Executive Condo Income Ceiling To Be Raised

SINGAPORE: The Housing and Development Board (HDB) is moving to bring studio apartments and two-room flats under a single scheme, as well as to raise the income ceiling for executive condo. National Development Minister Khaw Boon Wan announced on a Chinese radio talk show on MediaCorp’s Capital 95.8 FM on Tuesday evening (Jun 23). Upcoming executive condo launches include The Brownstone EC and Signature At Yishun EC while existing ones include The Terrace EC , Waterwoods EC and Skypark Residences.

The new scheme, called “2-room Flexi”, is currently in its research phase. Under this new scheme, seniors, singles or low-income families will be able to purchase two-room flats. Homebuyers will likely be able to choose from a flexible lease tenure, ranging from 30 to 99 years, said Mr Khaw. Details are expected in the next few weeks.

Currently, studio apartments have a 30-year lease and are meant for seniors above the age of 55. The scheme was started to help retirees monetise their existing larger flat, while keeping prices affordable by offering a shorter lease.

Two-room flats were introduced later on with a 99-year lease, and are for families or singles.

But Mr Khaw said he felt a need to consolidate both schemes as both studio apartments and two-room units are similar in size, whole accommodating the needs of various groups.

The unification of the schemes is expected to take place by the next BTO exercise in August, and will come with conditions.

“One example is: Should we allow a young couple to buy a 50-year lease because they think with a 50-year lease, the price will be (cheaper)? While the price may be cheaper for them, our worry is 50 years is too short for them, because if they are, for example, 30 years old or 25 years old, in 50 years, by the time the lease runs out they will be 75 years old,” said Mr Khaw.

“And the key is, even with a 99-year lease, because of the very heavy subsidy that we are granting to the first timer for a young couple, they can well afford it. It’s much better that they buy a 99-year lease and therefore if that is the outcome we desire then I think we have to make sure there are restrictions. Such people will not be allowed to buy homes with a lease shorter than 99 years,” he added.

HDB LOOKING INTO RAISING INCOME CEILING

HDB is also looking into raising the income ceiling for those hoping to buy new HDB flats and executive condominiums, according to Mr Khaw. Changes are likely to be made known in August as well.

The last time the income ceiling for Build-to-Order (BTO) flats was raised was in 2011, from S$8,000 to S$10,000. Likewise for executive condominiums, the income limit was raised in 2011 from S$10,000 to S$12,000.

Mr Khaw said about 80 per cent of applicants meet the requirements for purchasing a HDB flat, and it is uncommon for prospective buyers to have income that exceeds the income ceiling. However, he acknowledged that Singaporeans’ incomes have increased since 2011. As such, Mr Khaw has asked the HDB to look into this, to see if an adjustment is needed.

“If you ask for my personal opinion, I think (there is) a need to do some adjustments and I generally prefer to give every Singaporean couple a chance of living in HDB. You may come from say an upper-income group. You do not need an HDB flat,” the minister said.

“But I feel that it’s good for all Singaporeans, or almost all Singaporeans to have a chance of living in HDB for 5 years, and interact with the community, I think it’s part and parcel of a Singaporean way of life. It’s just like males go for National Service, and I think if we can give them this opportunity of staying in HDB towns, I think there are more positives than negatives.”

Mr Khaw also said the Design, Build, and Sell Scheme (DBSS), which has been suspended since 2011, would not be revived for now. “Looking at the current situation, HDB flats now are of a similar standard to that of DBSS flats,” he said.

“I think we should leave it to the next National Development Minister to decide. By then, market conditions could be different, and there could be reasons to bring the DBSS scheme back,” he said, adding that he believes there would be no reason to continue building DBSS flats within his tenure.

In response to recent incidents involving disputes between DBSS developers and homeowners, Mr Khaw said homeowners will be able to send their feedback to MND and HDB, and they would see if they could assist homeowners after looking into the cases.

executive condo income ceiling photo 1

COMBINING PLANS PROVIDES GREATER FLEXIBILITY: ANALYST

ERA Key Executive Officer Eugene Lim said possible flexibility in the tenure of the properties when 2-room Flexi scheme is launched could mean that studio apartments could have longer leases – going beyond 30 years – in future.

Mr Lim also touched on HDB’s considerations in raising the income ceiling for those hoping to buy new HDB flats or executive condominiums.

“I am speculating at the moment, but I would say that a reasonable (increase) would be to perhaps raise the figure from S$10,000 to S$12,000 for BTOs and ECs from S$12,000 to about S$15,000.

“I think this would help a broader base of people to be able to afford the housing that they want to. Because this is especially important for those that exceed the income ceiling, this will be a very welcomed move for them,” he said.