Should HDB owners be allowed to profit off their flats?

[Arcachon]

As the government gather public's views on housing, Singaporeans re-ignited a controversial topic in the forum pages in the media: Is it right to allow HDB flat owners to keep their property if they have bought a private condo?

Forum writer Tan Suan Jin argued that those "who have moved on from public housing should make the units available for those who are still struggling to own their first HDB flat."

Although this is appropriate when there is a shortage of units in the resale market, there is no need for additional supply at present, given the current context of cooled resale flat sentiments, said R'ST Research Director Ong Kah Seng.

Another forum writer Liew Eng Leng contended that letting private property owners get rich from renting out their HDB flats could worsen inequality.

But it is pointed out this objection only pertains to subsidised flats acquired directly from the Housing Board, or resale flats purchased with government grants. This does not apply to resale flats bought without any subsidy.

The government also strictly ensures that subsidised flats are purchased by those who need them by imposing an income ceiling.

Forum users also asked if owners should relinquish their HDB flats if they surpass the income ceiling after they applied for the property.

The opinion is that when a family becomes well-off and exceeds the income ceiling after getting an HDB flat, they are not obligated to sell their property and buy a private condo so as not to make them think they are being penalised for growing their wealth.

Notably, the government allowed 46,637 HDB flats to lease out their premises in Q1 2014, while the proportion of HDB flat owners with private properties remained at around four percent in the past five years.

Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email [email protected]

[Arcachon]

Thursday, June 12, 2014

Let HDB landlords enjoy their rent
Jun 12, 2014

By Janice Heng

WHEN the owner of a Housing Board flat moves to private property, should he be allowed to keep - and profit off - his old flat? This question resurfaced in both the print and online Straits Times Forum pages last month, just as the Government was starting a series of conversations to gather Singaporeans' views on housing issues.

Some felt it was unfair to let well-off property owners use a public flat to get even richer.

This objection goes as far back as 1993, when letters to Chinese daily Lianhe Zaobao decried how private property owners were "profiteering" by renting out their HDB flats - a practice which was illegal then.

The debate gained new life in 2010 when policy changes created an apparent "double standard": HDB flat owners could keep their flat if they went private, but private property owners must sell their home to get an HDB flat.

This led to more objections in the Forum pages, even as the proportion of HDB households owning private properties stayed stable over the last five years, at about 4 per cent.

As of the first quarter of this year, there are 46,637 HDB flats which are approved for rental. Though some of these landlords might be bunking in with relatives, others are living in private property of their own.

Yet the Government itself was once against the idea of owning both a public flat and private property, let alone renting out flats.

For decades, HDB owners had to dispose of their flats if they wanted to buy private property.

This was the case until 1989. That year, those who had bought flats on the resale market were allowed to invest in private property, provided they still lived in their HDB flats.

Private property owners could also buy resale HDB units to live in.

Two years later, in 1991, those who had bought flats directly from the HDB were allowed to buy private properties after a certain period. But they had to keep living in their flat, since HDB flats were built for the purpose of home ownership, not investment, said then Minister of State for National Development Lim Hng Kiang.

Since there was this requirement in place, the move did not contradict the policy of ensuring home ownership via the HDB, he added.

But why let HDB owners keep their flats if they were rich enough to get private property?

One answer is that even if they were not allowed, those who wanted to would do so anyway, but in "a roundabout way", said Mr Lim. For instance, they would sell the flat to a relative, buy a private property, then buy the same flat back.

Since HDB flat owners would attempt to invest in private property anyway, the rule was meant to make it easier to do so, he said. Like the earlier relaxation for those who had bought resale flats, this move was meant to give HDB home owners more investment opportunities.

But throughout this period of changes, one rule remained: Anyone who owned an HDB flat had to live in it, even if he owned a private property.

In 2003, this policy of owner-occupation was relaxed. HDB owners who had lived in their flat for at least 15 years could sublet the entire unit.

Previously, subletting was allowed only under special circumstances, or for those aged at least 65 who had lived in three-room or smaller flats for at least 25 years.

The Government had changed its mindset regarding what an HDB flat should be, accepting that it could act as a source of income.

But in 2010, amid a shortage of public housing, the rules grew stricter. Private property owners had to sell their property if they bought a resale HDB flat.

