HDB has announced today that seller of HDB flat are able to arrange with their flat buyers to extend their stay temporarily for a period of no more than three months after legal completion.

The temporary extension of stay must be mutually agreed upon by the flat sellers and buyers.  Both parties may agree on the terms of the extension of stay  and any monetary compensation by the flat sellers to the buyers.  Things to take note of are:

Flat sellers must have committed to buy (i.e. exercised an Option To Purchase or signed a Sales and Purchase Agreement) a completed housing unit in Singapore at the time of the resale application.

For flat buyers the computation of the minimum occupation period (MOP) for the flat will be set back by the period which they have agreed to let the flat sellers extend their stay.  Also, an administrative fee of $20 (inclusive of GST) is payable to the HDB.    

The Monetarty Authority of Singapore (MAS) on Monday has revised the Total Debt Service Ratio for owner-occupied residential properties.

Below is the statement from MAS.

Singapore, 10 February 2014… The Monetary Authority of Singapore (MAS) has received feedback from borrowers who face challenges refinancing loans for owner-occupied properties which were bought before the introduction of the Total Debt Servicing Ratio (TDSR) rules. MAS has decided to broaden the existing exemption from the TDSR threshold of 60 per cent for such loans to ease the debt servicing burden of these borrowers.

Refinancing of owner-occupied property loans

2   Under the revised rules, a borrower who bought a residential property before the TDSR rules were introduced – i.e. the Option to Purchase (OTP) of the residential property was granted before 29 June 2013 – will be exempted from the TDSR threshold as long as he occupies the residential property that is being refinanced.¹ This is a concession compared to the current rules, which also require that he does not own any other property, or have any other outstanding property loan.

3   The Mortgage Servicing Ratio (MSR) will also not apply to the refinancing of loans for HDB flats and Executive Condominiums (ECs) that are owner-occupied and were purchased before their respective MSR implementation dates.²

4   A similar concession will apply with regard to loan tenures, for residential properties purchased before the respective implementation dates for the loan tenure limits.³ In such cases, borrowers whose loan tenures for their owner-occupied residential properties exceed the current regulatory limits⁴ will be allowed to maintain the remaining tenures of their loans at the point of refinancing.

Refinancing of investment property loans

5   The TDSR threshold of 60 per cent will continue to apply to the refinancing of all investment property loans. This is to encourage borrowers to right-size their loans and thereby reduce their vulnerability to adverse economic conditions or changes in interest rates. However, MAS recognises that some borrowers may face challenges in right-sizing their debt obligations in the short term; the starting level of debt may be too high and there may be significant costs involved if they had to sell their properties to reduce their leverage.

6   Therefore, MAS will allow a transition period until 30 June 2017, during which a borrower may refinance his investment property loans above the 60 per cent threshold, provided he meets the following conditions:

(a) the OTP of the property was granted before 29 June 2013;

(b) the borrower commits to a debt reduction plan with the financial institution (FI) at the point of refinancing; and

(c) the borrower fulfils the FI’s credit assessment.

7   The changes are intended to help borrowers ease their immediate debt servicing burdens, while encouraging those who have taken on high leverage on their investment properties to right-size their loans as early as possible.

8   Borrowers should be aware that the current low interest rate environment will not persist indefinitely.  When interest rates rise, borrowers will face higher mortgage repayments. Borrowers engaging in refinancing should therefore exercise prudence and review their debt commitments.

9   The revised rules will take immediate effect.

***

¹ Financial institutions will be required to obtain documentary evidence to verify that the OTP was granted prior to 29 June 2013 and that the borrower occupies the property.

² The OTP was granted before 12 January 2013 for HDB flats and 10 December 2013 for ECs purchased directly from a property developer.

³ Where the OTP was granted before 28 August 2013 for HDB flats and 6 October 2012 for other residential properties.

⁴ 30 years for HDB flats and 35 years for other residential properties.

Ministry of National development has announced new HDB subletting rules. The changes plan to impose a quota on non-citizen subtenants, except for Malaysian Singapore Permanent Resident, renting entire HDB flats and bedrooms and to reduce the HDB subletting period from maximum of three years to one and a half year. The reduction of subletting will implement with immediate effect. More details about non-citizen tenant quota will be announce in due time.

Quota on non citizen

I think the imposing of non citizen subtenants will be very much like the ethnic quota that is currentlt imposed for buying of HDB flat. Tenants and property agents may have a system that could check the availabilty of the ethnic quota from month to month.

With this system it serves a few purpose. One, is to prevent the formation of foreigner enclave in HDB blocks. Two, it may deter landlords from giving preference to certain ethnic groups.

I do have some reserves in this new system. I can understand the rational about having to impose quota for subletting whole flat. However, the chances of forming an enclave of foreigners by subletting rooms to one or two foreigners is not that high. Don’t you agree?

Reduction of subletting period

Reduction of subletting period to 1.5 years seems quite awkward. Why not make it to 2 years or just 1 year? Most landlords will prefer two years as this will give them certainty in receiving their rental. For one year lease, landlords will have to risk having not able to find  tenants for several months due to non citizen quota and thus losing rental income. As a property agent myself, I see many landlords needed the rental income to support their elderly folks and families. To have yearly renewal and imposing  quota to their flats, it will cost them money and having unecessary financial stress.

What are your thoughts on this? Share it with us.

Planning to sell your HDB flat but not sure what is your minimum occupation period (MOP)? Generally, the MOP will not affect much to owners who bought the flat way before 30th August 2010. Please read below for more details.

If the date of resale application received is after 30th August 2010, the minimum occupation period (MOP) will be 5 years from the completion date  regardless you took a HDB loan or bank loan.

If the date of resale application received is between 5th March 2010 to 29th August 2010, the MOP will be 3 years regardless the type of loan taken.

If the date of resale application received is before 5th March 2010, theh MOP will be two and half years from the completion date if you took a HDB loan, and 1 year from the completion date if you have not taken a loan or  took a bank loan to finance the HDB flat.

If you have taken a CPF grant or purchase direct from HDB either BTO or Walk in Selection, the MOP will be 5 years regardless you took a loan from bank or HDB or no loan taken.

Flat bought under Selective En-Bloc Redevelopment Scheme (SERS)

The MOP will be 7 years from date of flat selection (provided seller has taken possession of the replacement flat) or 5 years from effective date of possession of replacement flat, whichever is earlier and subject to HDB’s prevailing policies.

If there is any period of subletting of the entire replacement flat (subject to HDB’s prior approval), the MOP will be extended to make up for the subletting period. The subletting period does not count into the minimum occupation period.  Flat owners who had enjoyed the SERS benefits more than once are not allowed to sell the replacement flat.

If  you are selling your flat, please call property agent Lawrence at 9712-0673 for advisory.

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American Loft style design and living

Corner Semi Detached at Tanah Merah Besar Lane.
Single Storey Semi D on the slope with huge living spaces.

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