Khor rightly mentioned, the developers are not very sure how this will work but, in the course of the discussions with them, HDB has tried to explain as much as possible what is the objective behind the scheme. Of course, it is the wish of the Government that as many developers as possible take part in this preliminary pilot project. So, the issue of the land price and the reserve price, these are things that will be determined by the Chief Valuer.”
“This will allow HDB to deal more effectively with offences under the Act. One such example is cash-back transactions, where the buyer, seller and housing agent may make false statements about the transacted price of the resale flat. Sir, I beg to move. Question proposed.”
“Under the current provisions, a Grant of Letters of Administration or Grant of Probate must be taken out within 12 months of the owner's death and, thereafter, HDB's consent for transmission or transfer must be sought within six months. However, there is no timeframe for administrators or executors to transfer or sell the flat after HDB's consent is obtained, which implies that they can remain as legal owners of the flat indefinitely. Clause 7 seeks to address this by requiring the transfer or sale of the flat to be completed within 12 months from the date of HDB's consent. If the transfer or sale is not completed on time, HDB can take action to have the flat vested in HDB. We will, of course, invoke this provision only as a last resort. Section 60 of the current Act states that it is an offence for anyone to make a false statement to HDB in relation to any purchase, mortgage, sale or transfer of a HDB property. Clause 8 repeals and re-enacts section 60 so as to expand the scope of the offence to include making false statements in relation to any other applications to HDB for its permission, consent, approval or licence under the Act or any subsidiary legislation. It will also make clear that the section covers any type of statements made, including those made electronically. The amendment is timely in view of the different types of applications which may be made to HDB and the wider usage of electronic applications today. Finally, clause 12 amends section 80 of the Act to expand HDB's investigative powers. Apart from requiring proof of identity from any person whom it believes to have committed an offence under the Act, the clause will also empower HDB to request for other types of evidence, call for the attendance of witnesses and inspect records.”
“Section 6 of the Act currently stipulates that the HDB shall consist of a Chairman, Deputy Chairman and between three and seven other members. Clause 2 seeks to increase the maximum Board size from the current nine persons to 12 persons, by allowing a maximum of 10 members instead of seven. This is to allow a wider range of expertise to be brought into the Board. With the expansion in the Board size, the quorum for Board meetings will be correspondingly increased from the current three members to four members, by way of clause 3. Clause 5 amends section 27A of the Act to allow HDB the flexibility to compound any offence under the Act instead of proceeding with prosecution in Court. Currently, section 27A only allows HDB to compound offences under rules made under section 27. At the same time, the maximum composition fine will be raised from $1,000 to one-half of the amount of the maximum prescribed for the offence, or $2,000, whichever is lower. This is in line with the Criminal Procedure Code and ensures that the fine will be commensurate with the offence committed. Clause 6 of the Bill amends section 51 to make it clear that, in addition to prohibiting the voluntary creation of trusts over an HDB flat, the Act also prohibits any person from becoming entitled to a HDB flat under a resulting trust or constructive trust. This will help to prevent a situation where a person who is ineligible to own an HDB flat may become entitled to own one, for example, by paying the purchase price of the flat on behalf of the owner. Section 52(2) of the Act sets out the guidelines for the transfer or sale of a flat, house or other building upon the death of the owner.”
“Special upgrading works Let me now turn to the provisions for special upgrading works stipulated under Part IVA of the Act. Sir, Part IVA lays down the guidelines for the implementation of special upgrading works and polling. Special upgrading works are defined as any works necessary or ancillary to installing lifts in a building, or other items of upgrading works for the convenience of residents which may be prescribed by the Minister. In the context of lift upgrading, works currently permitted under the Act are confined to the provision of new lifts or lift shafts to individual blocks. Provision of new lifts and lift shafts that are shared between blocks is not permitted, even if it is feasible and more cost-effective, for example, for blocks that are already connected, or can be connected, by link bridges. The proposed amendments in clauses 9 and 10 are therefore aimed at giving HDB greater flexibility in implementing the Lift Upgrading Programme, and making it clear that lift upgrading works need not be confined to works in a single building but may include works relating to more than one building. To facilitate the polling for such works, HDB will be given the flexibility to conduct the poll jointly across buildings and for the 75% majority required for a successful poll to be computed based on the total value in votes of the owners across the buildings. However, I would like to emphasise here that we will pursue such options only if it is more cost effective to do so. The cost cap of $30,000 per benefiting-unit will continue to apply to such blocks. Amendments to other sections Sir, I shall now move on to the other proposed amendments in the Bill.”
