GPC suggests bigger grants for 3- and 4-room BTO flats

A bigger grant for Singaporeans hoping to buy three- and four-room flats from the Housing and Development Board (HDB).

That’s one of the calls from the Government Parliamentary Committee (GPC) for National Development.

It says a bigger grant will make public housing more affordable and bring down homebuyers’ monthly mortgage and years spent servicing a loan.

24-year-old Kelvin Goh and his wife have just bought a four-room Build-To-Order flat in Yishun.

They received about S$20,000 in grants and expect their monthly payments (including CPF payments) to add up to 30 per cent of their income.

To ease the monthly burden, the GPC for National Development suggests bigger grants be given for three- and four-room flats.

This would help reduce the portion of income used to service a loan to a more comfortable level of below 25 per cent and shorten the loan repayment period.

The current cap is 30 per cent for bank loans, and 35 per cent for HDB loans.

Er Dr Lee Bee Wah, chairman of GPC for National Development, said: “Some of them use more than 25 per cent of their salary to pay the housing loan. If they use more of their salary to pay the housing loan, they will have less for other things like education and their living expenses.

“So if we can cap it at not more than 25 per cent, by giving them more housing grant, it will be of great help. Hopefully it can also cap the repayment period to not more than 25 years, because there are residents who worry about (whether) we are moving towards (the same situation as in) Japan or not (where) you need more than one generation to pay off the loan.”

About 80 per cent of home buyers in 2012 serviced loans entirely through their CPF, without having to top up with cash.

Some analysts say that if the government were to increase grants for three- or four-room flats, it will be a welcomed move. But they stress some criteria will need to be set to ensure that home buyers do not spend beyond their means.

Mr Ku Swee Yong, CEO of International Property Advisor, said: “On the monthly repayment issue, we must make sure that those numbers (are) very conservatively calculated (so as to avoid the situation where) instead of giving them additional grant to buy four-room flat, they actually take the additional grant to overstretch themselves and buy a five-room flat, subsequently getting themselves into a financial knot again.”

The GPC also hopes that more help can be given to divorcees, such as giving them the same priority as first-timers.

HDB flat buyer Sharon Tan said: “I had so many challenges when I had to apply for a flat…I tried balloting and I failed almost like five times. So I think as a divorcee, especially when we have children, we really need to be treated with priorities.

“And we really will appreciate it if we can be treated as almost like a first-timer, because I think divorce is not something that anyone wants. We have to sell off the matrimonial asset and after that we’re left on our own.”

The committee also hopes that residents who have difficulty paying their resale levy will be allowed to pay by instalments.

Source : Channel NewsAsia – 14 Aug 2013

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