Approving Creation of Trust Over HDB Flat and Protecting Parents' Interest when Relations Break Down
Ministry of National DevelopmentSpeakers
Summary
This question concerns Mr Murali Pillai’s inquiry on HDB’s discretion to approve trusts over flats and whether trusts could protect parents funding their children’s home purchases. Minister for National Development Desmond Lee stated that HDB approved 99 trust requests in the last five years, typically for minor beneficiaries or mentally incapacitated owners. He explained that section 58(9) of the Housing and Development Act restricts trusts to prevent rule circumvention, requiring specific HDB approval on a case-by-case basis. Regarding parental protection, the Minister suggested that parents co-own the flat with their children as a more direct method of safeguarding their financial interests. This approach provides security in the event of a relationship breakdown, rendering the creation of trusts for such arrangements unnecessary under current HDB policy.
Transcript
33 Mr Murali Pillai asked the Minister for National Development (a) in the past five years, on how many occasions did HDB exercise its discretion under section 58(9) of the Housing Development Act to provide approval for a trust to be created over a HDB flat; and (b) whether HDB will consider allowing the creation of a trust interest which favours parents who provide monies to their children to buy a flat in return for being able to live together, to protect these parents when relations break down.
Mr Desmond Lee: Under section 58(9) of the Housing and Development Act, no trust may be created over a Housing and Development Board (HDB) flat without HDB’s prior written approval. This is to prevent parties from making use of trusts to circumvent HDB’s rules.
On a case-by-case basis, HDB may allow the creation of a trust over a HDB flat, such as in favour of a minor child beneficiary following the demise or divorce of the parents, or if the flat owners are mentally incapacitated. Where a trust is created for a minor child beneficiary, the flat must be transferred to the child once he/she reaches the eligibility age of 21 years old to own the flat. This is in pursuant to the Civil Law Act that a person must be of full age (that is, aged 21 and above) to have the capacity to enter into a contract for the sale, purchase, mortgage, assignment or settlement of any land, among others.
Over the past five years, HDB has approved 99 requests for the creation of a trust over a HDB flat.
Parents who plan to provide monies for their children to buy a HDB flat in return for living together, have the option to co-own the flat with their children, if they meet the prevailing eligibility conditions. This is a more direct way of protecting the parents’ interests in situations such as the breakdown of parent-child relations, so there is no need for parents to set up trusts for this purpose.