Extending HDB's Deferred Downpayment Scheme to 4-room and 5-room BTO Flats
Ministry of National DevelopmentSpeakers
Summary
This question concerns the potential extension of the Housing and Development Board’s (HDB) Deferred Downpayment Scheme to 4-room and 5-room BTO flats, as raised by Mr Ong Teng Koon. Minister for National Development Lawrence Wong clarified that the scheme is specifically designed to facilitate right-sizing for seniors aged 55 and above purchasing smaller uncompleted flats. He noted that the Staggered Downpayment Scheme is already available for young first-timer couples across all flat types and for other right-sizers in non-mature estates. The Minister emphasized that downpayments serve as a critical indicator of financial commitment to prevent applicants from depriving others of housing opportunities by reneging on purchases. He concluded that while buyers should exercise financial prudence, HDB provides case-by-case assistance to those facing genuine difficulties with downpayment requirements.
Transcript
21 Mr Ong Teng Koon asked the Minister for National Development whether the Ministry will consider extending HDB's deferred downpayment scheme to 4-room and 5-room BTO flats and to applicants with low income.
The Minister for National Development (Mr Lawrence Wong): Mr Speaker, HDB requires new flat buyers to pay a downpayment of 10% or 20% of the flat price when they sign the Agreement for Lease within four months of booking a flat, to ensure that applicants are financially ready to commit to the flat purchase. The balance flat price is then payable when they collect the keys.
Deferred downpayment is a specific scheme for seniors and it is meant to facilitate the right-sizing process. Specifically, elderly flat owners aged 55 years and above who are buying an uncompleted 2-room Flexi or 3-room flat from HDB may apply for this Deferred Downpayment Scheme. So, it is really meant for seniors to facilitate right-sizing.
Separately, HDB also has a Staggered Downpayment Scheme (SDS) where flat buyers are required to pay half of the downpayment when they sign the Agreement for Lease, and pay the other half together with the balance purchase price at key collection. This SDS is available to first-timer young couples below the age of 30. They can qualify for such a scheme when they buy any flat type from the HDB, including 4-room and 5-room flat types. The SDS is also available to flat owners who are right-sizing to a 2-room Flexi or a 3-room flat in non-mature estates, regardless of the age of the flat owner.
Home seekers should continue to exercise financial prudence and buy a flat within their means. And for those who face difficulties with their downpayment, HDB can provide assistance on a case-by-case basis.
Mr Ong Teng Koon (Marsiling-Yew Tee): I would like to thank the Minister for the Staggered Downpayment Scheme (SDS). It is good to know that there is such a scheme to help young homeowners. My question is: is the downpayment a form of credit protection? What is the purpose of the downpayment? If it is a form of credit protection to ensure that the flat owner does not renege on his transaction, then would it be right to say that if he already has equity in his existing flat and HDB has control over the process the sale of his existing flat and the purchase of his new flat? If HDB has control over all these things, would it be correct to say that his equity in his existing flat is sufficient downpayment and sufficient credit protection for the downpayment for his new flat?
Mr Lawrence Wong: Mr Speaker, I am afraid I have lost the Member. Was the Member asking a specific question again?
Mr Ong Teng Koon: Yes. Why do you need a downpayment?
Mr Lawrence Wong: So, the Member is asking whether we need a downpayment to begin with?
Mr Ong Teng Koon: Yes.
Mr Lawrence Wong: Zero downpayment for all purchases of all HDB flats?
Mr Ong Teng Koon: I was referring to specific cases where there is an existing flat and the homeowner is moving to another flat and HDB has control over both flats. Why do you need a downpayment in such cases?
Mr Lawrence Wong: Mr Speaker, so long as I think the flat owner, regardless of whether they are new, first-timers or existing flat owners, when they would like to make a purchase of a new flat, I think the downpayment is an indication of commitment and an indication that the person is seriously making a commitment to purchase a flat because if they were to simply put in a free option and then renege on that option later on, they are, in fact, depriving other potential flat buyers from purchasing that flat. It will be an opportunity cost. So, we do want a downpayment policy and we want potential flat buyers to take the purchase of their flat seriously.
As I mentioned earlier, we do have a Staggered Downpayment Scheme (SDS) to help both young couples, as well as flat owners of all ages who are right-sizing. So, those are specific instances where we allow for Staggered Downpayment and if there are other flat buyers who have difficulties, they can approach HDB and we can help them on a case-by-case basis.