COS 2016: Helping Second-Timer Rental Families Own a Home Again

The Ministry of National Development announced details of the new Fresh Start Housing Scheme, as well as enhancements to the Tenants Priority Scheme at the Committee of Supply debate today. These measures will help second-timer (ST) families living in public rental housing to own a home again, to build a more inclusive society.

Fresh Start Housing Scheme

ST families may face greater difficulties buying a home, compared to first-timers who are helped by HDB housing grants to buy their first home. Under the Fresh Start Housing Scheme, we will integrate greater financial assistance with personal responsibility and social support to help those who are determined to give themselves and their children a fresh start in a new home.

Exceptional Measures to Improve Housing Affordability

MND and HDB will help the families with young children own a 2-room Flexi flat through the following measures:

a. The family can buy a 2-room (2R) Flexi flat in the Build-to-Order (BTO) or Sale of Balance Flats (SBF) sales exercises, with a shorter lease ranging from 45 to 65 years, which will be more affordable. The chosen lease should last all owners and spouse-occupiers until at least age 95.

b. An HDB concessionary loan for the flat purchase, regardless of the number of HDB loans the household has taken before;

c. The resale levy will be capped at $30,000 (for a 99-year lease), and adjusted downwards based on the chosen lease;

d. A Fresh Start Housing Grant of $35,000 for a 60-year or 65-year lease, which will be adjusted downwards for flats with shorter lease;

i. A fixed $20,000 will be disbursed just before key collection, regardless of the chosen lease;

ii. The remaining grant amount of up to $15,000 will be disbursed in annual tranches over five years after key collection;

e. Priority allocation in HDB sales exercises, within a quota of up to 10% under the Tenants Priority Scheme.

Together, these measures will provide significant help for these ST families to own a home again (see Annex A). Apart from improved housing affordability, they will also be able to use their CPF to pay for a flat of their own, instead of paying rental in cash.

Targeted Approach with Social Support

The scheme will take a targeted approach and focus on families with young children. To qualify for the scheme, the family must meet the following criteria:

a. Form an ST family nucleus and the parent(s) must be at least age 35 and below age 55. Parent(s) can be married, divorced or widowed;

b. Household has at least one Singapore citizen parent and at least one citizen child below age 16;

c. At least one parent in stable employment in the preceding 12 months;

d. Occupied a public rental flat for at least two years, without accumulating three or more months of rental arrears at any point in the preceding 12 months; and

e. Undergo assessment by the Ministry of Social and Family Development (MSF) and qualify for a Letter of Social Assessment (LSA). To qualify for the LSA, families must be stable, be in stable employment, manage their finances well, and the children must be attending school regularly.

f. Households who book a flat under Fresh Start must undergo annual check-ins to renew their LSA until five years after key collection, for them to receive the various tranches of the grant.

These criteria ensure that families are committed and ready for homeownership. In addition, families will need to meet a Minimum Occupation Period of 20 years, to ensure a stable home for the children. MSF will check in with the families regularly to ensure that they are doing well, and will link them with partner agencies for assistance if needed.

Implementation

The Fresh Start Housing Scheme will be implemented in late 2016. MND, HDB and MSF are working out the implementation details, which will be announced nearer the implementation date.

Tenants’ Priority Scheme

Beyond Fresh Start, we will extend the Tenants’ Priority Scheme to second-timer families in public rental, to give them greater priority when they apply for a flat from HDB. Currently only first-timer families in public rental are eligible.

Under the scheme, 10% of the 2R Flexi and 3-room flat supply will be set aside for these families, and shared with those applying under the Resettlement, Relocation, and Selective En-bloc Redevelopment Scheme (SERS). This will be implemented from the May 2016 sales exercises.