Friday, May 27, 2005
Despite gripes, HDB's resale levy to stay for now
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.
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.
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// posted by Shajahan @ 10:29 AM 