Then National Development Minister Mah Bow Tan said this was to reinforce the principle of owner occupation, as well as to reduce competition that first-time buyers faced for resale flats.

[This is a very targeted policy. By requiring pte property owners to sell their properties, it took these buyers off the market (they won't sell their pte property unless they absolutely have to - i.e. downgrading).]

Should the Government go further, returning to the old days of making HDB owners dispose of their flat when they go private?

One argument in favour is that it would increase resale supply.

Forum writer Tan Suan Jin made this point last July, saying that those "who have moved on from public housing should make the units available for those who are still struggling to own their first HDB flat".

But this applies only when the resale market is short of supply. Since Mr Tan's letter, the market has cooled.

Says R'ST Research director Ong Kah Seng: "There is no need to inject more supply of resale flats... in the current context of cooled resale flat sentiments."

Second is the philosophical objection to letting owners profit from public flats meant for those who cannot afford to go private.

As Forum writer Liew Eng Leng argued last month, letting well-off owners use their flat to get richer "is akin to commercialising a public good", and could worsen inequality, he added.

However, if the issue is one of public good, then the objection applies only to subsidised flats bought directly from the HDB or, after 1994, resale flats bought with government grants.

Resale flats bought without grants enjoy no obvious subsidy.

Furthermore, the principle that subsidised flats should be only for those who need them is already enforced - at the point of purchase, when an income ceiling applies.

Then the next question arises: Should subsidised flats be reserved for the less well-off even after they are purchased?

Well, if a household gets richer and busts the income ceiling after buying an HDB flat, the owners are not required to sell their HDB flat and move to private property. Otherwise, flat owners would feel penalised for having become wealthy after their purchase.

In any case, there are good reasons to let HDB flat owners who move on to private property keep their flats.

They provide a steady supply of flats for the rental market. And some flat owners, such as retirees, need the rental income.

National Development Minister Khaw Boon Wan pointed out as much when talking about the purpose of last year's Our Singapore Conversation housing series.

Those angry that some families live in private property while renting out an HDB flat may come face to face with a retiree who relies on precisely that for income, noted Mr Khaw.

"So there will be people who say: 'Hey, it's not fair, right?' But the condominium owners will say: 'No, it's very fair, right?' So let's put them in the same room and let's hear them out," he said.

If anything, the fact that Singapore's system allows public housing to become a source of wealth is praiseworthy, says Mr Ong.

Many Asian cities face the problem of providing sufficient housing. In contrast, in Singapore, "flat owners are able to get more than a mere shelter".

The current rules strike a balance between the public and personal roles of the HDB flat: ensuring that they are bought as homes, but allowing them to mature into assets.

http://heresthenews.blogspot.fr/2014...heir-rent.html

[Arcachon]

Don't target source of retirement income
PUBLISHED ON MAY 6, 2013 1:49 AM 1 7 0 0
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SOME Forum writers have suggested that Housing Board flat owners be made to give up their units once they have bought private properties ("Differentiate between residential and investment properties" by Mr Adrian Tan, April 22; and "Clamp down on dual ownership" by Mr Liew Eng Leng; Forum Online, last Tuesday). Others have said owners should not be allowed to rent out their whole flat ("Tighten rules on HDB flat rentals" by Mr Peter Chen; Forum Online, March 22).

We must determine the root causes of the housing problem before implementing solutions that may bring about undesirable side effects.

A retiree who owns both an HDB flat and a private property is not necessarily a speculator.

Encouraged by the Government to do retirement planning, these people have saved up to afford private properties in addition to their HDB flats. The rent they receive from leasing out either their HDB flat or private property forms part of their retirement income or may go towards instalment payments.

Some people see investing in private property as a safer alternative to buying shares and bonds, or starting a business.

By all means, clamp down on speculators but do not penalise the retirees.

National Development Minister Khaw Boon Wan has already said that Build-To-Order pricing will be brought down to four times the annual median incomes of buyers ("The big housing review"; April 13). There should be a price correction in about two to three years' time when supply exceeds demand. We must be careful not to over-react and trigger a property market crash.

http://www.straitstimes.com/premium/...ncome-20130506

- See more at: http://www.straitstimes.com/premium/....AhGVjdyx.dpuf

[Arcachon]

THE Housing Board resale market continued to cool last month, with prices hitting a two-year low and fewer flats changing hands.

