Thursday, 9 October 2008, 8:51 am | 2,829 views
Update:
In view of the comments posted here by readers, please allow me to
clarify a few issues which readers have brought up. Please see
below.
Andrew
Loh / Deputy Editor
A couple
with 4 children and an elderly mother appeals to the HDB for a
concessionary loan to purchase a flat. The appeal process has
lasted almost a year – with no success.
What happens if you are
unable to service your HDB mortgage loans and are forced to sell
your flat? Will you be able to apply for a new HDB loan to purchase
a new one?
More
importantly, is means-testing being quietly implemented by the
HDB?
Mr and Mrs Yap
(not their real names) are in such a situation. Having owed the HDB
arrears of more than $25,000, including $4,000 in late payment
charges, they were forced to sell their 4-room flat in Bukit Merah
in September this year.
The couple had
hoped that they would be able to successfully apply for a HDB
concessionary loan and purchase a new flat after they had settled
the arrears.
As it turned
out, however, their loan application has been a frustrating affair
and they do not understand why the HDB is refusing to grant them
one which is sufficient enough for a new house.
The Online
Citizen met up with Mrs Yap over coffee.
When the couple
had their second child in 2002, Mrs Yap, 33 and who was working as
an operations manager in a pub, quit her job in order to care for
the infant. Her husband was then working in dispatch. Their 4-room
flat in Bukit Merah then was home to six persons – including their
two children and Mr Yap’s parents, who had moved in with them in
1999. (They later had two more children – in 2005 and
2008).
Their woes
started in 2007, when they defaulted on the monthly mortgage loans.
It eventually accumulated to $25,611 and they were forced to sell
their flat in September this year (2008) in order to settle the
arrears. But even before the completion of the sale, the couple had
already started to apply to the HDB to grant them a loan to buy a
resale 4-room flat.
Application
rejected
In December last
year, HDB rejected the application, saying that Mr Yap’s salary of
$1,200 was not enough to service the loan which they would need to
purchase a resale flat. HDB advised them to “use the CPF refund and
cash proceeds from the sale of your current 4-room flat to buy a
smaller flat, without taking a loan.”
“I can’t buy a
smaller flat,” Mrs Yap told TOC. “Where will my children sleep?
What about my mother-in-law?” More importantly, the couple feels
that since this would be their second HDB loan and hence the last
one they would be granted, they want to purchase a 4-room flat to
live in for the long term.
Disappointed
with HDB’s rejection, the couple approached their Member of
Parliament, Mr Baey Yam Keng, who appealed to the HDB on their
behalf. In his letter in May 2008, Mr Baey informed the HDB that Mr
Yap’s income had recently increased to $1,450. He also noted that
they are unable to obtain any loans from the banks as they had a
record of owing some credit card debts.
Appeal
In its reply on
the 6th of June, HDB again rejected the application,
citing the couple’s difficulty to service the loan based on Mr
Yap’s income. “I need a flat so that my mother-in-law can live with
us. She is being abused by her husband. Also, she is not allowed to
rent a flat either,” Mrs Yap told us. The HDB said her mother will
have to either find someone to jointly it with or to pick a name
from HDB’s rental flat waiting list and live with that person, a
prospect which Mrs Yap frowns upon. “If she lives with us, she can
help me look after my children and I can go to work to supplement
the family’s income,” says Mrs Yap. She feels that even if she
worked part-time, she would be able to add another $500 to $600 to
her husband’s $1,450 salary and thus be able to help service the
HDB loan.
In July, after
Mr Baey made a second appeal on their behalf, the HDB finally
relented and agreed to grant them a loan which is “100 per cent of
the selling price or market, whichever is lower”, according to Mrs
Yap. The HDB later offered them $67,000 to purchase a 4-room flat –
provided the new flat was below $250,000. However, the loan amount
was not enough for the couple to buy a 4-room flat in Teck Whye,
which is one of the cheapest areas in Singapore, Mrs Yap told TOC. She said
they are asking for a loan of “about $90,000 to $100,000” from the
HDB.
“Our proceeds
from the sale of our previous 4-room flat is $126,000, which is put
back into our CPF,” she told TOC. The cash portion from the sale
was $57,200. “But we only get $49,604 after deducting the $5,000 of
deposit & appears to HDB & TC,” she explained.
HDB insisted
that a loan of $67,000 would be enough for the new flat. But Mrs
Yap disputes the figure. “Our CPF refund was $120,000 but $6,000
was credited into our special account,” she said. More was used to
pay their S&C charges to the town council and their housing
agent. They would also need to do some simple works on their new
home – such as painting, re-wiring and pay the “cash over
valuation” on the resale flat purchase.
