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Thread: Future owners of prime area BTOs to face 10-year minimum occupation period, subsidy r

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    Default Future owners of prime area BTOs to face 10-year minimum occupation period, subsidy r

    Future owners of prime area BTOs to face 10-year minimum occupation period, subsidy recovery rules
    • A new housing model has been introduced for public flats in prime areas to ensure they are accessible to Singaporeans
    • Owners of BTO flats in these areas will face a 10-year minimum occupation period, double that of typical projects
    • These flats will be priced with additional subsidies, but those who sell their BTO units will have to pay back HDB a percentage of the resale price
    • The resale buyer criteria for these units will be tighter than for typical resale units

    Cheryl Lin

    27 Oct 2021



    SINGAPORE: Buyers of future Build-to-Order (BTO) flats in prime locations will face a longer minimum occupation period (MOP) of 10 years, as part of a new model meant to keep housing in these locations accessible for Singaporeans, said the Housing & Development Board (HDB) on Wednesday (Oct 27).

    This 10-year MOP – which is how long owners must occupy their flats before being allowed to sell it on the open market – is double that of typical BTO projects.

    Under the model, these flats will also come with extra subsidies, but those who eventually sell their units will have to pay back HDB a percentage of the flat’s resale price.

    The measures come more than two years after it was first announced that thousands of homes would be built on the Greater Southern Waterfront, a prime location that called for a new housing model.

    Speaking at a media briefing, National Development Minister Desmond Lee said that if left entirely to private market forces, these prime locations would become expensive and exclusive, with housing that only the well-to-do can afford.

    “We see this happening in many cities around the world ... But we are determined not to let this happen in Singapore,” said Mr Lee.

    The new Prime Location Public Housing (PLH) model, comprising a slew of tightened rules, follows 10 months of public engagement.

    It will only apply to future projects – with the first to be launched at Rochor in the upcoming November BTO sales exercise.

    SUBSIDY CLAWBACKS

    As flats in these prime areas will “naturally command higher market values”, the units will be priced with additional subsidies, on top of those currently provided for all BTO flats.

    “This will keep flat prices affordable for a range of Singaporeans,” said HDB.

    But those who sell their flats later on will have to pay a percentage of the unit’s resale price to HDB, to allow authorities to “fairly recover the extent of the additional subsidies” initially given.

    Mr Lee said this will address concerns over extra subsidies leading to “excessive windfall gains” and whether it would be fair to BTO buyers in other parts of Singapore.

    “The subsidy recovery rate will reflect the extent of additional subsidies provided at launch and the same rate will apply regardless of when the flat is resold in the future”, said HDB in response to CNA’s queries.

    More details will be announced in the November BTO exercise, but Mr Lee added that the percentage may be adjusted for other projects in future, depending on market conditions and the subsidies needed.

    LOWER QUOTA FOR PRIORITY SCHEME

    To buy BTO units in prime areas, the eligibility criteria will be the same as that for buying BTOs elsewhere.

    But the quota for priority allocation under the Married Child Priority Scheme will be reduced.

    Currently, the scheme sets aside up to 30 per cent of BTO units for those who want to live with or near their parents or children in the area.

    Moving forward, quotas for PLH projects will be adjusted depending on their location.

    10-YEAR MINIMUM OCCUPATION PERIOD

    PLH flat owners will have to fulfil a 10-year MOP before they can sell their flats in the open market or invest in a private residential property.

    In addition, owners will not be able to rent out their whole flat at any point in time, even after the MOP is over. They will only be allowed to rent out spare bedrooms.

    These conditions will apply to both the person who buys the BTO unit from HDB, as well as all subsequent buyers on the resale market.



    “These policies will help to strengthen the owner-occupation intent of public housing and also seek to deter speculative demand and moderate resale prices,” said Mr Lee.

    He added that appeals by those who genuinely face extenuating circumstances will be reviewed on a case-by-case basis.

    TIGHTER RULES FOR BUYING RESALE FLATS

    On top of that, the resale of these flats will be restricted to only those who meet eligibility conditions to buy BTO flats.

    These conditions include meeting a household income ceiling, currently set at S$14,000, and being an eligible family nucleus, such as a married couple.