It was the fourth consecutive month of price drops, according to flash figures from the Singapore Real Estate Exchange (SRX).

Transactions had picked up in March and April, but could have been due to pent-up demand following the usually quiet festive season, with last month's fall seeing the market come "back to reality", said R'ST Research director Ong Kah Seng.

The HDB's combined launch of new and balance flats last month could also have diverted demand, said experts.

Resale prices fell 1.2 per cent from April to last month, reaching the lowest level since April 2012, according to SRX's price index.

The main reason for the fall remains the same, said analysts - the continued effects of loan curbs introduced in August.

The decline was across all HDB flat types, with executive flat prices falling the most, at 2.8 per cent. Three- and four-room flat prices dipped 0.8 per cent, while prices of five-room units fell 0.6 per cent.

Overall, prices have fallen 6.5 per cent since their peak in April last year, and 2.7 per cent since the start of this year.

According to SRX's median Transaction Over X-Value measure, the amount that buyers are underpaying for their flats remained stable at $4,000 below SRX's estimated market value.

Yet, buyers continue to hold back. Last month, 1,320 flats changed hands, down 11.1 per cent from the 1,484 deals in April. This was also 19.4 per cent fewer than a year ago.

One reason could be the 3,383 units in the sale of balance flats (SBF) exercise, with lower prices than resale flats', said OrangeTee head of research Christine Li.

For Mr H. H. Pang, 56, cool buyer sentiment is a worrying reality.

The freelance computer repairman is trying to sell his four-room flat in Ubi, so that he can move to Bedok to be closer to his daughter and mother.

"I am worried that I won't be able to dispose of this flat because buyers are waiting for prices to go down," he said.

With the weak resale market, those upgrading to private property may choose to rent them out instead, said Ms Li. This supply increase could keep a lid on rentals, she added.

[email protected]

- See more at: http://news.omy.sg/News/Local-News/s....ppcu1mxw.dpuf

http://news.omy.sg/News/Local-News/story20140606-268700

[Arcachon]

PRIVATE PROPERTY PURCHASE
HDB flat owners can't have cake and eat it
PUBLISHED ON JUN 14, 2014 1:16 AM 0 14 0 0
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THERE are four factors to be considered when discussing whether HDB flat owners who move to private property should be allowed to keep their old flats ("Let HDB landlords enjoy their rent"; Thursday).

First, one reason for banning private property owners from co-owning an HDB flat is the fear of driving up prices in the resale market that could become unaffordable for first-time home buyers.

Without the ban, affordability can be sustained only by channelling more public funds into building more new flats, rather than recycling the existing stock.

Second, residing in private property accords the owner the benefits of exclusivity, prestige and better facilities.

There is a price to be paid for these benefits, and not hoarding a public flat should be one of the costs.

The upgrader has already benefited from the first ownership of affordable housing in the form of an HDB flat that helped pave the way towards owning a private home.

The first-time home owner who goes straight into buying private property does not enjoy this benefit.

The argument that the rules penalise a flat owner for becoming wealthy is not convincing, as there is the option of not owning private property.

Third, there are already schemes allowing HDB owners to sublet their homes partially or in full.

A retiree can even rent out the whole flat after the mandatory five-year occupation period if he lives with his children.

It seems odd that a retiree would want to hoard an HDB flat to support his retirement when he could simply choose not to buy a private property.

Fourth, Singapore's rental market is heavily leveraged on foreigners' demand. Whenever the volume of foreign tenants declines, there will be many homes left unoccupied.

Unoccupied private homes are a poor investment. Unoccupied HDB flats point to public policy unwisely executed.

After all, HDB was founded on the basis of providing an affordable home, not providing an affordable investment.



- See more at: http://www.straitstimes.com/premium/....eR9ehucW.dpuf

[Arcachon]

Be fairer to both private property and HDB flat owners
PUBLISHED ON MAY 19, 2014 12:01 AM 9 16 0 0
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MR LIEW Eng Leng ("Implications of letting HDB flat owners buy private homes"; last Thursday) has misconstrued my letter ("Continue letting HDB flat owners buy private property"; May 9).

