New CPF, HDB loan rules give buyers flexibility, may make older properties more attractive: Analysts - CNA

General view of residential blocks against the Singapore skyline. (File photo: Jeremy Long)

SINGAPORE: Rules for buying homes using Central Provident Fund (CPF) money and HDB housing loans will be updated on Friday (May 10) – a move “in the right direction” that will give home buyers here more flexibility, some industry watchers said.

The new rules could also sway demand for ageing homes, they added.

Citing changing needs and the higher life expectancy of Singaporeans, authorities on Thursday afternoon announced tweaks that will centre home-buying rules on whether a property can last a home owner for life.

Under the changes, as long as the remaining lease covers the youngest buyer to the age of 95, home buyers will now be eligible to take an HDB housing loan of up to the full 90 per cent Loan-to-Value (LTV) limit. This is even if the flat has less than 60 years left on its lease.

READ: New rules on buying properties using CPF, HDB housing loans to kick in on Friday

The total amount of CPF that can be used for property purchase will depend on whether the property's remaining lease can cover the youngest buyer to the age of 95.

A minimum lease requirement will still apply to ensure “prudent use” of CPF funds, said the joint announcement from the Ministry of National Development and Ministry of Manpower. This will, however, be lowered to 20 years from the existing 30 years.

WHO BENEFITS?

The changes mark a “step in the right direction” as it will provide buyers with more flexibility, said ERA Realty key executive officer Eugene Lim.

For instance, those looking to purchase older properties so as to stay near their parents will likely benefit, he said.

Older home buyers are also among the beneficiaries, said OrangeTee & Tie’s head of research and consultancy Christine Sun. 

“Previously, older buyers may not be able to use CPF for flat purchases. But with the new regulation, some will be able to use CPF for their home purchase.” 

This helps older buyers plan for retirement, as some may prefer to tap on their CPF funds for property purchases so as to set aside more cash for future expenses, she added. 

The changes will also get the younger generation started on planning for the future, said Ms Sun. 

Noting that retirement may not a priority for this group, she said: “Their lifespans may outlast the balance leases of their flats or they may over-commit financially and have insufficient funds for retirement.”

The latest rule changes should mean good news for home buyers in general, said Mr Lim, though there could be exceptions.

“Some buyers may be worse off if they buy a home with more than 60 years of lease left, but does not cover them to age 95.” 

“In this instance, the amount of CPF funds they can use will be pro-rated under the new rules, but they would have not faced any restrictions previously,” he told CNA. “However, this group is a minority.”

BOON FOR AGEING PROPERTIES?

Industry watchers also said that the new rules could help burnish the appeal of ageing properties, both public and private.

Said CBRE head of research for Singapore and Southeast Asia Desmond Sim: “Existing owners of developments with 30 to 40 years left have effectively received a 10-year extension to their properties’ saleability.” 

“Apart from unlocking additional value to older properties, this will also allay the fears of people owning ageing assets,” he added. 

Echoing that, Mr Lim from ERA Realty said: “As the remaining lease is now not the only metric used for determining the usage of CPF funds, older homes may now be a little more appealing than they used to be.”

Previously, prices of properties with leases of less than 60 years were “depressed”, partly due to restrictions in the use of CPF funds, he added. “Now that has been changed – some buyers no longer face that restriction.”

This could boost demand for older homes, said Mr Lim, though prices are not expected to spike just yet.

“Buyers and sellers still have ready access to past transaction data and negotiations will likely settle around valuation," he said.

READ: Old HDB flats: Assets losing their value?

To be sure, there is one industry observer who holds a contrarian view. 

Mr Lee Sze Teck, head of research at Huttons Asia, expects demand for older flats to be little changed. 

“Although buyers can now use more CPF (funds) to buy older properties, the policies have increased the age to 95 and placed restrictions on withdrawal of CPF monies,” he said. 

“Rather, it will encourage younger buyers to go for either BTO (Build-To-Order flats) or younger properties. Otherwise, they may not be able to withdraw their CPF monies if they do not meet the new criteria.” 

The usual concerns over ageing properties remain as well, Mr Lee said: “Unless the price is really attractive, otherwise a buyer still looks at factors like flat condition. The lease issue will also be at play."

