We refer to the article “Studio apartments “effective”, downgraders have net proceeds of $200,000: Khaw” (Straits Times, May 7).
Downgraders get $200,000 each?
It states that “Housing Board flat owners who downgrade to a studio apartment have net sales proceeds of around $200,000 each, after paying off the outstanding loan for their old flat and fully paying for the new one.
These former owners of three- or four-room flats form 70 per cent of the 7,600 households who booked studio apartments from 2006 to 2013.”
Meaningless without the breakdown of the statistics?
- Without a breakdown of the statistics, the above statement may be quite meaningless.
How many had lower net sales proceeds of less than $200,000, $150,000, $100,000, $50,000 or negative net sales proceeds?
How many are not downgraders?
So many elderly have housing problems?
In our volunteer work doing financial counselling – we have come across many cases whereby elderly Singaporeans who want to buy a HDB studio in order to have a roof over their head – had problems with paying for the studio because of the restrictions on the use of their CPF for housing after age 55.
Restriction on use of CPF?
In this connection, according to the HDB’s web site – “Use of CPF -
You may use your CPF savings in the Ordinary and Retirement Accounts to pay for the purchase of the SA if you are aged 55 years and above. This is after you have set aside at least the full cash component of the minimum sum (currently $148,000).
30 year lease for small flat relatively expensive?
Now, why would anyone want to buy a smaller HDB studio flat with a lease of only 30 years (if you are alive after 30 years the HDB will tell you then how you can continue to stay in the studio) – compared to a bigger 2-room HDB flat which has a longer 99 years lease- which cost generally about 20% less than a 2-room flat?
Why the elderly buy Studio flats?
Well, the answer may be that you may not have any other choice because:
A HDB studio flat is the only type of new HDB flat that you can downgrade straight from a private property – for other HDB flat types – there is a 30 months waiting period before you can apply for a BTO flat.
A HDB studio flat is the only flat type whereby your resale levy (if applicable) is waived.
Also, if you had “sold your first subsidised flat and paid the resale levy, and are now buying a Studio Apartment (SA) instead of a second subsidised flat – The resale levy which you have paid can be used to offset the purchase price of the SA”.
The income ceiling (average gross monthly household income of all persons listed in your application) is $10,000. This is double the $5,000 income ceiling for 3 and 2-room flats in non-mature estates.
It is the only HDB flat type that an age 55 and above single unmarried, divorced or widowed Singaporean without any children, can apply for, for his or her own occupation (other than the new singles scheme for 2-room flats).
Its the policy that sells the flats?
So, you see – by tweaking the policies – arguably you can make any flat type (like studio flats) look as af they are in demand and apparently have helped so many Singaporeans to monetise their HDB flat for their retirement (“downgrade to a studio apartment (and) have net sales proceeds of around $200,000 each”).
SY Lee and Leong Sze Hian