    “Without such restrictions, the resale prices of these homes in prime locations may rise beyond the reach of many Singaporeans over time.

    “So we will maintain the resale restrictions for at least half of the 99-year tenure of each prime location flat, before we consider whether to review them,” said Mr Lee.

    PRIME LOCATION

    The PLH model will apply to selected public housing projects in prime and central locations, such as the city centre and surrounding areas, including the Greater Southern Waterfront, said HDB.

    The first project to be launched under the PLH model will be at a site in Rochor.

    Located along Kelantan Road and Weld Road, it will feature 960 units of three-room and four-room flats, and 40 two-room rental flats which will be incorporated within the same blocks.

    In response to CNA’s queries, HDB said it plans to launch at least one PLH project a year, though the exact numbers and their proportion out of total new flat supply may differ year on year, depending on site availability, among other factors.



    “WILLING BUYER, WILLING SELLER”

    When asked about how authorities would prevent BTO buyers from bumping up their future selling price to factor in the subsidy recovery, HDB said the resale market functions on a “willing buyer, willing seller basis”, and sellers will need to have “realistic expectations”.

    In addition, extra features have been built into the model to moderate the pace of price increases, such as ringfencing the pool of eligible resale buyers, said HDB.

    “Sellers who attempt to price in the subsidy recovery in the selling price, in the hopes of maximizing gains, may find themselves with an even smaller pool of potential buyers.”

    It added that buyers of resale PLH flats will need to “price in the implications of the additional ownership conditions”, such as the extended MOP and restrictions on renting out the whole flat.

    “NOT CAST IN STONE”

    Mr Lee also stressed that like other policies, the PLH model “is not cast in stone”.

    “It is very new and we will continue to review the parameters over time, based on our experience from the projects that are launched along the way.

    “We will make adjustments where necessary to ensure that the model achieves our goals and remains relevant to the needs of Singaporeans.”

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    Default Re: Future owners of prime area BTOs to face 10-year minimum occupation period, subsi

    Subsidy clawback, 10-year MOP for new prime location HDB flats to keep them affordable, inclusive

    Michelle Ng

    27 Oct 2021



    SINGAPORE - Future Housing Board (HDB) flats built in prime, central locations will be subjected to a 10-year minimum occupation period (MOP) and additional subsidies will be clawed back by the Government upon their resale.

    These are among the key measures under a new prime location public housing (PLH) model, aimed at keeping prime HDB flats affordable and inclusive, announced by National Development Minister Desmond Lee on Tuesday (Oct 26).

    The first Build-to-Order (BTO) project under this model will be located in Rochor and launched next month.

    The pool of resale buyers of these prime HDB flats will also be limited to households who earn not more than $14,000 a month and at least one applicant must be a Singapore citizen.

    Under the PLH model, fewer flats may be set aside under HDB's Married Child Priority Scheme, which gives priority to applicants whose parents or children live in the same area.

    Currently, up to 30 per cent of new flats are set aside under this scheme for families buying a flat for the first time.

    At a media briefing on Tuesday, Mr Lee said the new model is to keep public housing in prime locations affordable, accessible and inclusive for Singaporeans, both at the initial purchase and at subsequent resales on the open market.

    The PLH model will apply only to future public housing in prime locations and not to existing flat owners.

    There will be at least one prime location public housing project launched each year, but the exact proportions will differ year on year, as it depends on site availability and the overall supply of flats across all towns, said Mr Lee.

    In order for HDB to launch these prime flats at affordable prices at the BTO stage, it has to provide additional subsidies on top of the those provided for all BTO flats, said Mr Lee.

    All subsidies are factored into flat prices when they are launched as BTO flats.

    "But the concern is whether this would lead to the lottery effect, excessive windfall gains and whether it would be fair to BTO buyers in other parts of Singapore, who would not get these additional subsidies," he said.

    A record number of HDB flats have changed hands for at least $1 million this year.

    In the first nine months of this year, there were 174 million-dollar HDB flats, compared with 82 for the whole of last year, which raised eyebrows and set off concerns about home affordability.

    They came on the back of a buoyant HDB resale market, in which resale flat prices also hit a record high in the third quarter of this year.

    To address these concerns, the Government will claw back additional subsidies provided to PLH flats.