CONCERN OVER DEPRECIATING LEASES

The updated rules follow much discussion and concern over the issue of depreciating leases of older flats. 

This topic has been in the spotlight since National Development Minister Lawrence Wong cautioned in a 2017 Facebook post that not all HDB flats will be eligible for the Selective En Bloc Redevelopment Scheme (SERS).

At last year’s National Day Rally, Prime Minister Lee Hsien Loong addressed home owners’ concerns about their flat leases and announced new schemes aimed at older precincts.

These include the Voluntary Early Redevelopment Scheme (VERS) and the new Home Improvement Programme II (HIP II).

READ: Owners of old HDB flats now know ‘there is some future': Experts on new housing schemes

READ: The Big Read: No easy answers to HDB lease decay issue, but public mindset has to change first

Yet, Ms Sun from OrangeTee & Tie thinks the headline-hogging public debate may not have been the catalyst for the latest rule changes. 

“This, as they said, is to ensure everyone has a home when they retire. With an ageing population, there is also the need to help people to have enough retirement funds,” she told CNA. 

“I don’t think they are using this to address the decaying lease issue directly because for that, the Government has rolled out other measures like HIP and VERS."

By Tang See Kit

09 May 2019 11:32PM (Updated: 10 May 2019 12:08AM)

Source: CNA/sk(hm)


Read more at https://www.channelnewsasia.com/news/singapore/new-cpf-hdb-loan-rules-may-make-older-properties-more-attractive-11519468

Rules on CPF usage and HDB housing loans updated to ensure homes for life - The Straits Times

Under the changes, CPF funds and HDB loans will not be granted to fund the purchase of flats with 20 years or less left on the lease.ST PHOTO: KUA CHEE SIONG

SINGAPORE - Home buyers can draw more from their Central Provident Fund to buy ageing flats from Friday (May 10), provided the property's remaining lease covers the youngest buyer till the age of 95.

They would also be entitled to the maximum Housing Board loan of 90 per cent of the property price or valuation if they are buying resale HDB flats, according to a joint statement by the ministries of Manpower and National Development on Thursday.

This comes as the Government shifts the rules to focus on whether a property can last a home owner for life, instead of its remaining lease.

The move ensures that buyers have a roof over their heads in their old age - a nod to people living longer, when life expectancy is currently at 85 years.

But it also recognises that some buyers may have their reasons for buying older properties, such as to stay near their parents, and this creates more flexibility for flats to change hands in an otherwise illiquid market.

Most buyers will not be affected by the changes. About 98 per cent of HDB households and 99 per cent of private property families have a home which lasts them to 95 years and older, MND said.

But with the new rules, middle-aged buyers can buy ageing flats and face fewer restrictions on their CPF usage.

For example, a couple who are 45 years old can pay for a resale flat with 50 years left on its lease using more CPF savings.

They can use their CPF to pay up to 100 per cent of the valuation limit - the property price or valuation, whichever is lower - compared to 80 per cent previously. Their housing loan would remain the same.

On the other hand, younger buyers who buy older flats have to be prepared to fork out more cash.

For example, a couple aged 25 who buy a flat with 65 years of lease remaining can use their CPF to pay only 90 per cent of the valuation limit, down from 100 per cent. They would also be entitled to a smaller loan limit of 81 per cent, compared to 90 per cent.

Under the changes, CPF savings and HDB loans will not be granted to fund the purchase of flats with 20 years or less left on the lease.

Previously, CPF restrictions kicked in when a flat has between 30 years and less than 60 years left. Buyers could use their CPF if the remaining lease covered the youngest buyer till age 80, while the total amount of funds that could be used would be pro-rated.

Similar restrictions applied to HDB loans, except that the resale flat could only have 20 years of lease left.

The rules will kick in from Friday for new applications and agreements for Housing Board flats and private property purchases.

Buyers who are currently using their CPF to service their housing loans will continue to use their funds based on the old rules. Those who are midway through a property purchase can ask the CPF Board or HDB for assistance.

While it is unclear how this may affect housing loans by banks, the ministries said in their statement: "Banks also take reference from CPF restrictions when assessing how much loan to lend."

