Thursday, May 12, 2011

HDB flats

As the high cost of HDB flats has been a hot potato in the Singapore General Elections 2011, I will be writing some info about this category for the benefit of those taking the REA and RES examinations.

HISTORY (from the HDB Gallery at HDB Hub in Toa Payoh)

1960 Formation of HDB - builds HDB flats (public housing)
1964 Home Ownership For the People Scheme

1965 Toa Payoh Town is the first HDB development built. Known as the Chicago (gangsters were many there) of Singapore

1967 Land Acquisition Act to acquire land for public housing and infrastructure development

1968 CPF Act. Allows CPF savings to be used to buy HDB flat
1971 Resale of HDB Flats - allows HDB flats to be sold on the open market
(Only the CPF ordinary account is allowed to be used to pay for mortgage. CPF Special Account can be used if the Minimum Sum Scheme - MSS ? - is already inside the Special Account (as much as over $100,000)at the age of 55 when the person withdraws his CPF. To complicate calculations only 50% of the difference between the Excess over MSS and the MSS can be used to pay the mortgage if the 120% Valuation Limit is exceeded.....Another formula to be studied is needed!

1982 Multi-tier Family Scheme - priority for extended families to buy new HDB flat so that they can live nearby

1985 "Two bites of Cherry Concept". Singapore Citizens are allowed to buy 2 subsidized flats which they can resell in the opoen market. (In practice, they get two concessionary housing loans from the HDB. Subsidized flats are said to be 10-30% cheaper than resale flats)

1988 Town Council Act - manages and maintain public housing estates

1989 Ethic Integration Policy - EIP - prevents the formation of ethnic enclaves by ensuring a good racial mix in the HDB estates. (With effect from Mar 5, 2010, the NMPR (Non-Malaysian Permanent Resident) ethnic group is introduced as follows: Ethnic Proportion in the neighourhood is 5% subject to "above quota" and 8% in each block subject to "above quota" as elaborated below:

The Ethnic Proportion in HDB Estates are as follows:
Ethnic Group Neighbourhood Each block
Chinese 84% 87%
Malay 22% 25%
Indian & Others 12% 15%
NMPR 5% subject to 8% subject to
above quota above quota
1991 Design & Build Scheme - DBS - Allows private architects to design public housing

1992 Main Upgrading Programe - MUP - To improve the living conditons of residents in older estates and to make them on par with the new towns

1994 CPF Housing Grant Scheme - $30,000 to families buying resale flats (NOT new HDB flats) within a 2-km radius of their parents' or married children's home. (According to my REA lecture notes, the Family Grant is $30,000. The Family Grant to stay near parents is $40,000.

1995 Executive Condominium Housing Scheme - young professional couples who cannot afford the high prices of private homes. An income ceiling cap of up to $10,000. (Apparently it is $12,000 if they stay near parents). MOP 5 years. Can sell on to those eligible when MOP is 5-10 years and after 10 years, can sell on the open market. Has condo facilities. Any management corporation? I need to check on this.

Selective Enbloc Redevelopment Scheme - SERS - optimise land use by redeveloping old estates without diluting strong community ties. (Much details of the MOP 5 to 7 years etc to be memorised by the student for the exam!)

1996 Estate Renewal Strategy - ERS - systematically re-develop older estates & improving the living environment for residents

1997 Studio Apartments with elderly-friendly features as another housing option for the elderly. (Right-sizing replaces down-sizing as a term to be studied by the students!)

2000 40th Anniversary. 88% of the population live in public housing

Special Housing Assistance Program - SHAP - assist low-income household to own their homes

2001 Lift Upgrading Program - LUP - to provide lift access to every floor level in the HDB block. (In the old days, the HDB built some levels without access to lifts. You got to walk up or down two levels to get to the lifts. This is tough for the old folks.)

Build To Order Program - BTO - to match supply of HDB flats to actual demand

Rental Flat Upgrading Projects - improve the living environment for tenants

2006 Additional Housing Grant - AHG - to help the lower income to buy 2- to 3-room HDB flats

2009 Lease Buyback Scheme - LBS - low-income elderly Singaporeans who live in 3-room or smaller flats can opt to sell the tail end of the lease back to the HDB, leaving a shorter 30-year-lease for themselves. The sales proceeds will be used to buy a CPF Annuity that yields a monthly payout for life.

(Many RES and REA students will not understand what "tail end" means. The LBS starts when the person is 62 years old. As an example, at 62 years old, his remaining lease is 40 years. He keeps the last 30 years of the lease so that he can live in his own HDB flat. The difference is 10 years of lease to be sold to the HDB (40-30). This 10 years is the "tail end" of the lease.

HDB then uses the sales proceeds to purchase the CPF Annuity for him. The Annuity then pays him a monthly income till he dies. In addition, the Government gives him $5,000 cash upfront and another $5,000 to pay for the CPF Annuity too. I hope students of RES and REA can understand now.

In this example, the 62-year old would have to live to 102 years old (62+10+30) and will get a monthly income up to 102 years old!

2010 50th Anniversary

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The above info is from the HDB Gallery.

Feb 18, 2011 Low-income Special Housing Grant - SHG - is paid to lower-income families that have an average household income of up to $2,500 to help them to buy 2- to 3-room HDB BTO flats. This is in addition to the AHG and the Family Grant of $30,000 and Family Grant to stay near parents of $40,000.


The Design, Build & Sell Scheme - DBSS - to permit private developers to build the flats for sale to those whose household income is capped at $10,000. The HDB owns the land and HDB and the Town Council will manage the DBSS flats after completion. No condo facilities.

There are so many facts and figures to remember. It will not be a surprise that the HDB officers can't remember each and every one of them! It will be tough to pass the REA exam if one cannot remember the various HDB schemes and eligibility!

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