SINGAPORE (EDGEPROP) – In keeping with the Government policy requirement to dispose of private property when buying HDB resale flats, 5,000 households disposed of their private properties in the last eight years. The Minister for National Development revealed these figures in answering a parliamentary question.
The Minister responded to the Workers’ Party MP, Muhamad Faisal Abdul Manap who asked:
“…with regard to the requirement to dispose private property within six months of the effective date of purchasing a non-subsidised or resale flat how many cases of private residential property in Singapore and overseas have been so disposed since the inception of this policy; how many appeals asking for retention of such property have the Ministry received; and how many of such appeals are approved and what is the basis for the approval.”
The Minister responded to MP Faisal and said:
“HDB flats are meant for owner-occupation. To reinforce this principle, buyers of HDB resale flats are not allowed to retain ownership of local or overseas private properties.
Since the policy was introduced in Aug 2010, slightly over 5,000 households have disposed of their private properties when they purchased flats from the resale market. In the last 3 years, about 1,200 households appealed to retain their private property. Of these, HDB acceded to about 300 appeals after considering the specific facts of each case, taking into account factors such as the owner’s share in the private property, and the reasons why the private property cannot be recovered for his or her own use.”
The Government policy requirement to dispose of private property when buying HDB resale flats came into effect in 2010. The policy required private property owners who buy an HDB flat to dispose of their private homes within six months.
Prior to the policy introduction, around half of private property owners who buy an HDB flat sold their private properties. The other half did not dispose of their private property and held on to both properties.
The policy to dispose of private property meant that investors who were till then able to purchase HDB flats and keep their private property for investment purposes were unable to do so.
The Government enacted the policy to dispose of private property as a counter-measure as Singapore’s strong economic growth, low-interest rates and high liquidity continued to push home prices up in 2010. This sparked concerns of a property bubble.
Before the introduction of the policy to dispose of private property, private home prices were up 38 per cent year on year, while HDB resale prices climbed 15 per cent over the same period.
Then Minister for National Development, Mah Bow Tan, justified the introduction of the policy to dispose of private property and said: “If the current momentum in the market continues, what will likely happen is that a property bubble will form. And when the bubble bursts – not if, but when it bursts – there will be severe implications for individuals as well as for the economy as a whole. Furthermore, the very low-interest rates we are seeing today are not sustainable in the long run.”
With the policy initiatives introduced in 2010, HDB owners who want to own a private property can purchase one after the 5-year Minimum Occupation Period. In contrast, private property owners who want to buy HDB flats need to sell any private properties that they own.
The policy to dispose of private property means that if you want to own both a HDB flat and a private property, you need to buy a HDB flat first, wait 5 years, and then buy a private property after that. The policy changes also required HDB flat owners to occupy their flats for a minimum occupation period of 5 years before they are allowed to invest in local and overseas private property.
When the policy was introduced, some had argued that a fairer, more efficient way would be to re-look the Minimum Occupation Period, especially for those who are not taking any government grants to buy their HDB flat. The policy may disadvantage some group of people – for example, an elderly couple who would like to buy a 3-room resale HDB flat to stay in while they rent out their private property unit for passive income.
When buying HDB resale flats, private property owners, along with their spouses, co-applicants and any occupiers listed in the resale application, must dispose of any existing ownership or interest in any private residential property within six months from the completion of the purchase of a resale flat.
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