Other changes to using CPF

WITHDRAWING CPF SAVINGS AT AGE 55

When CPF members turn 55 years old, some may wish to withdraw their CPF savings.

Previously, they could withdraw any amount above the Basic Retirement Sum (BRS), if they pledged a property with a remaining lease of at least 30 years.

From Friday, this remaining lease will be raised to at least 40 years, to ensure that their flat covers them to age 95.

This change is not expected to affect most CPF members, as all HDB flats and the vast majority of private properties have leases that can last a 55 year old till age 95.

BUYING MULTIPLE PROPERTIES USING CPF

Previously, CPF members had to set aside the BRS before excess Ordinary Account monies could be used to purchase subsequent properties.

From Friday, members who do not have a property that covers them till age 95 will need to set aside the Full Retirement Sum - twice the BRS - before they can use excess OA funds to buy other properties.

Members who have a property whose remaining lease covers them till age 95 will not be affected.

USING CPF SAVINGS AFTER AGE 55

For purchases from Friday, the remaining lease of the property must cover the buyer till he is age 95 in order for him to use Retirement Account savings above the BRS to pay for his property.

Members approaching age 55 can ask the CPF Board to reserve their OA savings so they may continue servicing their mortgage payments after their 55th birthday.

Those facing difficulty servicing their housing loans can approach the HDB or CPF Board for assistance.

PUBLISHED

MAY 9, 2019, 5:00 PM SGT

Rachel Au-Yong 

Housing Correspondent

Source: The Straits Times

Home Rental Rates and Prices Near Singapore’s Top 5 International Schools - 99.co

Photo by Pragyan Bezbaruah from Pexels

Welcome to Singapore. You may notice there are some discrepancies between what you’ve heard, and this actual country (e.g. no riot police beating up bubblegum chewers, and the dominant presence of Boring Rich Asians). To avoid further confusion, we’re here to provide clarity on an important topic: how much it costs to stay near the top international schools.

1. Australian International School, Singapore

1 Lorong Chuan (Singapore 556818)

This neighbourhood (Serangoon Garden) is one of the oldest in Singapore, and was originally intended to house British military officers. Today, it’s well known for being a dining hub, with the nearby Chomp Chomp food centre. The Lorong Chuan MRT station provides convenient access to the rail network.

Average Rental (Condo): $2.91 per square foot, averaging $2,717 per month

Average Price (Condo): $1,510 per square foot, averaging $1.02 million

Average Rental (Landed): $2.35 per square foot, averaging $5,773 per month

Average Price (Landed): $1,246 per square foot, averaging $3.39 million

Serangoon Garden Circus is an F&B paradise, from pubs fancy dining to local fare

2. Avondale Grammar School (AGS)

304 & 318 Phoenix Park, Tanglin Road (Singapore 247979)

Tanglin is one of the most desired upmarket locations in Singapore. It’s less than a 10 minute drive to Holland Village or Orchard Road, giving you access to Singapore’s best retail and F&B outlets. Tanglin is sometimes preferred over living along Orchard Road itself; many inhabitants will tell you it has fewer noise issues, while retaining access to the same amenities.

Average Rental (Condo): $3.55 per square foot, averaging $5,075 per month

Average Price (Condo): $1,948 per square foot, averaging $3.22 million

Average Rental (Landed): $3.02 per square foot, averaging $13,139 per month

Average Price (Landed): $1,758 per square foot, averaging $12 million

3. Canadian International School, Singapore

There are two campuses for this school:

Lakeside Campus, 7 Jurong West Street 41 (Singapore 649414)

Tanjong Katong Campus, 371 Tanjong Katong Road (Singapore 437128)

Katong is a favourite haunt among east-enders, with its laid-back vibe

The Jurong campus is located in the western half of the island, whilst the Tanjong Katong  campus is in the eastern half.

The Jurong area was primarily noted for being industrial with few developments, but this has changed rapidly in the past few years. Jurong is now slated to become a major business hub, and the area has seen a notable surge in amenities. The Jurong area, as a whole, is an early beneficiary of Singapore attempts to decentralise its Central Business District.

The Tanjong Katong area is a heritage district, often associated with the local Peranakan people. It was was one of the wealthiest areas in Singapore between the 1800’s to 1900’s, and was formerly seafront land (the coast is now further away due to land reclamation). It’s regarded as a foodie haven today, and is well built up with a wide a range of amenities.