“Clause 4 of the Bill amends the current section 13 of the Housing and Development Act to expand HDB's functions and allow it to grant mortgage loans for the purchase of DBSS flats. Finally, clause 11 allows the Minister to make rules necessary for the implementation of the DBSS. An example would be to prescribe the format of the sales contract between the approved developer and the buyer. As provided for in the Bill, the approved developer will be exempt from the sale and purchase documents prescribed under the Housing Developers (Control and Licensing) Act, which apply to private properties. Let me now explain the amendments to other Acts that are necessary for the implementation of the DBSS. First, clause 13 makes related amendments to the CPF Act to allow buyers to use their CPF savings to finance the purchase of flats built under the DBSS. A charge on the flat will be created to secure repayment to the CPF of the amount used in the purchase of the flat. The Home Protection Insurance Scheme will also be extended to flats built and sold under the new Part IVB of the Housing and Development Act. In addition, clause 14 provides for related amendments to the Residential Property Act, to exempt flats built under the DBSS from the various provisions and restrictions under the Act, as is the case with HDB-developed flats today. This will allow Singapore PRs who are married or engaged to Singapore citizens to purchase these flats. Mr Speaker, Sir, I have briefed the House on the various legislative amendments required for the implementation of the DBSS. Once they take effect, HDB will be able to proceed to put the land parcel for the first pilot DBSS project up for tender. My Ministry will monitor the outcome of the pilot closely before proceeding further.”
“These include restrictions pertaining to the purchase and resale of flats, HDB's right to compulsorily acquire flats of lessees who infringe on the terms of the lease, and restrictions on the sale and mortgage of the flats. Clause 11 allows the various terms and conditions currently stated in Part IV to apply to flats built under the DBSS under Part IVB. This is to give HDB the necessary powers to regulate the sale, purchase and use of these flats and to administer their leases, so as to ensure that the public housing nature of DBSS flats is preserved. For example, HDB will need to be able to enforce the various conditions for resale and sub-letting, since public housing is intended primarily for owner occupation. At the same time, some flexibility may be given to modify the terms and conditions, where appropriate. This is essential as our intention is for HDB to experiment and modify the parameters of the DBSS, if necessary. Clause 11 also includes provisions to cater to the scenarios where a buyer dies or ceases to be eligible to purchase the DBSS flat before taking possession of it. These provisions are similar to those stipulated under the Executive Condominium Housing Scheme Act. In addition, just as the use of DBSS flats by lessees will be regulated by HDB, uses of unsold units by the developer will also need to be regulated. There is, therefore, a provision to allow the Minister to prescribe the allowed uses for such unsold units. As with new and resale HDB flats, buyers of DBSS flats can obtain mortgage financing from HDB, subject to them meeting the prevailing eligibility conditions for an HDB concessionary loan.”
“The bulk of the legal provisions related to the DBSS will be introduced as new provisions under the new Part IVB of the Housing and Development Act, which is outlined in clause 11 of the Bill. It allows the Minister to appoint approved developers to implement DBSS projects. It also sets out the functions and duties of an approved developer. These include developing public housing on the land parcels specified by the Minister and selling the flats in accordance with the provisions in the Act. Under the DBSS, private developers will bid for the site and pay the land premium before commencing development. The approved developer will hold the title to the land. As DBSS projects are public housing, upon their completion, HDB will take over the ownership of the common property and commercial properties, such as the shops or social communal facilities, and be the head lessor of the flats. This will, in turn, allow Town Councils to manage and maintain the common areas in the development. Clause 11 thus provides for the vesting of the land parcel in HDB upon issuance of the temporary occupation permit or the certificate of statutory completion for the development. Specifically, the parts that would be vested are the commercial properties, the common property, as well as the reversionary interest in the flats sold by the developer. HDB will indicate upfront the amount of consideration it will pay the approved developer for the properties to be vested, so that developers can take it into account when they submit their land bids. Currently, HDB flats are sold under Part IV of the Housing and Development Act and are subject to the terms and restrictions stated therein.”
“This new scheme will enable the private sector to play a bigger role in the public housing market. Our public housing programme will be more responsive to the needs and aspirations of Singaporeans. Market competition will also benefit HDB flat buyers by injecting fresh ideas into the design of public housing, giving them a wider choice of flats and, hopefully, better value for money. As the DBSS is a new scheme and different from how public housing has been implemented in the past, we will move cautiously at first. We will carry out some pilot projects, test the various features of the scheme, and gather feedback from the industry and from buyers to ensure that the objectives of the scheme are met. We will study the outcome of the pilot projects and make refinements and modifications to the DBSS scheme, if necessary. The DBSS is not the only way we will engage the private sector in the provision of public housing. Under the Design and Build (D&B) Scheme, HDB outsources the design and consultancy services of new HDB flats as well as the building works, as one package, to the private sector. This is a tried-and-tested method. HDB will continue to be the developer, and set prices, for the bulk of the new flat supply. HDB-developed flats, together with HDB resale prices, will set benchmark prices for DBSS flats, thus ensuring that they are affordable to flat buyers. Over the past year, HDB has met up with industry players and associations to get their feedback on the scheme. Based on their inputs, we have refined the details of the scheme and put in place a suitable legal framework for the implementation of the DBSS.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Objective Sir, the key objective of the Housing and Development (Amendment) Bill is to put in place the legislative framework for the new Design, Build and Sell Scheme (DBSS). Under this scheme, the private sector will step into HDB's shoes to build and sell HDB flats. The Bill will introduce a new Part IVB under the Housing and Development Act to give effect to this. The Bill also seeks to introduce other amendments to the Housing and Development Act. These include allowing special upgrading works, eg, lift upgrading, to be offered in relation to two or more buildings to link them together, expanding the composition of the HDB Board, and widening certain powers of the HDB to facilitate its operations. Let me now explain the various key provisions. Design, Build and Sell Scheme (DBSS) Sir, I announced in Parliament earlier this year that MND and HDB will be piloting a new Design, Build and Sell Scheme in the second half of the year. Under this scheme, the private sector will undertake the development of public housing. Upon building completion, the development will be vested in HDB. HDB will remain the lessor of the flats and administer their leases, while the Town Councils will manage and maintain the common areas. Under the DBSS, developers will bid for the land through open tender and the successful tenderer will have the flexibility to decide on the design of the flats, the flat mix and their pricing. This allows greater scope for market forces to work. So far, our public housing has been developed entirely by HDB. Most of them are designed by HDB's in-house architects. The DBSS represents a major shift in the way our public housing programme is implemented.”