“That means we
can only buy a 3-room flat if we’re very lucky because the prices
of flats keep increasing,” she said in her email reply to HDB. She
checked the HDB website several times for the latest resale prices
of 3-room flats in Teck Whye and they ranged from $201,000 to
$230,000.
Frustration
After more than
6 months of appealing to the HDB, she feels frustrated as during
the period, prices of flats have escalated and has made it harder
for them to purchase a new home. Prices of 4-room flats in Teck
Whye have risen to as high as $240,000 and $305,000 – figures which
Mrs Yap took from the HDB website and included in her email to the
HDB.
In September,
after numerous appeals spanning almost one year, a glimmer of hope
surfaced. HDB informed them that it is “reviewing [their] re-appeal
for a higher HDB loan”. That glimmer turned to frustration again
one week later when the HDB informed them that it is “unable to
accede” to their request for a higher loan.
In her
desperation, she fired off an email to the Prime Minister, Mr Lee
Hsien Loong, last month. In it, she told the PM that “it is not
that we do not work hard for our future [but even when we do] we
can’t even secure a … home for our children.” She went on, “We’ve
been writing in for a year, fighting for a loan to purchase a flat
and not asking for [a free ride].”
On
25th September, having had enough of the frustration of
not being able to secure the loan, she told the HDB to “cancel the
approved loan of $67,000 for now”, as there’s no point for them to
buy a 3-room flat. “I’ll still be unable to work as nobody can look
after my children,” she said.
Mrs Yap is
extremely disappointed that HDB would consider her husband’s salary
too low to service a mortgage loan.
“[The}
Government encouraged us to have more children. But after having
more children, we can’t provide them a proper home, my husband
can’t provide his mother a place to stay, because his salary was
[considered] too low to service a HDB loan.”
Read Leong
Sze Hian’s article, “HDB
means-testing?”
—————–
Update: Andrew Loh’s comment on certain issues
brought up by readers.
The Yaps are not asking for a free
handout.
What they are asking for is to be given a loan (an
additional $33,000 to the $67,000 which HDB has already offered) in
order to buy a 4-room flat.
Why a 4-room flat?
In a word, space. The four kids which they have (the
youngest is just two months old) will grow up and the couple’s
intention is to have a flat big enough for them. It’s a long-term
thing. Also, a 4-room will enable Mr Yap’s mother to live with
them, which in turn will allow Mrs Yap to go out to work, which
will enable her to supplement her husband’s income and help service
the $100,000 loan.
Second and last loan.
HDB only allows Singaporeans to apply for two
concessionary loans. As they have already received one such loan,
this second loan will be their last from the HDB. Thus, they hope
to secure a loan which will be enough to buy a 4-room so that they
can live in it for the long term, without having to loan from the
banks, which for the time being they cannot as they owe credit card
bills.
Means-testing
The bigger issue here is why HDB is implementing,
effectively, means-testing for public housing without any official
announcement or statements from the National Development Minister?
Are there many cases of people defaulting on their mortgage loans?
Further, what are the criterias or salary ceilings for applying for
loans to buy a 3-room, 4-room or 5-room flat? What are the cut-off
points for these?
Why have 4 kids?
I think this is a personal issue which the family
decides. Financial ability to provide for the children is of course
important but not all couples put that as the main consideration.
Some have religious beliefs (I’m not saying the Yaps do). But
whatever it is, however many kids the couple has, the point is that
they are not asking for a handout. Mrs Yap wants to go back to work
so that she can help supplement her husband’s income in order to
help service the loan and be able to purchase a 4-room flat in
order to give her children better living conditions and also to
provide security – and safety – for Mr Yap;s mother who’s been
abused.
Living within one’s means
It is said by some that the couple should live within
their means. While this would be generally encouraged, situations
are not all the same. The difference here is that Mr and Mrs Yap
are working hard to provide for their children. Mrs Yap wants to go
out to work.
Providing public housing
HDB’s policy, inadvertently, is discouraging the
average Singaporean from having more children, it would seem, which
is contrary to what the Government is trying to do. HDB is supposed
to be an agency or Government department which provides public
housing at affordable rates for the average Singaporean. Has HDB
lost sight of its original purpose?
Again, the biggest question is: Why is HDB in the
business of means-testing and what are the criterias? Why no public
announcements about this?
Perhaps the HDB should provide Singaporeans with the
statistic of those who have defaulted on their loans, who are
unable to purchase flats because of their income level and give us
the reasons why.
In a word, transparency.
Why is Mr Yap’s $1,450 salary not enough to qualify for
a sufficient loan? Should Mr Yap work a second job?
