More help to buy first home

Source : AsiaOne - 6 Feb 2009

Lower income households looking to buy their first home will have more help starting February 6.

The minister for National Development announced in Parliament today the details of the enhanced Additional CPF Housing Grant Scheme.

The AHG is an additional subsidy over and above the regular market subsidy and CPF Housing Grant that new and resale flat buyers enjoy respectively. It offsets the purchase price of a new or resale HDB flat, thereby further reducing the loan a flat buyer needs to take.

The enhancements are:

• Increase in the income ceiling from $4,000 to $5,000. This will increase
  the coverage of the AHG from 50% to 60% of resident households.
• Increase in maximum grant quantum from $30,000 to $40,000.
• Reduction of the 2-year continuous employment condition to one year.

Average Monthly Household Income	Current Additional CPF Housing Grant Quanta	Enhanced Additional CPF Housing Grant Quanta
$1,500 or less	$30,000	$40,000
$1,501 - $2,000	$25,000	$35,000
$2,001 - $2,500	$20,000	$30,000
$2,501 - $3,000	$15,000	$25,000
$3,001 - $3,500	$10,000	$20,000
$3,501 - $4,000	$5,000	$15,000
$4,001 - $4,500	-	$10,000
$4,501 - $5,000	-	$ 5,000

An additional 2,700 first time homebuyers are expected to benefit from this scheme. For instance, a family with a monthly household income of $1,500 can comfortably own a new 2-room HDB flat priced at $90,0001. With the help of the maximum AHG quantum of $40,000, they only have a monthly mortgage instalment of about $200. This is about 13% of monthly income and can be serviced entirely from monthly CPF contributions.

Middle income families will also benefit from this scheme. a family with a monthly household income of $4,000 will get an AHG of $15,000, an increase of $10,000. They can also get a higher CPF Housing Grant of $40,000 if they stay near their parents. If they buy a resale 4-room flat at about $315,0002, they will only need to use 26% of their monthly income to service their loan. Only a small cash payment of about $121 is needed, with the rest from their monthly CPF contributions.

The grant, similar to the current scheme, will be used to service the capital payment of the flat. The amount will be reinstated to the recipient’s CPF account when the flat is sold.

This can be used to purchase new/DBSS flat, as well as resale flats on or after February 6, 2009.

HDB tightens rental flat eligibility criteria

Source : Channel NewsAsia - 6 Feb 2009

The Housing and Development Board (HDB) is tightening its rental flat eligibility criteria with immediate effect to ensure that these heavily subsidised flats go to the truly needy.

HDB rental flats come cheap. With rent rebates and discounts, 85 per cent of tenants pay very low rent, according to the National Development Ministry.

Taking into account the increased rebates under the Goods and Services Tax Offset Package, this is how much tenants will pay this year: one-roomers pay just S$240 or S$20 a month, while 2-roomers will pay S$540, which works out to S$45 a month.

These attractive rates have led to overcrowding in the public rental market, said National Development Minister Mah Bow Tan.

Over 300 new applicants join the queue every month, but only about 150 return their rented flats. There are currently 4,000 people in the rental flat queue, with an average waiting time of 17 months.

Two thirds of them used to own HDB flats, but have cashed out on their property and are coming back for a heavily subsidised rental flat.

Mr Mah said most do not seem to have financial difficulties when they sold their flats. They were not in arrears and they were not divorce cases. In fact, 40 per cent received more than S$90,000 in sales proceeds.

The minister said these applicants in the queue should not be competing with needy families for rental flats. To weed out these cases, the HDB will introduce new rules on top of existing ones, which hinge heavily on meeting the income ceiling of S$1,500 per month.

For those who have taken a housing subsidy, the board will now consider their income and assets, including CPF savings and proceeds from the previous flat sale. They will be excluded if they used to own a private property.

Family support will also be taken into account. Applicants will be excluded if their child owns a private property or has spare rooms in his flat to take the parents in.

Mr Mah said: “We must reinstate the public rental scheme to its rightful role as the final safety net and the final housing option of last resort for the needy. If everyone jumps onto the safety net, whether they deserve or they don’t, that safety net is going to break.”

For existing tenants, rents will be kept low. The HDB will maintain the 2005 market rent rate. The rent alignment exercise, where households who earn more will pay more rent, will also be deferred for a year.

The alignment was announced in November 2006. Tenants earning more than S$800 per month were earlier informed that their rents will be raised over two tenancy renewals or four years.

HDB will also increase the supply of rental flats by 20 per cent to 50,000 units by 2012. For this year, HDB will add another 1,450 rental flats through its rental flats building and conversion programme.