“Currently, first-time buyers of an HDB flat can enjoy a CPF housing grant of $30,000 if they buy a flat from the resale market. If they buy a resale flat with their parents, or near to their parents' flat, ie, within the same town or within 2 km, they can qualify for a 2nd-tier grant of $40,000. The take-up rate for the 2nd-tier grant has been very encouraging in recent years. More than half the housing grant applicants have opted for the higher grant. This shows that the current grant of $40,000 already provides a strong financial incentive for married children to live with or near to their parents, for mutual care and support. MND's view is that there is no need at this point in time to further differentiate the CPF housing grant between married couples who live with their parents, and those who live near to them. APPENDICES”
“It is not just a matter of somebody walking in and say, "I want to buy a flat", and that is it. Consumer education is important, I agree. But it is something that has to be undertaken by many people and ultimately the individuals must take responsibility for that purchase. I do not think they can abdicate that responsibility. I would like to ask Dr Ng to respond to the other questions.”
“Sir, let me respond to the Member's question on the resale levy. Yes, these are the people who have been trapped in the high prices of HDB flats bought at the peak. They now want to downgrade. We have other options available for them which include buying a smaller resale flat in an area which is not so expensive. Another option is renting of flats from the market. Other options include moving in with their friends or relatives. On the HDB option that the Member is suggesting, ie, that we waive the resale levy for these people in difficulty, I think it is an example of a policy which is not sustainable in the long run. Because when the situation changes, and property prices start to go up, I think we are going to see a recurrence of the high demand as a result of people coming back for a second bite. I do not think we want to see that situation again, firstly, because it is not fair to those who are genuine first-timers, and secondly, it will strain our financial resources. So, the resale levy stays. We will continue to finetune it, if necessary, but the principle of having a resale levy must stay because there is a perfect rationale for it. On consumer education, it goes on all the time. This is something which I hope the Member can also help to do because she is in the business of helping people plan for their future. So financial planners, the media, the banks and HDB will continue to play that role. In fact, I have asked HDB, every time when their officers talk to people who are intending to buy a flat, to take them through the numbers, find out from them why they need the flat, what they are buying it for, can they afford it, what jobs they are doing, and so on. This is part and parcel of consumer education.”
“So, I repeat once again, we make all these changes for our longer term interest and not just to adjust to short term market situations.”
“My Minister of State has explained earlier that there are cases of people who downgrade and who either ask for and are given a rental flat in spite of the 30-month debarment, or who come back and ask for a second loan. We review those cases, recognising that the situation is such that these people are not able to buy a second flat. We have, in many instances, granted them waivers of the rules, and we have done so quite generously. Dr Wang asked whether it is 10%. I can tell him that it is more than 10% that we have actually acceded to after appeals from Members of Parliament. I believe there is nothing in the present set of rules which will encourage people to be less prudent. In fact, we will make sure that from the lender's side, we will continue to exercise all care to make sure that people do not over stretch themselves. I say this once again that while these changes are positive for the market, each individual should continue to exercise utmost care when they make purchases of private property. What are the rules meant for? The rules are really meant for us to make sure that we have a stable property market. We have to make sure that we have a property market that responds to market signals properly and smoothly and yet, at the same time, make sure that many of our policies are sustainable in the long run. Where we need to fine-tune our policies, we need to continue to make sure that they are relevant to the times. We need to make sure that they are sound because, in this way, we will continue to enjoy good and sustainable growth. And, at the same time, we continue to have an efficient property market that allows itself to adjust to the changes in the marketplace.”
“Sir, first of all, let me reiterate again the explanation I gave about the resale levy. If a person downgrades or upgrades and he buys a second flat which is a resale flat - in other words, it is bought in the open market and it is non-subsidised - then he need not pay a resale levy. The only reason why a person has to pay a resale levy is because he is coming back to the Government to take another subsidised flat. So long as you come back to buy a second subsidised flat, we have to impose a resale levy. Why? Because if we do not, then there will be many people who will be coming back and say, "Look, let me get another subsidised flat from HDB." In the early 90s, obviously, that distorted the market so much because there were so many people in the queue who already had a flat. They just came back and joined the queue because there was no cost to it. They could get another flat, why not? But with the imposition of the resale levy, that made people stop and think. "Do I really need to buy a second flat? Is it because my family has grown so that I need a bigger flat? Then I come back and get a second flat. Even though I pay the resale levy, it is still worth my while to do so." There is no penalty for those who actually downgrade to a resale flat. Yes, I accept the fact that there are many people who are in financial difficulties at the moment. Again, this is the result of the high prices and the free-wheeling days of the early 90s when many of our residents actually bought and sold many flats, and bought at very high prices in the expectation that the prices would only go up and not come down. Yes, we are seeing all these situations now where people are cash strapped.”
