Special CPF Housing Grant for low-income families

The Singapore government has announced more help for low-income families own their first flat.

From Thursday, families earning up to S$2,250 a month can now look forward to a Special CPF Housing Grants (SHG). The SHG was first announced by Finance Minister Tharman Shanmugaratnam in his Budget speech.

Those with household incomes of up to S$1,500 dollars will get the maximum S$20,000 in SHG.

National Development Minister Mah Bow Tan told Parliament that the new SHG announced on Thursday is over and above the regular housing subsidy and the Additional Housing Grant (AHG).

To encourage financial prudence, families whose monthly household incomes do not exceed S$1,500 can only buy a 2-room standard flat in the non-mature estates from the HDB.

Together with the AHG, these families will enjoy a total CPF housing grant amount of S$60,000. This is on top of the price subsidy that already comes with the new 2-room flat.

Mr Mah said the SHG will make owning an HDB flat within reach of more low-income families by reducing the housing loan that they will need to take.

One possible beneficiary will be 37-year-old Saribanon Senin, who has lived in a one-room rental flat in Bukit Merah with her husband Rosli Nodin for the past 15 years.

A housewife with two children aged four and 12, Madam Saribanon depends on her husband’s take-home pay of about S$1,000.

The family applied for a 3-room Build-To-Order (BTO) flat in 2008, but eventually pulled out as Mr Rosli’s CPF was not enough to pay for the house.

“We had to top up cash for about S$300 (per month). So I told my husband it’s not convenient for us to buy. Because S$300 is a lot of money for us and will affect our household income,” said Madam Saribanon.

With the new grant, owning a home becomes a greater possibility for the family.

A 2-room BTO flat costs about S$100,000. The family qualifies for a S$40,000 subsidy under the Additional Housing Grant scheme and with the new Special Housing Grant, the family will receive another S$20,000.

This means the family only needs to take a S$40,000 loan.

With monthly instalments at S$181, Mr Rosli’s CPF contribution of S$186 can cover the housing loan with no additional cash outlay.

Madam Saribanon said the S$110 they save from paying rent can be put to other uses.

“We can use the money for our household income, or to save for the children to go to school. It’s quite a lot for me.”

Madam Saribanon added that her family will start looking for a BTO flat soon.

MND said about one in four citizen households can potentially benefit from SHG. In addition, it is estimated that about 700 tenants currently renting flats under the Public Rental Scheme could also benefit from the SHG.

The SHG will give these rental tenants who are first-timers the opportunity to become home owners.

Some 3,500 households are expected to benefit from the SHG each year.

To qualify for the SHG, one of the flat buyers must have worked continuously for at least one year when they apply to buy the flat.

The average monthly income of the household over the one-year period will be used to determine the amount of grant the household will receive.

The SHG will also be extended to those who apply to buy 2-room and 3-room standard flats in the ongoing BTO exercise offering new flats in Sengkang and Bukit Panjang.

Applicants who have already applied for a flat under this BTO exercise will be allowed to change their choice of flat type without having to pay a fresh administrative fee.

As for households in need of a rental flat, the average waiting time has been reduced from 21 months in 2008, to just eight months this year.

Mr Mah said HDB expects the waiting time to decline further with more rental flats coming on-stream next year.

Source : Channel NewsAsia – 3 Mar 2011

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