Sunday, March 28, 2010

Milking HDB flats ‘a very bad trend’

Of the many people turning to their MPs for help when they run into trouble paying for their flats, none is a first-time owner living in the home he bought straight from the Housing Board.

Instead, they tend to be people who have bought and sold HDB flats more than once in a bid to make a quick buck.

Prime Minister Lee Hsien Loong highlighted this point at a dialogue yesterday, as he expressed grave concerns over a trend of people trying to sell off their HDB flats to make money, with little regard for where they are going to live next.

Some turn to their MPs to appeal for cheap rental flats. Others turn to friends and relatives. Some even set up camp on the beach.

The beach communities, in particular, have been making the news of late.

During the Budget debate earlier this month, it was revealed in Parliament that many of the families living in tents on the beach had sold their homes and spent the cash. Some demanded rental flats from the Government.

The topic was raised at yesterday’s dialogue at the Grassroots Club by 51-year-old counsellor Tamilarisee Muthu. She said it was worrying to see that some people did not consider the flat a home, but rather as a means to make money.

Mr Lee similarly called it ‘a very bad trend’ and something that the Government was watching closely.

He recounted a meeting with such a person that left a deep impression on him.

A woman had gone to him seeking help buying a new flat. When he asked her why she wanted to buy a new flat, she replied in Chinese: ‘Because I have no money.’

He recalled: ‘Because she had no money, she sold her present flat and took the cash. So she wants a new flat (from the HDB), and a new loan from HDB…She will borrow to the limit all over again, and hopes to pay back some time in the future…It’s a disaster.’

The Prime Minister stressed that Housing Board flats are meant to be long-term assets for Singaporeans, not short-term cash cows.

‘When we help people to own a home, it is really for you for life. It’s an asset as well as a roof, and is meant to see you through into your old age,’ he said.

Flat owners who are elderly could choose to sell their flats and move in with their children, or go into a lease buyback arrangement with HDB to generate a stream of future income, he noted.

Those who are ‘not so old’, however, should think twice before selling. ‘What happens to you, or more importantly, your children – where do they go?’

The Government has recently taken steps to try and counter the very bad trend.

One is to reduce the amount of the loan granted by HDB, at concessionary interest rates, to second- time buyers.

HDB will now take into account how much money is in the owner’s Central Provident Fund (CPF) account, and the profit he made from selling the first flat.

Said Mr Lee: ‘I told the HDB, Make sure that when people sell the flat, you counsel them, tell them if you ever come back and want a loan again, this is all you’re going to be entitled to, please take note.

‘If you think you can’t afford the new home, then please don’t sell your flat.’

Moving forward, he said the Government will channel more of its housing aid via the CPF.

The Additional Housing Grant which lower-income families are already eligible for is an example. These families can get up to $40,000 to help buy a flat, but the money goes into their CPF accounts.

When they sell the flat, the money goes back into the CPF account – where it can help tide them through their old age.

Source: Sunday Times, 28 Mar 2010

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