“Sir, we had to publicise the fact that we would be making a statement today and that it would be telecast. The reason for publicising the notice is to make sure that everybody has equal access to information. I do not want a situation where I make a statement in the House which has an impact on the market to be available only to a few privileged people. Of course, I do not expect Members in this House to take advantage of such a situation, including NMPs. But the point is that we had to give that notice after 5 o'clock yesterday, and I expect that there will be people who will speculate. They will take a chance and speculate as to whether the announcement will be this, that or the other. If they are wrong, they will be burnt. If they are right, I think they will make money. That is the working of the market. As to whether there is any leak, I am not able to say. Honestly, in our own establishment, I make sure that such sensitive matters are handled adequately. If Mr Chia has any evidence of any leak, I will be very happy to investigate.”
“Sir, that is one of the reasons why we have decided to keep this requirement for HDB property buyers to make use of their CPF money in the Ordinary Account before getting the HDB loan. It is part and parcel of our exercise to make sure that HDB buyers buy properties or flats in areas that they can afford and, as a result, take as small a loan as possible which they would have to service in future.”
“Sir, it may be a no-brainer to the Member but it is very hard for us to predict how the market is going to be in the next three to six months, which I would consider to be short-term, because it depends on many other factors. But, as I have said earlier, we think this is the right thing for us to do in today's situation and this is still relevant, even as the market moves in whichever direction in the future. Would it make it more difficult for new property buyers? Some of the measures will actually make it easier for them because the cash downpayment, for example, will be reduced. And if they qualify, they will be able to get a higher loan. To that extent, affordability would be increased. Yes, if the market does go up, and if prices move, of course, it would make it more expensive for the new property buyer. What will that do as a net result? It is very difficult for me to say. It depends on individual situations. But I can assure the Member that for HDB prices, we have always priced new HDB flats on the basis of affordability and we will continue to do so and monitor prices and make sure HDB new flats will be affordable to the target groups, in other words, those who are eligible for subsidised housing.”
“That is still the primary consideration. HDB, for one, will be instructed that credit assessment rules would still apply. The rules requiring individuals to make full use of their CPF, so that their loan will be low, will still be there. This move may tempt a person to get a larger flat, but if he is not able to afford that larger flat, that will not happen. But if he can afford, then it is for him to make that decision, to see whether he is over-investing or not. And there are many singles who can afford larger flats and we have actually relaxed the rules recently to allow singles to buy larger flats. That has enabled the singles to widen their housing options. Do we encourage upgrading as opposed to downgrading? As a philosophy, the Government has always facilitated people to upgrade. But again, upgrading within their means. I do not remember us having an upgrading grant. As far as subsidies are concerned, singles do enjoy some form of subsidy which is the housing grant. Two singles can combine together to buy a flat and it would almost be equal to the grant that we give to families. But we do not have an upgrading grant. We have a grant that we give to eligible singles, in the same way that we have a grant that we give to eligible families to buy their first flat. But we do not have another grant that says, "Ok, if you upgrade, I am going to give you some more money." No.”
“Mr Speaker, Sir, first of all, on the issue of whether these measures benefit the high income singles more than the low-income singles, to the extent that we are rationalising our rules, as part of the review, one of the anomalies concerns the use of CPF by singles to purchase properties. In the case of HDB, under the Joint Singles Scheme, they can, but in the case of private properties, they cannot. So CPF Board relooked at it and decided that this anomaly is not tenable and, therefore, they made the change. Does it benefit the high income more than the low income? I think the overall point to be made is this. Each person must make his own decision based on what he feels is the correct one, ie, he has to make a decision based on what he can afford and what he is able to obtain, in terms of loans, and the banks and HDB would have to make another decision based on whether such a person is able to afford the loan before it is going to disburse the loan. When the LTV is raised from 80% to 90%, it does not automatically mean that every single person who goes to HDB or to a bank would now be able to get a 90% loan. Credit assessment will still be in place. And if you are not working or if you do not have adequate income, if your expenses are high and your disposable income is low, for whatever reason, if you are not able to service that loan, you will not get that 90% loan. This move does not, in any way, shape or form, suggest that all the rules of financial prudence have been thrown away. No. But it does allow the banks and the HDB to grant that higher loan if that person is able to afford it. So there is no change in the philosophy that we are currently practising that each person should buy a flat or a property commensurate with his or her own means.”
“I think the Member may not have heard me when I said, maybe the umpteenth time, in this House that we have not actually taken a position on whether the market is going to go up and, if so, by how much. So, what is the likely take-up rate? I honestly do not know. How many jobs will it create? I think if the market does go up and it generates demand and if there is additional construction activity going on, yes, certainly the construction industry will benefit from it and I would be the first person to cheer that. I think the construction industry has gone through a very protracted period of poor performance, partly as a result of excesses in the industry itself, and partly also because the market has been hit by so many problems over the last six or seven years. So, if there is any upturn in the market and if there can be new jobs created for the construction industry and gives it a boost, then I certainly welcome it.”
