www.shaproperty.com

THE levy that the Housing Board imposes on those who sell their first flat to buy another from it will stay.

 This is despite a rash of criticism by flat owners, who say the charge makes it hard for them to switch to smaller flats.

 These owners say the prices of their flats have dropped significantly, and this means they lose money if they want to downgrade.

 But when contacted by The Straits Times, the HDB said it has no plans to waive the fee, introduced in 1997 to curb speculation.

 The fee ranges between 10 and 25 per cent of the resale price of the first flat, or 10-25 per cent of 90 per cent of what it has been valued at, if that figure is higher.

 The HDB said the levy is to ensure housing subsidies are fairly allocated, by reducing the subsidy received by those buying second flats from it.

 But the board added that it will 'continue to review the policy regularly to ensure that it remains relevant to the objective'.

 Several flat owners say the prices of their flats have dropped in recent years.

 Certain flats on the resale market are going for the same price at which they were bought. Some are going for less.

 The HDB index of resale prices of its units shows these have dropped an average of 22 per cent since 1996.

 The hardest hit are the five-room flats whose valuations have gone down 24 per cent from their 1996 peak, and the executive flats, which have fallen 30 per cent from their 1997 highs.

 Former bank officer Lee Lay Choo, 36, who wrote to The Straits Times last month, is one such flat owner. She bought a new executive flat in Woodlands for $350,000 in 1999. Now, she wants to move to a four-room flat, as she left her job to look after her two children, and the family is living on only her civil servant husband's income.

 She would like to buy the flat from the HDB, because, she said, the resale ones are too pricey.

 But if she does so and sells her executive flat, now valued at $350,000, she will have to pay a levy of more than $80,000. This would leave her worse off than before, she said.

 The situation has been noticed by at least one MP, Dr Amy Khor, who is also the chairman of the Government Parliamentary Committee for National Development and the Environment.

 She said in a recent interview: 'The levy works if the market is moving up all the time. In a down market, you need to moderate the policy.'

 The HDB collected $79 million in levies in the year ended March 2004,and $100 million in the financial year before that. It uses this money to partially offset its home ownership subsidies.

 When asked how many appeals it has received from flat owners requesting that the levy be waived, the board said it was unable to give that information.

 It stressed, however, that those who do not want to pay the levy can buy a flat on the resale market.

 Housing agents though say there is room for a little flexibility. A division director of property agency PropNex, Mr Eric Cheng, suggested that exceptions be made in cases where owners are downgrading due to financial hardship, and when flats are sold at cost or even at a loss.

 Mr Albert Lu, the managing director of C&H Realty, said it made better sense for the HDB to waive the levy and price new HDB flats higher for second-time buyers, so that the policy would not be seen as a tax on profit.

May 26, 2005
Singles, PRs can now buy older, unsold HDB flats
by Tan Hui Yee

SINGLES and permanent residents who could only purchase resale Housing Board flats, have been given the chance to buy older, unsold homes.

 They can now buy about 100 in Jurong West, Bukit Panjang and Sengkang for starters, under a scheme the Housing Board has introduced to clear some of its large stock of these units.

 Most have been vacant since they were built about four or so years ago.

 The flats, all five-room or executive units, are being put on the market as resale units after repeated attempts to find buyers for them failed.

 Other groups of property buyers also stand to benefit if they plump for one of the units, which are being marketed by HDB subsidiary EM Services.

 Those who currently own a flat they bought directly from the HDB will not have to pay a resale levy, while private property owners will be freed from having to wait 30 months after they sell their home.

 If the scheme proves successful, the HDB said it could offer more unsold units and appoint more marketing agents.

 At September last year, it reported a stock of 10,000 vacant flats.

 Some of the 100 units are going for about $50,000 less than other resale flats in the three areas.

 The Straits Times understands that one of these unrenovated, ninth-floor, five-room flats in Jurong West is being offered for about $210,000.

 Typical renovated resale homes there would cost around $260,000.

 Housing agents interviewed expressed concern that the lower prices will drag down the value of resale units in the area.

 The managing director of C&H Realty, Mr Albert Lu, pointed out: 'Anybody considering buying a five-room or executive flat there will definitely go for these units because they're so much cheaper.'

 But the HDB expects any impact on the resale market to be 'minimal' because of the small number of units involved.

 Asked how the flats' prices have been determined, it said these are based on 'market value', determined by qualified valuers.

 It stressed yesterday that its various measures to clear its stock of unsold flats, like allowing buyers to book a unit on the spot, have been 'generally effective'.

 The new scheme is to move those which have been turned down 'despite repeated sales offers'.

 Some of the units have been offered to private developers as well as Nanyang Technological University, and declined.

 Singles like Ms Jessica Lee, who is in the market for a resale four-room flat, said she is open to getting a bigger unit.

 'This new measure is good,' the personal assistant, who turns 35 in July, said.

 'A resale flat is so expensive.'