Jurong West

Average Rental (Condo): $3.14 per square foot, averaging $2,913 per month

Average Price (Condo): $1,054 per square foot, averaging $1.22 million

Average Rental (Landed): $1.82 per square foot, averaging $4,452 per month

Average Price (Landed): $755 per square foot, averaging $1.74 million

Tanjong Katong

Average Rental (Condo): $3.14 per square foot, averaging $2,761 per month

Average Price (Condo): $1,317 per square foot, averaging $1.41 million

There are few landed property up for rent in this area. The last recorded transaction (probably the only one for 2019) was at $2 per square foot, at $2,900 per month.

Average Price (Landed): $1,684 per square foot, averaging $3.15 million

4. Chatsworth International School, Singapore

Orchard is the heart of Singapore’s retail scene, and is home to the most posh brands

There are two campuses for this school:

Bukit Timah Campus, 72 Bukit Tinggi Road (Singapore 2897)

Orchard Campus, 37 Emerald Hill Road (Singapore 229313). Note that the Orchard Campus is for Kindergarten to Year 6 (Grade 5) only.

The Orchard campus, at Emerald Hill, is actually just off the main Orchard Road shopping belt (this will spare the students from the noise off the main road). This area needs no introduction; the Orchard area, as you would imagine, provides the top retail and entertainment amenities in Singapore.

The Bukit Timah area is also an affluent neighbourhood, consisting of mainly private and luxury developments. It’s known for its scenic views and greenery, and provides some relief from Singapore’s intensely urban environment.

Orchard

Average Rental (Condo): $5.37 per square foot, averaging $6,512 per month

Average Price (Condo): $3,561 per square foot, averaging $8.14 million

Average Rental (Landed): $3,33 per square foot, averaging $9,600 per month

There is no recent enough record of a landed property sale in this area.

Bukit Timah

Average Rental (Condo): $3.20 per square foot, averaging $4,013 per month

Average Price (Condo): $1,751 per square foot, averaging $1.89 million

Average Rental (Landed): $2.55 per square foot, averaging $7,932 per month

Average Price (Landed): $1,403 per square foot, averaging $7.22 million

5. United World College of South East Asia (UWCSEA)

Dover is home to a large number of educational institutes, so demand is always high from families

There are two campuses for this school:

Dover Campus, 1207 Dover Road (Singapore 139654)

East Campus, 1 Tampines Street 73 (Singapore 528704)

The Dover campus is toward the western half of Singapore, while the East Campus is where the name states.

The Dover campus is close to National University of Singapore (NUS), and it’s located in the neighbourhood known as Queenstown. The area is home to a disproportionately large number of educational institutes, from Secondary schools like the Anglo-Chinese School, to the Singapore Institute of Technology (SIT) and the Singapore Polytechnic. The Ministry of Education (MoE) is also in this area. Dover sees high demand from many families, who want their children to be close to a school of choice.

The East Campus in Tampines is in a more distinctly residential area. It’s just a few minutes by car to Tampines hub, which has a cluster of three major malls; the neighbourhood is also home to IKEA, Giant, and a Courts mega store. Tampines forms something of an enclave, where residents have all their needs without having to travel out too much.

Dover

Average Rental (Condo): $3.26 per square foot, averaging $3,490 per month

Average Price (Condo): $1,128 per square foot, averaging $1.29 million

For landed properties, please check out surrounding areas like Holland Grove (none in the immediate vicinity)

Tampines

Average Rental (Condo): $2.52 per square foot, averaging $2,587 per month

Average Price (Condo): $1,269 per square foot, averaging $1.03 million

Average Rental (Landed): $1.85 per square foot, averaging $3,836 per month

Average Price (Landed): $1,067 per square foot, averaging $2.77 million

Would you rent or buy in Singapore? Voice your thoughts in our comments section or on our Facebook community page.

Looking for a property? Find the home of your dreams today on Singapore’s largest property portal 99.co! You can also access a wide range of tools to calculate your down payments and loan repayments, to make an informed purchase.