“So, there is a theoretical link between the two in so far as both of them respond to the same economic fundamentals, the economic situation, growth, etc. But, ultimately, it will depend on the supply and demand for the supply that is available in the market. In so far as competitiveness is concerned, yes, I have informed this House that the Government does monitor the property market closely and make sure that we remain competitive. To that extent, we have a long-term reservoir of land that allows us to provide not just for housing but also for development, factories and so on, and we release these lands at a pace which the market can absorb. So, we do ensure that there is a sufficient supply of land for residential, commercial and industrial developments through the GLS programme. But having said that, I think we also must realise that we cannot compete just on land price that is as cheap as what is available in our neighbouring countries, for example, with larger land masses. It is not for us to either boost or depress prices for whatever reason, because there would be implications on our economy. So, for the supply of land for commercial as well as for industrial purposes, we do monitor carefully and we do make sure that there is a sufficient and adequate supply, and we set policies to make sure that our property market is a stable one, and ensure that these policies are relevant, both through the ups as well as the downs of the cycle.”
“Thank you, Dr Wang, for informing the House that the market has gone up. I am very happy for those who are involved in the market. But, as I said earlier, this package of measures was never intended to move the market in any particular direction. The policy measures that we have announced today are derived from the policy reviews made by many different Government agencies and Ministries. They all have their own rationale and reason behind it. The CPF review policies, as I explained, are not just to free up on the one hand the use of CPF for housing, but also to make sure that at the same time there is retirement adequacy. The LTV changes by MAS, there is a rationale for them in their own right. But we put them all together in one package today because we want to present this holistic picture. Will the market for commercial properties go up? Indeed, if Members follow the market closely, you will realise that although there is a link theoretically between the two, the pace and the rate at which changes take place in different markets really depends ultimately on more fundamental issues like supply and demand. And so we see that, in the case of the commercial property market, when supply was very high, demand was low, the commercial property market was very weak. Vacancy rates were running very high in the Central Business District at a time when the other markets were not so weak, such as the retail market. Similarly, in the current situation or in the last few quarters, you would have noticed that the commercial property market has actually strengthened, but the private property market has not. Why? Because, fundamentally, there is still a large overhang in the private property market.”
“I believe we have actually relaxed this, so that the joint singles scheme is no longer limited to the 3-room flats. As for foreigners, yes, we have, because of the RPA changes, now allowed flats below six storeys to become unrestricted. But strata landed cluster housing will continue to remain restricted.”
“Mr Speaker, Sir, first of all, why do we not change the cash payment for HDB flats to 5% straightaway? Currently, they are paying 4%. It is scheduled to go up to 6% by 1st January 2006. This was part of the original plan when the goal was to go up to 10% by 2008. So, since the next stage is 1st January 2006, 6%, we have decided to stick to that timetable, but instead of making it 6%, we will cap it at 5%, same as for private property. As for resale levy review, as I have explained in this House many times, the purpose of the resale levy is not to tax the individual. It is really a mechanism to claw back some of the subsidy that the Government is handing out for the second flat. Our current policy is a straightforward one. We will make sure that every Singaporean who is eligible is entitled to one subsidised HDB flat. It is heavily subsidised. He is free to cash out anytime he wants and keep the proceeds. However, if after doing so he wants to purchase a second subsidised flat, which also comes with a heavy subsidy, that is where we impose a resale levy. It is a mechanism, as I have said, to make sure that the distribution of the levy is equitable across-the-board. If he decides to buy a resale flat at market value, he keeps it. He does not have to pay a resale levy. So, the resale levy is not automatic upon the sale of a HDB flat. I think some Members may have this misunderstanding. So, why do we have a resale levy? We need to make sure that we claw back some of the subsidy for the second flat and, as a result of that, allow us to provide flats for genuine first-timers rather than those who are going for their second flat. Purchase by two singles, why limit to 3-room flats?”
“Member that, in so far as the whole package is concerned, these are put together as one holistic package in order to give property buyers, investors and the market a total picture of what the various measures should be. Am I concerned about upsurge in prices which affect affordability? Whether there will be an upsurge in prices and to what extent, again, I am not in a position at this stage to predict. Again I stress, we do not intervene in the market to dampen or boost prices unnecessarily. But there are certain situations - and I think the hon. Member would know - for example, in 1996 when prices were running away, when the market was overheating and there was excessive speculation, the Government had to move in to dampen property prices. But that was an exceptional situation. As a general rule, we would not intervene in the market. But, if the situation calls for it, then of course we will not hesitate to reintroduce some of the anti-speculative measures. As to why are we doing away with the NRPS, perhaps I could ask my colleague, Dr Ng Eng Hen, to address this issue.”