    Flat owners will pay a percentage of the resale price to HDB when they resell their home on the open market for the first time, he said.

    This will apply only to those who bought the flat from HDB and not to subsequent resale transactions.

    The exact percentage will be announced at the launch of the Rochor BTO project next month, which is the first site under the PLH model, and may be adjusted for other projects in the future, he said.

    Other prime locations for public housing include the future Greater Southern Waterfront.

    However, buyers who want one of these flats on the resale market will have to meet the prevailing eligibility conditions for buying a flat directly from the HDB.

    These include having at least one applicant who is a Singapore citizen, meeting the household income ceiling of $14,000 and not holding a private property or sold any in the last 30 months.

    Singles above 35 years old will not be allowed to buy these PLH flats. This is in contrast to current rules that do not place limitations on singles above the age of 35 buying resale flats.

    "Without such restrictions, the resale prices of these homes in prime locations may rise beyond the reach of many Singaporeans over time," said Mr Lee.



    These conditions on the resale pool will also act as safeguards to prevent sellers from adding the subsidy recovery to their asking price in the hopes of trying to maximise gains, he added.

    “Buyers will be a circumscribed group of people who meet BTO eligibility requirements, so that means not anyone can buy. And buyers will also have to bear in mind the impositions on subsequent resale on him or her,” he said.

    “So that will ensure that the moderated market for the prime location public housing flats is functional.”

    To ensure buyers are genuinely buying the flat to live in, instead of hoping to flip it for a windfall, the MOP for prime location HDB flats will be extended to 10 years, up from the current five.

    Owners will also not be allowed to rent out their whole flat at any point in time, even after the MOP is over.

    These conditions will apply to all flat owners who purchase BTO and resale flats under the PLH model.

    The resale restrictions will be in place for at least half of the 99-year lease of each prime location HDB flat before the Government considers whether to review them, Mr Lee said.

    "These policies will help to strengthen the owner-occupation intent of public housing and also seek to deter speculative demand and moderate resale prices," he added.



    However, HDB housing grants will still be available for eligible buyers and the prevailing ethnic quota under HDB's Ethnic Integration Policy will apply.

    When asked what constitutes a prime location, Mr Lee said it refers to the city centre in central Singapore and the future Greater Southern Waterfront.

    Some of the HDB towns and estates immediately surrounding the city centre may qualify, depending on the attributes of the sites within those areas, he said.

    "I think let’s keep it tight for now to these central prime locations. Because there are constraints on the buyers of these homes and we have a clear social objective to achieve by injecting these flats in areas which, under today’s context, would normally be for private housing."

    Public rental flats will also be included at these sites where feasible, said Mr Lee.

    He added that the new PLH model, which comes after almost a year of public consultations, strives to balance the many considerations and trade-offs, while fulfilling the key social objectives of public housing.

    "As with all our policies, the new PLH model is not cast in stone. It is very new and we will continue to review the parameters over time, based on our experience from the projects that are launched along the way," he said.



    https://www.straitstimes.com/singapo...s-to-keep-them

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    Default Re: Future owners of prime area BTOs to face 10-year minimum occupation period, subsi

    Home seekers see benefits of 10-year MOP, limitations on resale buyers for new prime HDB flats

    Michelle Ng and Ng Keng Gene

    Oct 27, 2021

    SINGAPORE - The 10-year minimum occupation period (MOP) for new flats in prime, central locations is key to attracting those who genuinely want to live in the flats and are not looking to profit from reselling, say home seekers and flat owners.

    The longer MOP, up from the current five years, subsidy clawback and limitations on the pool of resale buyers are among the key measures under a new prime location public housing (PLH) model announced by the Government on Wednesday (Oct 27).

    Among those who plan to apply for a unit in the upcoming Rochor build-to-order (BTO) project, the first site to come under the PLH model, is logistics manager Jacob Phua, 40.

    He is more deterred by the pricing and waiting time for the flat than the various restrictions under the new model.

    "The restrictions are not an issue to us because we plan to stay for the long term if we get a unit. Whether it's five years or 10 years' MOP, we're unlikely to sell once we get used to the convenience of the location," said Mr Phua, who has lived in Yishun all his life and hopes to move to a more central location with his wife.

