Lease Buyback Scheme extended to 4-room HDB flat

On 3rd Septem­ber 2014, the Min­istry of Nation­al Devel­op­ment (MND) and the Hous­ing & Devel­op­ment Board (HDB) announced four enhance­ments to the Lease Buy­back Scheme (LBS) with effect from 1 April 2015.
Only house­hold with at least one of the own­er a Singa­por­ean and all own­ers must be at least at CPF Draw-Down Age in order to par­ti­cip­ate in this LBS.

Firstly, the LBS will be exten­ded to 4-room HDB flats. On top of the pro­ceeds the own­ers receive from selling the tail-end lease of their flat to HDB, they will receive a fur­ther $10,000 cash bonus per house­hold if the total CPF top-up is $60,000 or more. If the total CPF top-up is less than $60,000, the house­hold gets a pro-rated bonus of $1 for every $6 CPF top-up.

Secondly, the income ceil­ing for par­ti­cip­at­ing in the LBS will be raised from $3,000 to $10,000 per month. The income ceil­ing for the Sil­ver Hous­ing Bonus (SHB) scheme will be raised from $3,000 to $10,000 cor­res­pond­ingly.

Thirdly, each own­er of a house­hold will only be required to top up his/her CPF RA to half the age-adjus­ted pre­vail­ing CPF Min­im­um Sum (MS), instead of the full age-adjus­ted pre­vail­ing MS cur­rently. There­fore, they will be able to retain more cash upfront from par­ti­cip­at­ing in the LBS. How­ever, for any cash pro­ceeds above $100,000, the own­ers will still be required to top up the excess amount into their respect­ive CPF RAs. How­ever, if you are a sole-own­er of the HDB flat, this rule does not apply to you and you will still be required to top up your CPF RA to the full age-adjus­ted pre­vail­ing CPF MS.

Fourthly, eld­erly house­holds will have the flex­ib­il­ity to choose the length of lease to retain, based on their age and pref­er­ences, instead of hav­ing one stand­ard 30-year lease for all. Those aged 70 to 74 will have the option of a 25-year lease, those aged 75 to 79 will have the option of a 20-year lease, and those aged 80 or older will have the option of a 15-year lease. On the oth­er hand, those who prefer longer leases can choose to retain more than the min­im­um required for their age, in 5-year incre­ments, up to a max­im­um of 35 years. Any uncon­sumed lease will be refun­ded to the owner’s estate. A house­hold must have lived for at least 5 years and have at least 20 years of lease to sell to HDB to be eli­gible for the LBS.

Refinancing of Residential Properties Loan made easier

Own­er-Occu­pied Res­id­en­tial Prop­er­ties

Mon­et­ary Author­ity of Singa­pore (MAS) has announced to exempt own­er-occu­pied own­ers from the Total Debt Ser­vi­cing Ratio (TDSR) of 60% when they refin­ance the prop­erty loan from bank, as long as they bought the prop­erty before 29 June 2013.

Also, the Mort­gage Ser­vi­cing Ratio  (30% of borrower’s gross monthly salary) will also not apply to HDB flats and Exec­ut­ive Con­domin­i­ums (ECs) when own­ers refin­ance the loan, as long as these homes were pur­chased before 12 Janu­ary 2013 and 10 Decem­ber 2013 respect­ively.

A sim­il­ar con­ces­sion will apply with regard to loan ten­ures, for res­id­en­tial prop­er­ties pur­chased before the respect­ive imple­ment­a­tion dates for the new loan ten­ure lim­its of 30 years for HDB flat and 35 years for oth­ers. For HDB, the imple­ment­a­tion date was 28 August 2013 and for oth­er own­er-occu­pied res­id­en­tial prop­er­ties, the date was 6 Octo­ber 2012. In such cases, bor­row­ers will be allowed to main­tain the remain­ing ten­ures of their loans at the point of refin­an­cing.

Invest­ment Res­id­en­tial Prop­er­ties

The TDSR threshold of 60 per cent will con­tin­ue to apply to the refin­an­cing of all invest­ment prop­erty loans. How­ever, MAS will allow a trans­ition peri­od until 30 June 2017, dur­ing which a bor­row­er may refin­ance his invest­ment prop­erty loans above the 60 per cent threshold, provided he meets the fol­low­ing con­di­tions:

(a) the prop­erty was bought before 29 June 2013;

(b) the bor­row­er com­mits to a debt reduc­tion plan with the fin­an­cial insti­tu­tion (FI) at the point of refin­an­cing; and

© the bor­row­er ful­fills the FI’s cred­it assess­ment.


Cap on money borrowed from MoneyLenders

The Singa­pore Gov­ern­ment may be imple­ment­ing cap on the total amount of money  that Singa­por­ean can bor­row across all the licensed moneylenders. There­fore, a cent­ral data­base whereby all moneylenders can access to check on the bor­row­ers’ bor­row­ing and cred­it his­tory will be set up to facil­it­ate this imple­ment­a­tion.

In Septem­ber 2013, Mon­et­ary Author­ity of Singa­pore has announced that from June 2015, those whose unse­cured debts total more than 12 months of their income for 90 days or more will be barred from bor­row­ing fur­ther from the banks.

So it is nat­ur­al that Min­istry of Law, who reg­u­lates the Registry of Moneylenders, will likely to look into the unse­cured loan in the moneylenders’ indus­tries. Hope­fully, these two reg­u­la­tions will help Singa­por­eans to be more prudent and do some fin­an­cial plan­ning so that they do not over-bor­row from the banks or the moneylenders.