“But this is not inconsistent with what has worked, what we have done and, also, not inconsistent with what institutions in other countries are doing. And of course, MAS, as I said in the Statement, will be requiring the banks to have additional capital for the additional loan and will look into the issue of mortgage insurance. On the market underperforming, again, I stress that the package contains a mix of measures which will be positive for the market and measures which will have a dampening effect. You could say that the raising of the LTV limit, the lowering of the cash downpayment, the relaxation of the restrictions on foreign purchases, all these would be positive. But there are other changes as well that will have a dampening effect, such as the restriction on the use of CPF for multiple property purchases, or the NRPS, or the transfer of MA overflows into the Special Account or Retirement Account, instead of to the Ordinary Account. So we do not intend for these measures to move the market in one direction or another, neither do we have a position on what the final outcome of the market would be. We will leave it to the market to adjust to these factors and to find its own level. Why not implement in phases? We have, at various times, implemented some of these measures for various purposes. We have decided that, since they are all property-related, we should present them in a package. The individual measures will be implemented as and when the consequential amendments to the legislation are made. Those that can be implemented immediately, of course, we have to, because these are market sensitive measures and we cannot wait. But let me assure the hon.”
“But the market depends on many other factors over and above these measures - the economic conditions, the supply and demand situation out there, the market sentiments, interest rates, people's own assessment of where they are heading as far as their jobs are concerned. So how all these will pan out will really depend on how individuals perceive their own situation. I have, in the Statement, also cautioned that individuals should continue to exercise prudence, to make sure that they make purchases that are consistent with their own situation. But, collectively, as a result of all these policy changes, and as a result of all the individual decisions that arise from these changes, the market will find its new equilibrium. Is it a reversal of the policy or philosophy of prudence that we have had? The answer is no. Even for those policies where there is a relaxation of some of the rules, like the LTV limit, the requirement for prudence is still there. Take, for example, the raising of the LTV limit from 80-90% for both bank and HDB loans. The banks and the HDB will continue to be required to exercise extreme care and prudence when they are assessing individual loans. They have to continue to impose credit assessment on their customers. They have to make sure that their customers are able to afford these loans, are able to afford the property and are able to repay the loans. In the case of HDB, over and above the credit assessment, buyers of HDB flats will be required to totally use up their CPF savings towards the purchase before they are able to get a HDB loan. So, again, I stress that these measures are not a relaxation of our philosophy of prudence. We still require our banks and institutions to exercise prudence.”
“Mr Speaker, Sir, first of all, let me thank Dr Khor for her remarks and support of the measures. She asked why now. As I explained in my Statement, these policy changes are as a result of several policy reviews made by different agencies. They all are property-related policies. They have been introduced at various times to meet long-term social as well as economic objectives. If I may cite the CPF policy changes, the CPF policy changes have been introduced to meet the overall long-term objective which is to increase the flexibility for use of CPF but, at the same time, ensuring that the retirement funds are adequate. The changes to the LTV limit and also the consequent lowering of the cash downpayment are also part of a broader review of the measures that were introduced earlier in 2002. The Residential Properties Act (RPA) changes are basically fine-tuning of some of the policies that are relating to the ownership of private and residential properties in Singapore. They are not meant to influence the property market one way or the other individually. But each of them would have some impact. They would have some influence on the market and that is the reason why the Government has decided that we will present this as one package, as a holistic package, to make sure that stakeholders, investors, buyers and property owners look at the whole picture and understand what are the various changes that we are making, and also, for us, as Government, to make sure that our policies are consistent with one another. We will let the market adjust to these changes. All else being equal, perhaps the current set of policy changes on that basis would be positive.”
“In addition, to allow foreign developers some flexibility to ride out unexpected changes in market conditions, the period allowed for completing developments is extended from the three to four years currently to six years. The Ministry of Law will release further information on these changes and their implementation dates separately. Conclusion Mr Speaker, Sir, let me reiterate that the policy changes proposed above are not intended to steer the property market in any direction. Some of the policy changes will have a positive effect on the property market, while others may have a dampening effect. The overall impact of these measures on the market may be positive or negative, but that is not the purpose of our review. Rather the changes should be seen in their totality as a package, a package that will enable the property market to work better, and that will enable it to find its own equilibrium based on firm economic fundamentals. Some changes are refinements of rules put in place in earlier reviews. Others are to remove provisions or controls that are no longer relevant, or to introduce new opportunities. Where necessary, we have put in place adequate, but not excessive, safeguards. We will continue to review our rules and policies from time to time, and to change them if conditions change or unexpected situations arise. But I believe that these new policies, which lay the foundation for us to achieve longer term objectives, will be relevant through the ups and downs of the property cycle. Mr Speaker, Sir, I will be pleased to answer any questions from Members, together with my colleagues from the relevant Ministries.”
“First, with immediate effect, foreigners can purchase apartments in non-condominium developments of less than six levels without the need to obtain prior approval. For landed properties, prior approval is still needed if they wish to buy. Landed properties is a special class of residential property that Singaporeans aspire to own, and therefore should remain restricted. The second change concerns the exemption granted to some foreign companies from applying for a Qualifying Certificate (QC) when they purchase residential land for development. Under the RPA, foreign companies are required to apply for a QC. To obtain the QC, they must provide a Banker's Guarantee for 50% of the purchase price of the land as well as commit to the completion of the development in three to four years. The purpose of these requirements is to ensure that foreign companies do not hoard land or do not buy land for speculation. Currently, a small group of foreign companies are exempted from these QC requirements. To level the playing field, the Government has decided to revoke the exemption status of currently-exempted foreign companies and subject all foreign companies to the QC requirements, with immediate effect. The existing land stock held by currently-exempted foreign companies will be given grandfather rights. The third change concerns the requirements attached to the grant of a QC. We recognise that the QC requirements impose costs on businesses. To lower these costs, the Government has decided to reduce the required Banker's Guarantee from 50% to 10% of the land price.”
