Resale levy ensures fair housing subsidy allocation
Date: 26 Oct 2018
We refer to the letters “大屋换小屋的误区” (15 October) by Mr Tang Foo Thong and “大屋换小屋的困扰” (22 October) by Mr Lim Kian How.
Seniors who wish to unlock the value of their flats can choose from several monetisation options, depending on their needs and preferences. Besides renting out spare bedrooms, or selling part of the lease back to HDB under the Lease Buyback Scheme, seniors may wish to right-size to a smaller and cheaper 2-room Flexi or 3-room flat. Besides taking into account the related costs, including realtor fees, renovation costs and the resale levy that would be incurred from buying a new flat, seniors should be aware that the flat type and price of the next flat would affect the size of the proceeds after right-sizing.
The resale levy is intended to reduce the subsidy on the second subsidised flat. This maintains a fair allocation of public housing subsidies between first-and second-timers and helps to ensure the subsidies are equitably distributed. Flat buyers are informed of the resale levy quantum at the selection process of the second subsidised flat. Nevertheless, to help seniors right-size, those who purchase a short lease 2-room Flexi flat will benefit from a cap on their resale levy and adjustment for the shorter lease. This means that the maximum resale levy that would be paid on a 2-room Flexi with a 45-year lease is $18,000, much lower than what the normal resale levy would be. Elderly homeowners such as Mr Lim Kian How who right-size to a 3-room or smaller flat and top-up their CPF Retirement Accounts can also receive up to a $20,000 cash bonus with the Silver Housing Bonus.
For flat buyers like Mr Lim Kian How who intend to use the sale proceeds from their existing flat to pay for their new flat, they can consider the Temporary Loan Scheme that allows them to complete the flat purchase and collect their keys first. The temporary loan will be redeemed subsequently from the net proceeds of the resale transaction.
HDB Branches offer one-on-one financial consultation to help seniors better understand the various monetisation options and make informed decisions. We encourage seniors to find out more about each option, and choose one that best meet their needs and preferences.
Norlilah Bte Abdul Latiff (Ms)
Acting Director (Sales) 代 处长(售屋)
Housing & Development Board 建屋发展局
Troubles related to right-sizing
Date: 22 Oct 2018
Referring to the letter, “The misperception of right-sizing” (15 Oct), the writer recounted his personal experience of having to pay a resale levy of $40,000 when he downgraded to a smaller flat, and agreed that the option of right-sizing might not be the best for all households. He viewed that it was unfair to require senior home owners who are right-sizing to pay the resale levy, as they are not property investors nor speculators. He suggested that the authorities exercise flexibility on a case-by-case basis, and consider tiering the amount of resale levy based on the duration the home owners have lived in their flats.
In addition, he shared that as he was unable to obtain a loan, he had to sell his existing flat in order to have enough proceeds to pay fully for his new flat at the time of key collection. He opined that HDB could be more flexible, by allowing those who right-size to collect their keys first before subsequently deducting the cost of the new flat from the proceeds of the first flat.
The misperception of right-sizing
Date: 15 Oct 2018
Referring to the option of right-sizing one’s flat to supplement their retirement income, the writer said that this was not applicable to all households. Recounting his personal experience, he said that he had sold his Executive flat for $440,000 and had bought a 4-room SBF flat in the same estate for $300,000. After deducting expenses for renovation, he did not have much left for his retirement. He said that he had written to HDB and his MPs to waive the resale levy from the sale of his Executive flat but to no avail. He hoped that the authorities could consider waiving the resale levy on a case-by-case basis for seniors who right-size their flats.