More young couples can now buy HDB flats with the new staggered payment plan

Young first-time couples who book a HDB flat can pay the downpayment in two instalments. They will make the initial payment upon signing the Agreement for Lease within nine months and the rest at the key collection.

Depending on the chosen financing option, the initial deposit is either 5 or 10 percent of the total price. The down payment required by most HDB homebuyers is 10 percent, while the amount for financial institutions or those taking out a loan is 20 percent.

Even though the initial downpayment is reduced to 5 percent, for some couples it can still be a major financial obstacle.

Starting with the June 2024 BTO sale exercise, couples eligible for deferring their income assessment in order to receive the HDB Housing Loan and the Enhanced Central Provident Fonds Housing Grant will see their down payment halved.

Couples who delay income assessments are more likely to qualify for the EHG. To be eligible, one spouse must have been in employment for atleast a year. The couple may qualify for higher loan amounts after some time.

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More than 3,700 couples, supported by the SDS, have used the deferred-income assessment since 2018. This has helped them to lower their upfront costs so they can start their home-ownership journey sooner. I hope couples who are saving for a down payment on a home and want to settle down sooner can benefit from this new enhancement.

The Progress Singapore Party proposal would allow singles to access public housing earlier. However, their proposal may lead to an increase in BTO application rate and a rise in resale price.

Lee said that, in any case, from the second quarter of this year onwards, singles can already purchase two-room BTO flexi apartments islandwide. In addition, the government has increased the number of available flats.

Rental vouchers

Lee explained that families who wait for their HDB flats would also be entitled to S$300 monthly rent on the open market.

The S$300 rental coupon is part of a newly introduced scheme for couples that are eligible for Parenthood Provisional Housing Scheme, which offers subsidised HDB rentals to families who have urgent housing needs.

The S$300 was designed to be a relief for some families and to mitigate the potential inflationary effect on the rental markets of others.

Families who qualify for the scheme must have bought an unfinished HDB apartment. They can be a couple with atleast one first-time buyer or a divorced, widowed, or childless parent. A household income of S$7,000 or less is required, as well as a registered rental tenancy with HDB. Vouchers are not applicable to tenants who rent from family members.

The scheme will last for one year starting in July 2024, while the government increases the number of PPHS flats – doubling the amount from 2,000 to 4,000 units by the second quarter of 2025.

Support for such households includes a reduction in the initial financial outlay, and S$300 each month in open market rent.

Desmond Lee, Minister for National Development and Housing and Development Board of Singapore (HDB), said that some couples who are waiting to buy their new HDB flats may have to pay less as an initial downpayment with the revised Staggered Downpayment Scheme.

The ministry announced the extension of support during a debate of its Committee of Supply. The changes will help ease the burden of young couples who are looking to settle earlier but may not have been able to qualify for an adequate housing loan because they have not started to work yet or have only recently started to work.

To qualify, couples must either be students or recent graduates who are currently enrolled full-time, or be national servicemen. Couples must include at least one member under 30 years of age, be married or apply for a flat through the Fiance-Fiancee Program.

The revised scheme is effective from the launch of Build-to-Order (BTO), which will be in June.

Analysts say that both of these moves will help to keep public housing affordable for more youth.

The reduction in down payments will allow eligible couples to apply Plus and Prime apartments, which are typically more expensive and may have been out-of-reach.

Christine Sun is the chief researcher and strategist at OrangeTee Group. She said that PPHS vouchers can offset up to 25 percent of rent costs for households who qualify, as median rent in neighborhoods such as Punggol, Geylang and Punggol ranges between S$1,175 – S$1,825 a monthly.

It is unlikely that the voucher scheme will have an inflationary affect on the HDB rental markets, as it is temporary and not too substantial.

On the open rental market, most tenancies last two years. The couple could face problems once the vouchers have expired. This is because the amount of vouchers is not enough and doesn’t cover the entire two-year period.

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