“Allow investment in private residential properties to qualify for PR status under EDB's Global Investor Programme (GIP) Currently, under the Global Investor Programme (GIP) administered by the Economic Development Board (EDB), foreigners can be considered for Permanent Resident (PR) status if they invest a certain minimum sum in business set-ups and/or other investment vehicles such as venture capital funds, foundations or trusts that focus on economic development. Private residential properties, which had been allowed under the GIP, were removed from the list of allowable investment instruments under the scheme in 1996. The Government has now decided to re-allow investment in private residential properties. Under a new option to the current GIP, a foreigner can now be considered for PR status if he invests at least $2 million in business set-ups, other investment vehicles such as venture capital funds, foundations or trusts, and/or private residential properties. Up to 50% of the investment can be in private residential properties, subject to foreign ownership restrictions under the Residential Property Act (RPA). This additional option will complement our efforts to attract and anchor foreign talent in Singapore. This policy change will take immediate effect. Foreign ownership of residential properties under the RPA Under the Residential Property Act (RPA), foreigners can buy restricted properties in Singapore only with approval. Restricted properties are landed properties or apartments in non-condominium developments of less than six levels. The Government has reviewed the RPA rules and has decided to fine-tune the RPA rules in three aspects.”
“Members with inadequate Minimum Sum cash components will be allowed to use their CPF funds for the purchase of second and subsequent properties if they undertake to sell their existing property within six months from the purchase of the second property. For the second and subsequent properties, the amount of CPF savings that can be used for their purchase will be capped at 100% of the valuation limit of the property. This measure will take effect on 1st July 2006. Phase out the Non-Residential Properties Scheme (NRPS) The final change to CPF policies pertains to CPF Board's Non-Residential Properties Scheme (NRPS). Currently, the NRPS allows CPF members to invest their CPF savings in non-residential properties such as office space, shops, factories and warehouses. Since members who wish to invest their CPF savings in properties can now do so by investing in property funds, instead of physical properties, the Government has decided to phase out the NRPS by 1st July 2006. Existing NRPS users will be allowed to continue to use their CPF savings to pay their mortgage instalments for non-residential properties. CPF Board will release the details of the above six changes to CPF policies shortly. Foreign purchases and ownership of residential properties Sir, let me now turn to changes affecting foreign purchase and ownership of private residential properties and lands in Singapore.”
“Currently, Medisave Account (MA) contributions which are in excess of the Medisave Contribution Ceiling, or the so-called "MA overflows", are automatically transferred to CPF members' Ordinary Accounts (OA), and these funds can be used for property purchases and other investments. To improve retirement adequacy for CPF members, the Government has decided to transfer MA overflows into the Special Account (SA) for members aged below 55 and into the Retirement Account (RA) for members aged 55 and above, instead of to the Ordinary Account. The interest rate for the Special Account and the Retirement Account, as Members know, is higher than that for the OA. This will benefit members and better ensure adequate retirement savings for members. However, as the savings in the SA and RA cannot be used for property purchases, this could affect a small number of members who currently rely on their MA overflows to finance their mortgages in properties. CPF Board will allow existing mortgagors who have difficulty servicing their loans as a result of this measure to use their MA overflows to do so upon appeal, subject to conditions. This change will require the CPF Act to be amended and the effective date is set as 1st July 2006. Impose restrictions on the use of CPF savings for multiple property purchases The fifth CPF change concerns the use of CPF savings to purchase multiple properties. Currently, CPF members can use their CPF savings to purchase more than one property. To ensure that retirement needs are not compromised, the Government has decided that only the CPF savings in the OA in excess of the Minimum Sum cash component can be used for the purchase of second and subsequent properties.”
“To align the treatment of private residential properties with HDB flats, the Government has decided to allow non-related singles to use their CPF savings to jointly purchase private residential properties. This policy, which will take immediate effect, is expected to benefit singles who have been hitherto constrained by CPF regulations to share purchases of private residential properties. Simplify the Available Housing Withdrawal Limit (AHWL) The third change to CPF policies is to simplify the Available Housing Withdrawal Limit (AHWL). The AHWL limits the amount of CPF savings that CPF members can withdraw for housing purchases. Currently, for CPF members below the age of 55 years of age, the AHWL is set at either 80% of the gross CPF savings in the Ordinary Account and Special Account in excess of the prevailing Minimum Sum, or the available Ordinary Account balance after setting aside the Minimum Sum cash component, whichever is lower. However, the current AHWL is complex and difficult for members to understand. Therefore, the CPF Board has simplified the requirement to set the AHWL only to the available OA balance after setting aside the Minimum Sum cash component. This will raise the AHWL for a small number of CPF members. This policy change will take immediate effect. Government's plans to reduce the CPF withdrawal limit for housing expenditure to 120% of the property's valuation limit by 2008 will remain unchanged. Transfer Medisave Account (MA) overflows to Special Account (SA) or Retirement Account (RA) instead of to Ordinary Account (OA) Sir, the fourth change relates to Medisave Account overflows.”