    "But looking at prices in previous BTO launches, I believe the Rochor prices may be more than $500,000, in which case, I may have to reconsider. There's also the completion date to consider; I'm not that young to wait for more than five years for a flat," he added.

    The PLH model, which comes after almost a year of public consultations, is aimed at keeping new HDB flats in prime, central locations affordable and inclusive.

    The pool of resale buyers of these flats will be limited to households which earn no more than $14,000 a month and with at least one Singaporean applicant.

    Video producer Maverick Chua, 24, said the "long lock-in period with no definite returns" would not suit those who see properties as an investment, such as himself.

    "Personally, the restrictions are too much for me, but I can see how it will still be attractive to someone who is looking for a place to live in and have no plans in upgrading or investing in property as the resale value will likely be controlled due to the various selling conditions," he said.

    Graphic artist Lim Qian Ting, 22, said she supports the new policy as it will deter those who are out to make a quick buck on the resale market.

    "Prices of newer HDB resale flats are just so ridiculously high now and it's so frustrating trying to get a BTO flat because of the high application rates," said Ms Lim, who has been unsuccessful twice in her BTO applications.

    "The future generations also need a home. It's not fair to us if property prices are constantly rising as it puts a lot of financial pressure on us."

    HDB resale prices have been on the rise in the past year, with overall prices hitting a record high in the third quarter of this year, according to HDB data.

    Finance trainee Charleston Lim, 26, was hopeful that the new model would curb the "lottery effect", which is a major point of discontent in the resale market where some first-time buyers earn a neat profit when sellingtheir well-located flats.

    "The BTO ballot should not be seen as a lottery for those hoping to make an investment, as such a mindset impacts those who genuinely need housing," he said.

    However, Mr Lim concurred that the measures may benefit people like him, as flat prices in the city fringes may rise. He recently got a BTO flat in Geylang.

    "Resale buyers who don't want to be restricted by the PLH model may look for 'second best' flats just outside the city, while new prime housing residents may be less inclined to sell with the subsidy clawback, potentially raising the prices in areas like Geylang," he said.

    "Disallowing rental of whole units in PLH projects will also bode well for me, as city-fringe rentals rates may increase."

    While most were supportive of the new model, there were concerns that some groups of people, such as singles, would be left out as they are not eligible to buy these flats both at the initial purchase and on resale.

    Singles are not allowed to buy these PLH flats, even after they turn 35 years old.



    This is in contrast to current rules that do not place limitations on singles 35 and above buying resale flats.

    A 44-year-old housewife, who wanted to be known only as Mrs Goh, said while the policy may be helpful to curb speculative buying, disallowing singles from buying puts them at a disadvantage.

    She said: "While the country's longstanding policy is to encourage a family nucleus, the society has changed with many more singles, including divorcees and unwed mothers, today. Optically, they appear to be second-class citizens and that's unhealthy for nation-building."


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    Default Re: Future owners of prime area BTOs to face 10-year minimum occupation period, subsi

    Tighter rules for future prime HDB flats will weigh on windfalls from them

    Expect government policies to continue to favour owner occupiers over investors

    Oct 28, 2021

    SINGAPORE'S public housing is the envy of many countries. Provision of good quality affordable public housing has helped the nation achieve a high level of home ownership, thereby giving Singaporeans a stake in the nation's prosperity.

    Public housing estates are racially integrated. Typically, they are well maintained, well served by public transport and boast an array of amenities catering to all ages. Periodically, the estates benefit from upgrading programmes.

    Still, public housing policies are not immune from refreshing. On Oct 27, 2021, the Ministry of National Development (MND) and the Housing Board (HDB) announced details of the prime location public housing (PLH) model to keep public housing in prime locations, such as the city centre and surrounding areas, including the Greater Southern Waterfront, affordable, accessible and inclusive for Singaporeans.

    Near-term, this new PLH model will not dampen the HDB resale market, where prices as at Q3 2021 are up 12.5 per cent year on year.

    Those who desire owning a HDB flat in a prime location and are worried about being able to afford such a unit will cheer the PLH model. Also, the prices of resale HDB flats in locations like the Greater Southern Waterfront will be kept affordable by limiting the pool of potential buyers and removing those with greater spending power.