4 hours ago · 6 min read · by Ryan Ong

Source: 99.co (26 Nov 2019)

My neighbour used to think three-room flats are ‘low class’. Here is why she’s wrong. - 99.co

5-room HDB flats have always been the dream amongst middle class Singaporeans. They’re big and spacious – especially the old ones built before 1997. Plus, they’re the closest thing to a condo some of us will ever get to. 

On the other hand, their diminutive sibling, the humble three-room flat doesn’t get much love. They’re smaller and are often seen as ‘low-class’ options – as my snotty neighbour used to say back in the 1990s. 

“You see ah girl, if you don’t study hard next time you’ll be low-class, live in three room flats” – I once overheard her telling her daughter ( and OF COURSE she went to an elite school named after an British coloniser). 

Well, that’s entirely ridiculous back then (and now) simply because

1) the phrase ‘low-class’ is used by people who are indeed low-class,

2)  a three-room flat is  a genius choice for Singaporean millennials in 2019.

Allow me to explain.

Many millennials are opting for fewer (or no) children. All the more they should save on space and get a three room flat.

In case you missed it, Singapore’s birth rate is pathetically low. (It’s not even at the replacement rate, meaning that if it goes on, Singaporeans will be become extinct.)

The previous generation had two, three, four, or even five kids. Today, that’s the exception, not the norm. If that’s the case, do we really need that many extra rooms? Not really. These extra rooms, unless in the unlikely scenario are rented out, only serve to accumulate clutter and other unnecessary things (and maybe become a fire hazard in the near future). 

If you can’t afford a big home, you’re stressing yourself for no reason. 

If you’re gonna buy a big home you can’t afford for rooms you don’t use – what’s the point, really?

This doesn’t apply just to HDBs – but all to property in general. Land is expensive in Singapore. But you already knew that. That’s why the price difference between a 5-room HDB flat and a 3-room HDB flat in a mature estate can easily exceed $200,000 – take Clementi’s $274,137 price difference, for example.  

In Clementi, the average price difference is a cool $274,137

Assuming in both cases, you apply for a $50,000 Family Grant – the monthly loan repayments will be $617 for the three room flat, and $1377 for the five room flat, or a difference of $760 per month. This might not seem much, but by the end of flat’s five year MOP, that would have been a difference of $40,200. That’s enough money for a nice emergency cushion for the family, or a decent amount to invest into the stock market to add towards a child’s education fund. Or going to a retirement fund for yourself or your elderly parents.

But what about HDB capital appreciation?

The 10 year capital appreciation for 3-room and 5-room HDB resale flats are 21.77% and 28.07 respectively. But keep in mind that these are 10-year-returns. Since 2014 where the government clarified that 99 years means 99 years, HDB resale prices have only slumped.

The big G has time and time again stressed that HDB prices will continue to be affordable.

While this means it’s a fantastic time to buy a HDB resale flat, it also means that in the future, it might terrible to sell your HDB flat. These days, the only way you can ‘make’ money with a HDB flat is through the BTO process, but even that may not be as lucrative as you think – after taking into consideration all the other costs people forget about.

Okay, so now what?

If nothing else, understand this from this article.

• Rapid capital appreciation of HDB flats is unlikely because they have to remain affordable to the public
• That means the longer your money is locked up in a HDB flat with rooms you don’t use, the more your opportunity cost will be.
• Buy the smallest HDB flat you need, then invest the remaining cash you have – your portfolio will thank you in the long term
• Buy a home that suits your needs, instead of blindly throwing cash on getting a bigger home
• Space is a luxury in Singapore. If you want to have more space just for the lulz, then be prepared to pay the price.
• Buying a small three room flat can be a genius move (and not ‘low-class’ at all) because it maximises your liquidity to allow you to invest elsewhere

A caveat: If you know exactly what you want to do with the extra space, then please go ahead. 

Before you raise  pitchforks and accuse us about not ‘creating content for everyone’ and all that, we acknowledge that a three room flat just isn’t enough for everyone. 

If you’re intending to have lots of kids to keep the species known as Singaporeans alive, or your elderly parents need to live with you – then you definitely need a bigger HDB flat. 

5 hours ago · 5 min read · by Ruiming He

Source: 99.co (26 Nov 2019)