“Central Provident Fund Policies Sir, I will next deal with Central Provident Fund policies. The CPF Board will streamline its policies to increase flexibility for the use of CPF savings to purchase property, while ensuring that adequate sums are put aside for retirement needs. Reduce Minimum Lease Period (MLP) for use of CPF savings The first policy change is to allow the use of CPF savings to purchase private residential properties with shorter leases. Currently, CPF members are allowed to use their CPF savings to purchase private residential properties only if these properties have remaining leases of at least 60 years. This is to ensure that the lease can last the average life expectancy of buyers. This policy intent is still valid, but older members can also meet this objective when they choose to buy properties with shorter leases. The Government has therefore decided to allow CPF members to use their CPF savings to purchase private residential properties with remaining leases of 30 to 60 years. CPF withdrawal limits for the purchase of such properties will be pegged to the age of the purchaser as well as the remaining lease of the property. CPF will provide further details shortly. This policy change will take immediate effect. Allow non-related members to jointly purchase private residential properties using CPF savings The second change pertains to the purchase of private residential properties by non-related members. Currently, CPF Board does not allow non-related CPF members to use their CPF savings to jointly purchase private residential properties. However, non-related singles have been allowed to use their CPF savings to jointly purchase HDB flats.”
“MAS will be studying its viability here and how best to regulate mortgage insurers. HDB will similarly raise the loan limit for its flat buyers from 80% to 90%. The actual loans to be granted will be subject to the banks' and HDB's credit assessment and mortgage financing policies. Limit minimum cash payment required for residential properties at 5% Sir, another revision to the housing loan rules in 2002 was the reduction of the cash payment for private residential properties to 10% of its value, down from 20% previously. The Government will now lower the cash payment for private residential properties from 10% to 5%. This means that a purchaser who is granted a 90% loan for his housing unit can pay his remaining 10% through a combination of at least 5% of the property value in cash, and the remaining with CPF. For HDB flats financed with bank loans, the payment to be paid in cash is currently 4% and it is slated to increase gradually to reach 10% by the year 2008. In line with the reduction in the cash payment for private residential properties to 5%, the Government will adjust the cash requirement for HDB flats financed with bank loans to 5%, instead of to 10% that was initially planned. The raising of the LTV limit will take immediate effect and will apply to all properties purchased from today. The 5% cash requirement for private properties will take immediate effect, while that for HDB will apply to flats purchased from 1st January 2006. These changes will give consumers a wider choice of financing options when purchasing a property. However, I urge property buyers to continue to exercise prudence in their home purchase and financing decisions, and to ensure that they can comfortably afford the expenses involved.”
“MAS introduced the 80% LTV limit for bank-originated housing loans in 1996, together with the Government's package of measures to cool the private property market. The 80% LTV limit was intended not only to counter the market overheating at that time, but also to ensure sound bank lending practices across property market cycles. The 20% payment by borrowers provided a buffer for banks in the event of a property downturn. This was particularly important as bank loans at that time ranked second behind borrowers' own CPF claims on mortgaged properties. In 2002, the priority of claims over properties was changed so that banks now held the first charge for the property ahead of CPF. It has been three years since, and the market has had sufficient time to adjust to this change. Currently, over two-thirds of banks' outstanding housing loans are secured by first claims over properties. MAS is now ready to increase the housing financing limit to 90% of the property value. The remaining 10% which the purchaser has to pay will continue to deter over-borrowing by purchasers and minimise potential losses by banks arising from borrower default. However, to mitigate the increased risk that banks will take, MAS will require banks to hold more capital against housing loans which exceed 80% of the property value. MAS will also expect banks to apply rigorous internal credit evaluation criteria before extending high LTV loans. In some countries, mortgage insurance is available to insure lenders against the risks of high LTV loans. MAS is prepared in-principle to consider mortgage insurance as an alternative to the capital charge to mitigate the risks of high LTV loans. However, mortgage insurance is not yet available in Singapore.”
“The review has covered three major areas, namely, first of all, caps on bank financing for residential properties; secondly, limits on the use of CPF for property purchases; and, thirdly, restrictions on foreign ownership of lands and properties. Let me stress that the purpose of the changes is neither to boost nor depress the property market. Rather, the review is to improve structural rules in the above areas to improve the functioning of the property market, and to better achieve broader economic and social objectives in today's context. Some of the measures introduced will have a positive effect on the property market, while others may have a dampening effect. The net effect will depend on many factors, many of which are beyond these measures. We believe that with prudent and realistic decisions, the market will find a new equilibrium that will be based on economic fundamentals. The Government Ministries and agencies involved in the review include the Ministries of Law, Manpower, Trade and Industry, and National Development, as well as the Central Provident Fund Board, Monetary Authority of Singapore, Economic Development Board, Singapore Land Authority, Housing and Development Board, and Urban Redevelopment Authority. I will now proceed to elaborate on the measures that will be put in place in the next few months. Details of these policy measures will be provided by the respective Government agencies separately. Mortgage and Financing Policies Raise LTV limit for housing loans from 80% to 90% Sir, let me first deal with our mortgage and financing policies. The first of these measures is the raising of the Loan-to-Value (LTV) limit for housing loans.”