    But no model can please everyone. Those who are ineligible to buy a prime flat in the resale market under the PLH model such as singles, Singaporean couples with a household income exceeding S$14,000 per month, and permanent resident households, may be unhappy that their choice of HDB flats in the resale market will be curtailed. Those who want to move from a private home to a resale HDB unit in the Greater Southern Waterfront will find it cumbersome to execute such a move.

    The new PLH model will not apply to existing HDB flats in prime locations such as Pinnacle@Duxton, where some flats have been sold for over a million dollars each in the resale market. Homeowners of Pinnacle@Duxton may be inadvertent winners as they will not need to compete with new PLH flats for certain groups of potential buyers and tenants.

    Also, some potential buyers of prime resale HDB flats may be driven to look for pricier private properties instead.

    However, in the longer term, the private home market could be adversely affected by the PLH model.

    In Singapore, demand for private homes is supported not just by job creation and household income growth but also by buyers upgrading from HDB flats.

    Profits made from selling HDB flats, especially if these are windfall gains from selling prime HDB flats, can be deployed to fund the purchase of a dream private abode. Such potential gains may be rather limited for future prime HDB flat owners and hence less liquidity will flow into the private home market.

    The first project to be launched under the PLH model will be at Rochor, with the offer for sale of 960 units of 3-room and 4-room flats in the build-to-order (BTO) sales exercise in November.

    As new flats in prime locations would naturally command higher market values, new PLH flats will be priced with additional subsidies, on top of the substantial subsidies already provided for BTO flats today. Flat owners of PLH flats will pay a percentage of the resale price of the flat to HDB, as a means to recover the additional subsidies.

    The minimum occupation period (MOP) of PLH flats will be extended to 10 years, compared with the current 5 years for other HDB flats. Even after the MOP period, owners of the PLH flats will not be allowed to rent out their whole flat.

    The resale of PLH flats will be ring fenced for buyers who meet the prevailing eligibility conditions for the purchase of flats directly from HDB.

    These include having at least one applicant who is a Singapore citizen, meeting the monthly household income ceiling of S$14,000 and not holding a private property or having sold any in the last 30 months.

    Singles above 35 years old will not be allowed to buy the PLH flats. This is in contrast to current rules that do not restrict singles above the age of 35 from buying resale HDB flats.

    Some of the conditions under the PLH model can be rather onerous. Having to hold a new prime flat that one bought from the HDB for at least 10 years is a fairly long time. A family's circumstances can change leading to some who may desire to sell their unit sooner than they had anticipated. For example, some may want to move overseas to pursue work or business opportunities, some may be facing financial difficulties, and some may want to move to be near a new school or work place.

    The PLH model was designed by MND and HDB after taking into account public feedback from more than 7,500 Singaporeans.

    The implications of the new PLH model may go beyond acting against powerful social and economic forces that drive stratification and segregation by making attractive areas expensive and exclusive locations, with housing that only the well-to-do can afford.

    Taken together with various measures such as the introduction of seller's stamp duty and additional buyer's stamp duty on residential property transactions in 2010 and 2011 respectively, policy changes are making homes less attractive as investment instruments. And the risk is that policy wise, amid the need to raise more taxes and strengthen inclusiveness, more measures may be unveiled that act against the interest of those seeking to invest in homes for recurring income and capital gains.

    Perhaps, policies will be refined to emphasise the HDB flat being a home rather than an investment.

    Could the clawing back of subsidies on the first resale of a PLH flat be laying a precedent of sorts for the government to get a cut of profit on other resale transactions in the public or private housing market?

    Living in Singapore, luck can determine if a child secures a spot in a popular primary school or if a couple gets a BTO flat of choice. For those who meet the eligibility criteria, luck may still be needed but the odds of securing a unit in Rochor or the Greater Southern Waterfront have improved.

    With the unveiling of the PLH model, the government continues to show that it can listen to feedback and act to help achieve key social objectives in the housing market. May we develop prime areas in Singapore as inclusive ones that are not out of bounds to the less well-off.

    Home prices here are supported by economic growth, low interest rates and political stability.

    Prices can rise in a sustainable manner when there is social cohesion but a government in pursuing social cohesion can hurt the investment returns of homeowners. Expect policies to continue on the path of favouring owner occupiers and being less hospitable to investors.

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