Govt wants to curb home owners from cashing out early

http://www.straitstimes.com/PrimeNew...ry_511342.html

Apr 7, 2010

Govt wants to curb home owners from cashing out early


THE Government is concerned about home owners cashing out from their flats prematurely and is considering ways to discourage them from doing so, said National Development Minister Mah Bow Tan.

The review comes amid concerns over a growing number of home owners who sell their Housing Board (HDB) flats to pay off debts or buy luxury items - and then return to the HDB to seek help with housing.

Mr Mah told The Straits Times on Monday: 'There are many different options that we have to look at, one of which is to see how we can transfer some of the subsidy that is given when the flat is purchased, whether we transfer it into his CPF for retirement or medical expenses or to buy another flat...to make sure they don't take it out as cash and spend it away.'

But, he added, if the proceeds from selling the flat are used to buy another property, 'there will not be an issue'.

'We are not concerned if they are substituting one house for another, it's only when they use it for all sorts of (other) things,' he said.

Last month, Prime Minister Lee Hsien Loong expressed concern over the trend of people selling their flats for a quick profit with little regard for future housing.

Some of these people have turned to Members of Parliament for help. Others have turned to the HDB or to relatives, while some have set up homes on beaches, he noted.

More recently, home owners desperate for cash are reported to have pledged flats to moneylenders as collateral for loans. Mr Mah said these cases were 'cause for concern'.

'So that's why we need to step up our education efforts, to emphasise that the HDB flat is not only a roof over their heads, but also a long-term investment.

'It's not for short-term profit or speculation,' he said.

He added that this is part of HDB's 'life cycle approach to housing' - where it subsidises flats and helps young couples get on the property ladder.

The HDB also arranges upgrading and ensures that flats maintain their value, and finally helps people monetise their flat when they retire, he said.

'But this works only if people do not cash out of their flats prematurely. If they were to sell their flats halfway through and use the money for various things, whether to start a business or to pay debts or spend on luxury items, then the whole concept doesn't work any more,' he said.

The Government is worried that more people are doing that and not making other arrangements for housing, he said.

Housing analysts The Straits Times spoke to say it is premature to predict what form new policies, if any, will take to tackle this challenge.

Associate Professor Sing Tien Foo of the National University of Singapore's real estate department said some proportion of profits from the sale of HDB flats could be locked into Central Provident Fund accounts, just as the CPF Investment Scheme requires profits made from the investments to be returned.

'But in our current hot property market, where significant gains can be made, locking up such monies may not be a popular idea,' he said.

But he agrees that any such policy would ensure the safety of retirement funds for home owners.

'If home owners cannot withdraw home sale profits, their consumption of other goods will likely have to be deferred, especially if they do not plan to buy another property,' he said.

Mr Mah said the Government has not decided what actions to take, but is looking at different measures.

'We have to find a way to make sure that this message of long-term investment is emphasised,' he said.

JESSICA CHEAM

I've also posted this in the other thread on "Curbs against speculation hit HDB resale sentiment".

From the article above, it can be seen that our Government also believes in PROPERTISM.

PROPERTISM Rule No. 1 - Property prices always go up in the long term hence properties should only be bought and not sold.

Read what Mr. Mah Bow Tan said.

Quote:

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Originally Posted by mr funny

if the proceeds from selling the flat are used to buy another property, 'there will not be an issue'.

'We are not concerned if they are substituting one house for another, it's only when they use it for all sorts of (other) things,' he said.

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What the Government is essentially saying is that there is nothing worth buying other than PROPERTIES!

So the next time you are thinking of selling a property, ask yourself what (to quote Mr. Mah Bow Tan) all sorts of (other) things you need the money for?

All sorts of (other) things, e.g. cars, holidays, noodles and donating to charity (as suggested by some other members here previously) can be financed directly from income and there is actually no need to sell a property.

This exactly agrees with PROPERTISM Rule No. 1 that properties should only be bought and not sold - Unless en blocked then quickly buy a replacement property (which I have recently tweaked to "buy a replacement property even before the en bloc")