New Rules for Buying Homes with housing loans from HDB and Central Provident Fund

People in Singapore always had the opportunity to buy homes with the help of housing loans offered by HDB, plus the chance to use their Central Provident Fund or CPF for the same purposes. Well, starting with the beginning of May, this year, these rules will change. What does this mean? Is this good news or bad news? In fact, it would be better to say that the old rules will be updated, so that homebuyers enjoy a bigger degree of flexibility. Also, these updates could change the odds for homes that are getting older as time passes by.

Changes in CPF Ruling

What made the authorities consider new rules in this sector? As the city background is changing, so are the needs, preferences, and expectancy of city inhabitants. The updates regarding the existing rules could help a person get a home that will be there for a lifetime. So, the constant chase for a new home will slow down a little, as the loans provided by the HDB could be as much as 90% of the total value of a home. The condition would be for the lease to be covered by the age of the youngest member of the household up to the age of 95. This rule can be applied even if the remaining lease for a particular apartment is below a 60-year term.


But what about CPF? How will the rules in this sector change? Things will get more permissive in this area as well, as a CPF found can be used entirely for getting a home, as long as the youngest buyer can cover the lease term up to the age of 95, once again. But, there will still be a minimum requirement when it comes to the approved lease so that the funds are used with caution. However, this particular condition will be lowered from 30 years, as it was established before, to 20 years, making the use of this fund more accessible for a higher number of people.


Who are the future homebuyers that will benefit from the new changes? As Eugene Lim stated, who is the key executive officer for ERA Realty, the changes will make the conditions more flexible, allowing more room for maneuvers. For example, young people looking to purchase properties of older ages, just so they can be closer to their parents and families, would definitely benefit from these changes. But, senior buyers will also enjoy some advantages as well. Christine Sun, who is the head of research and consultancy of OrangeTee & Tie, stated that senior homebuyers were not able until recently, to use money from the CPF in order to buy an apartment. With the new updates in place, a part of the seniors will have the chance to use at least a part of their CPF for such purposes. Yes, it is true that not all seniors will meet the requirements, but the fact that more of them will be able to find a helping hand in the CPF, in case they need indeed a home, is definitely a welcomed improvement.


As specialists in the real estate market say, these updates will boost the sales of properties that are aging. As we all know, the expectancy of a homebuyer in Singapore increased over time, so new and modern apartments are preferred over an older property. So, the sales of older properties are not that great. But, with the appearance of these changes, it is expected for the sales in this sector of the property to increase. The updates recently adopted will definitely boost sales when it comes to older apartments. In other words, property owners that have flats with 30 or 40 years of lease left, can add 10 more years to the appropriate sale age of their properties.


When it comes to older properties, their owners were always worried that their assets will be assessed under the value of the market. Now that the rules changed and older properties are easier to purchase, they are just starting to appear more desirable in the eyes of homebuyers. The restrictions placed on the usage of CPF did have a negative effect on the prices of properties with less than 60 years of lease left. But, even if the demand for these properties is expected to grow, specialists are not yet seeing price spikes, at least not for now.


But, in spite of all the positive changes brought in by these updates, there are people that don’t see this as such a great thing. More precisely, there is one head of research, at the Huttons Asia Company, who thinks differently. Lee Sze Teck doesn’t believe that the demand concerning aging apartments will change too much. As he said, in spite of the fact that the usage of the CPF is more permissive, there are restrictions when it comes to cashing out money from the fund and the policies of the fund are now spanning to 95 years. According to Mr. Teck, these updates will just push homebuyers to pursue younger properties even more and opt for Built-to-Order units instead of getting an older flat. He believes that only an attractive price could truly convince a homebuyer to opt for an old apartment, instead of going for a new, modern one.


Of course, just like with everything else, there are advantages and disadvantages. Opinions and perspectives can also differ, but only the evolution of the market will tell which of these are true. Obviously, the changes will favor some while it won’t do much for others, but it could give the old apartments market a much-needed boost after all.


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