HDB Flats Resold to HDB in Past Five Years

4 Mr Gan Thiam Poh asked the Minister for National Development (a) in the past five years, how many HDB flats have been resold to HDB, broken down by room type; (b) what is the reason that these flats are resold to HDB instead of in the open market; and (c) whether HDB will consider assisting these sellers by offering their flats in HDB's open booking system for interested buyers to consider.

The Senior Minister of State for National Development (Ms Sim Ann) (for the Minister for National Development): In the past five years, about 1,700 flats were surrendered to the Housing and Development Board (HDB). Of these flats, about half were 2-room flats, one-sixth were 3-room flats and one-third were 4-room or larger flats.

About 1,000 of the surrendered flats were short-lease flats, comprising Studio Apartments, 2-room Flexi flats bought on a short lease, and flats whose owners had opted for the Lease Buyback Scheme. Owners of short-lease flats who no longer wished to retain their flats or who had become ineligible to do so, are required to surrender their flats to HDB. They are not allowed to sell them on the open market.

The remaining 700 flats were surrendered to HDB mostly due to changes in the owners’ circumstances within their Minimum Occupation Period, which rendered them ineligible to own an HDB flat. As these owners had not fulfilled their Minimum Occupation Period, they were not allowed to sell their flats on the open market. The most common reasons for surrender of flats were divorce, break-up of fiancé-fiancée relationship and annulment of marriage.

HDB compensates flat owners for the surrendered flats, and offers them for sale through the Sale of Balance Flats (SBF) exercises. If the flats remain unselected after the SBF exercise, they may then be made available under open booking.

Mr Speaker: Mr Lim Biow Chuan.

Mr Lim Biow Chuan (Mountbatten): Thank you, Mr Speaker. I just wanted to ask the Senior Minister State this: I understand that for flats that are returned to HDB, HDB imposes a penalty of 5% on the value of the flat. Alternatively, they only compensate only 95% of the value of the flat. Considering that most of these flats can be sold back into the open market at a similar price, would HDB consider lowering the penalty imposed such that the owners who have to return the flats, for whatever reasons, will not suffer such a big loss?

Ultimately, I think the question is, because HDB is not going to make a loss on the resale of the flat, why should the loss be passed down to the applicant who had to surrender the flat?

Ms Sim Ann: Mr Speaker, may I clarify with the Member that he is referring to flats that have not yet met the minimum occupation period (MOP)?

Mr Lim Biow Chuan: I refer to flats that have either been surrendered because they have not met the MOP or flat bookings that were cancelled because parties were not able to proceed with the flat purchase due to either the marriage breaking down or the parties not being able to go ahead with the marriage.

So, in either instances, they would suffer. If you cancel the sale and purchase agreement, there is a penalty of 5%. If you have taken over the flat and then you have to surrender the flat due to divorce or whatever reason, the HDB will only compensate you 95% of the purchase price.

Again, the question really is: if the flat can be sold back at either the same price in the open market or a better price, why should the loss be taken by the applicant who had the misfortune of not meeting the MOP or had to surrender the flat?

Ms Sim Ann: Mr Speaker, as the Member is aware, the reason why we have subsidised housing is to help our Singaporeans have a roof over their heads. The subsidies for housing is something that is very important and which we would allocate to Singaporeans based on eligibility conditions.

For the minimum occupation period, it is there to also deter speculative purchase so that we can be fair to all Singaporeans who aspire to be HDB homeowners. Therefore, the reasons for the conditions that govern the surrender of flats are not so much determined by whether or not there is resale value to be had from those flats, but really to ensure that when flat owners enter into the commitment to purchase an HDB flat, they understand the eligibility conditions and that they will abide by them. We do this in order to be fair to everyone.