Unintended Consequences of Cooling Measures Policies
While I am working on the ground serving many clients with their real estate needs, here are some things that I observe and do hope that there will be tweaks by the policy makers
1) ABSD and lower loan to value for single property owner upgrading for own use
While the measures is aim at multiple properties owners for a more stringent loan and higher tax during purchase, it has affected many families, disrupting their upgrading plans.
Eg. Today a family of 4 exploring buying private condo 3 bedroom to upgrade from their existing 4rm hdb.
If they have outstanding loan with the hdb. Their loan to value is only 45% for their next condo, on top of that, they will have to pay 20% for second property first. Only upon sale of existing hdb, then they can apply to IRAS for remission.
If the family is exploring to buy a $1.5m 3 bedroom condo, the downpayment upfront required will be a total of $1.17m. Question is, how many families have such cash/cpf lying around?
More often than not, the logical options will be either sell the existing place with extension of stay from the buyer or to rent a place outside temporarily.
My humble suggestion is to apply the same method given to Executive Condo.
For hdb buyers going for EC, they are allowed to hold onto their existing property while waiting for the EC to be completed. In the meantime, they have to sign a letter of indemnity form to commit to sell their hdb within 6 months upon collecting for their keys for the EC.
If this were to be allowed by the COH, URA, IRAS and other relevant authorities, many families will not be caught into this situation of wanting to upgrade but bogged down by the financial and logistical issue of moving house 2 times.
This will also reduce the strain on the high rental demand. Many of such families are renting 1 year either hdb or private during this buying/selling transition to facilitate a smooth timeline.
This flexibility is granted only to genuine homebuyers who are looking to switch their current own stay property to another future own stay property. Hopefully the authorities can look into improving this.
2) 15 months wait out period for private properties owners to buy resale hdb
While this measure is introduced back then to reduce the numbers of cash rich PPO going back to the resale hdb market, the fundamental issue of escalating hdb prices still lies with the supply crunch caused by Covid.
The blanket ban to all private properties owners is not a fair one as there are many instances where the young couple was not married before, one of them may have bought a 1 bedroom condo thinking that he/she will be forever single.
However, one cannot stop fate, and subsequently when the two singles got married, they would very much want to have their first love nest together. A one bedroom condo may be enough for a Single but a resale hdb will provide a better space & opportunity for the couple to increase our country’s population.
If the Singles are already disadvantaged when applying for BTOs, in this scenario where they are looking to buy their first resale hdb as a couple, they may feel even more resentful towards the policy makers.
Again, these are just my personal observations and humble suggestions based on my experiences dealing with common Singaporeans.
These suggestions stem from my experiences and aim for a housing situation in Singapore that is more inclusive and responsive to diverse population segments.
