SINGAPORE (EDGEPROP) – HDB will offer to buy back public housing flats from owners who face difficulties in selling due to the Ethnic Integration Policy (EIP) quotas. The new measure, announced by National Development Minister Desmond Lee on March 8, will allow flat owners who are unable to sell their flat where EIP quotas have been reached to approach HDB for assistance.
In such circumstances, HDB will offer to buy back flats from eligible EIP-constrained flat owners. This includes flat owners who bought their flats from HDB and those who purchased their flats on the resale market, regardless of whether the flat was EIP-constrained when it was bought.
PropNex chairman and CEO Ismail Gafoor says the new measure is long overdue. “This policy change will help to ensure that certain groups of flat owners, such as minority sellers will not be unfairly burdened by the EIP limits,” he says.
Noting that EIP-affected sellers tend to take longer to sell their flat, Gafoor highlights that EIP-constrained flat owners also often end up selling their units at a big discount, with the price difference reaching more than $50,000 in some cases.
HDB will assess requests for buyback assistance on a case-by-case basis. Owners who seek assistance must have fulfilled the minimum occupation period and owned the flat for at least 10 years.
The Ministry of National Development (MND) says EIP-constrained flat owners must have made ‘regular genuine attempts’ to sell their flat over a period of six months. The owners must have also attempted to sell the flat at a ‘reasonable asking price’, which MND says can be benchmarked to recent transaction prices within a 200m radius of their flat, adjusted for the flat’s attributes such as storey height and orientation.
Flat owners will be required to submit records of their marketing attempts, such as online or property print listings and records of flat viewings. Owners who do not fulfil these criteria, but who face extenuating circumstances, may seek special consideration from HDB.
Flats that are assessed eligible for buyback will be valued by a professional licensed valuer appointed by HDB. HDB will then determine the buy back price and make an offer to the flat owner. Flat owners will have up to three months to accept HDB’s offer. The flats bought back by HDB will become part of HDB’s housing stock and will be offered for sale to the public through the Sale of Balance Flats exercises or open booking.
ERA Singapore’s head of research and consultancy Nicholas Mak believes that the potential impact of the new measure is still unclear at this stage, noting that in the past few years, only about 400 to 600 HDB flat sellers affected by EIP appealed to HDB annually. He adds: “It is still unknown how many owners will sell their flats to the HDB after this scheme is implemented.”
Meanwhile, PropNex’s Gafoor says that while there could be an increase in the number of EIP-affected owners approaching HDB at the outset, this will stabilise over time. “Generally, we do not expect the number to be significant enough to distort the HDB resale market,” he adds. If you are looking to sell or purchase properties in Singapore, our team members can help you with Affordability Assessment and Asset Progression Plan. Call us now at +65 86666 944 or +65 9844 4400.