The minimum occupation period (MOP) restriction I proposed for private property owners buying an HDB flat applies only to the flat they bought, and not to the private property they already own.

It would be unjust if private property owners could buy an HDB flat today and immediately rent out the whole flat the next day.

Private property owners buying an HDB unit are depriving the resale market of a flat, skewing demand for flats in the process.

The Government needs to decide whether to allow all private property owners to buy flats, or only a select group based on their current home value or income.

For example, is it equitable to allow someone who owns a $30 million penthouse in Orchard Road to buy an HDB flat for investment, when he has a wealth of other investment options available?

As stated in my earlier letter, we can be fairer to both groups by imposing the same MOP restrictions on both parties, or no restrictions at all (that is, remove MOP for first-time HDB flat buyers).

http://www.straitstimes.com/premium/...wners-20140519

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[Arcachon]

Continue letting HDB flat owners buy private property
PUBLISHED ON MAY 9, 2014 1:16 AM 722 9 0 0
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I DISAGREE with Ms Chan Suan Yen ("Why condo units are shrinking"; Wednesday).

First, she said private developers of smaller condominium units are meeting the demand from buyers who cannot afford the quantum for larger units, because they are holding on to their HDB flats.

If we compare today's per square foot (psf) prices with past figures, we will realise that private developers are shrinking condo units to cap selling prices and to maximise profits.

Shrinking units affect not only existing HDB flat owners wishing to purchase a second property, but also first-time home buyers and investors. We should look into reducing the psf price so that private developers can go back to building larger units at the same price, instead of getting HDB flat owners to raise cash through selling their homes to pay even higher quanta to the developers.

Second, Ms Chan said it is unfair for an HDB flat owner to be allowed to buy private property without disposing of his HDB unit, when private property owners are banned from buying HDB flats.

The subsidy for a new HDB flat is not handed out frivolously and comes with a string attached in the form of the minimum occupation period (MOP) of five years.

If we assume that it takes three years to build a flat, a buyer would not be able to purchase a second property for eight years, after factoring in the MOP. The opportunity cost is indeed high.

Hence, we should not deprive HDB flat owners who have fulfilled the MOP of the opportunity to buy a second property when they are finally able to do so.

If we wish to allow an existing private property owner to buy an HDB flat, then we should subject him to the same MOP, whereby he cannot buy a third property, or sell/rent out his HDB flat during that period. Alternatively, we could remove the MOP for first-time HDB flat buyers. Only then will it be fair to both parties.



- See more at: http://www.straitstimes.com/premium/....uvELR9vl.dpuf

[Arcachon]

HDB flat – Private dwelling or cash cow?
Protected May 13th, 2014 | Author: Online Press
Private developers are only meeting the growing demand for smaller condominium units (“Condo units shrinking: Report”; April 28).


HDB flats in Singapore
I know of people who are holding on to their HDB flats and buying small private condo units either to rent out, or to live in while renting out their HDB units, hence turning the subsidised flats into “long-term cash cows”.

As they are not selling their flats, they cannot pay a large quantum for the condo units, which leads to growing demand for “downsized” apartments.

Letting HDB flat owners rent out their units for profit, when they can afford private property, goes against the HDB’s mission of providing affordable homes for the masses.

A subsidised flat that is being used to generate long-term profits is not really a home.

The HDB should relook its policies in this regard.

A flat owner who buys private property should be subjected to an income assessment.

If his income is above a certain cap set by the HDB, he should be made to sell his flat on the open market within a certain period of taking possession of the private property.

When owners have to dispose of their HDB flats upon upgrading to private property, they will have more cash and Central Provident Fund savings to purchase larger condo units, which in turn encourages developers to build them.

Another way would be to limit the timeframe that an HDB flat can be rented out, if the owner has a private property under his name and does not have a valid reason, such as being stationed overseas, for renting out the unit.

Current rules forbid a private property owner from purchasing even a resale HDB flat. The same rule should apply to HDB flat owners looking to buy private property.

This is a loophole many are exploiting, resulting in fewer resale HDB flats on the market. This deprives people who genuinely need public housing from owning such units, and encourages developers to build smaller condo units for HDB flat owners who want the best of both worlds.

http://www.tremeritus.com/2014/05/13...g-or-cash-cow/

[Arcachon]

How to qualify to buy a HDB unit.

Flats sold by HDB are subsidised and meant for Singapore Citizens who meet the following:

Eligibility Conditions
1. Citizenship
2. Age
3. Family Nucleus
4. Income Ceiling
5. Ownership/Interest in Property in Singapore or Overseas other than HDB flats
Owners/Ex-owners of HDB flats/DBSS flats/EC units.

Then have to go BTO, wait for 3 year (BTO to build) stay for 5 year (MOP) than can buy private.

It take an average of 8 years for HDB owner to buy Private.

Why the noise?

The Have and the Have Not.

1. BTO cannot get after numerous try or too choosy.
2. Government did not build enough for the demand. (solved after 2011 election).
3. Salary too high cannot buy BTO. (Poor planning)
4. Private owner just found out they can buy HDB and HDB have just change the rule and now private owner cannot buy.
etc.

Things like,

1.Should HDB owners be allowed to profit off their flats?"who have moved on from public housing should make the units available for those who are still struggling to own their first HDB flat." by Tan Suan Jin.
2. letting private property owners get rich from renting out their HDB flats could worsen inequality. by Liew Eng Leng
3. "Why condo units are shrinking", she said private developers of smaller condominium units are meeting the demand from buyers who cannot afford the quantum for larger units, because they are holding on to their HDB flats. by Ms Chan Suan Yen.
4. I know of people who are holding on to their HDB flats and buying small private condo units either to rent out, or to live in while renting out their HDB units, hence turning the subsidised flats into “long-term cash cows”.by Ms Chan Suan Yen.
etc.

They are the Have Not.

[Cupcakes]

Should solve cpf issue first. Not all Singaporean own hdb and private but everyone have cpf

[Allthepies]

Should solve cpf issue first. Not all Singaporean own hdb and private but everyone have cpf

Stop CPF altogether... those retirees with children will leave to their children to take care of all their needs... those retirees without children will depend solely on themselves ...

the country should not and cannot afford to look after the retirees

These will encourages citizens 1) to have more children as their retirement planning 2) to be disciplined with their spendings 3) to be happier, no more CPF

[Wolverine23]

if HDB owners can buy private and keep the flat, then it should be fair for private owner to buy 1 HDB as well.

Fair and square. Then no one will complain.

[Arcachon]

Long Long time ago, there was an island with 3 million people.

The government tell the people to save a part of their money for retirement.

Everyone was happy because when they retired they have money.

One day in a far away land, the people start to print money like no tomorrow.

The island Government was told to also print money.

But they forget to tell the 3 million people to do something to their money they saved.

A time past, people start to realise the money they save can buy less and less things they want and they are very sad.

[Arcachon]

if HDB owners can buy private and keep the flat, then it should be fair for private owner to buy 1 HDB as well.

Fair and square. Then no one will complain.

It got nothing to do with Private buy HDB, HDB buy private it all about money printing in a far away land and the money in CPF is deprecating at a rate which make a lot of people very sad.

My Father retire at age 55 years old was able to buy a 3 room HDB for SGD 25,000 for his mother to stay using cash from his CPF, fast forward to now I can't afford to buy a 3 room HDB for SGD 300,000 for him to stay.

[minority]

Long Long time ago, there was an island with 3 million people.

The government tell the people to save a part of their money for retirement.

Everyone was happy because when they retired they have money.

One day in a far away land, the people start to print money like no tomorrow.

The island Government was told to also print money.

But they forget to tell the 3 million people to do something to their money they saved.

A time past, people start to realise the money they save can buy less and less things they want and they are very sad.

unfortunately the smart ones when to invest. its the less savvy that are suffering.

[invigorated]

if HDB owners can buy private and keep the flat, then it should be fair for private owner to buy 1 HDB as well.

Fair and square. Then no one will complain.

As arcachon has rightly pointed out, it takes about 8 years from time of booking to completing 5 years MOP for hdb owners to buy another private. It is likely that if the owner had chosen to buy private then if he could afford one instead of a hdb, his gains may even supersede that of hdb.

Private owners can also get both hdb and private. They just have to ho a big round of selling their condo, wait till they qualify for hdb, get it, complete mop then get the private. Would one risk the possibility of rising prices?