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SDP proposes non-open market flats in housing policy
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SDP proposes non-open market flats in housing policy
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Added on: Sunday 04 November 2012
Total comments: 3
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Singaporeans Democrats
 The SDP has proposed a new Non-Open Market, or
NOM, scheme in public housing to help reduce prices of HDB flats. Under
the scheme a segment of new HDB flats will be priced at cost minus the
land "cost" that is currently factored into HDB prices.
As a
result, prices of flats will be substantially lower, ranging from
$70,000 for 2-room flats to $240,000 for 5-room flats.
As stated, the
prices reflect only the cost of building a flat (that is,
administrative, material, labour costs only).
As the name
implies, however, flats bought under this scheme will not be allowed to
be re-sold in the open market. Owners wishing to dispose of their NOM
flats will have to sell them back to the HDB.
This
innovative idea was introduced at today's launch of SDP's alternative housing
policy, Housing A Nation:
Holistic Policies For Affordable Homes. The paper was presented by Mr Jeremy Chen (pictured below), a decision science expert, who is currently pursuing his PhD at the National University of Singapore.
Others involved in the SDP's housing panel include Mr David Goh, an accountant and property consultant; Dr Leong Yan Hoi, a medical practitioner and member of the SDP's healthcare panel; and Dr Toh Beng Chye, also a medical practitioner and another member of the SDP's healthcare panel.
 Singaporeans who purchase these flats will take an estimated 9 to 15 years to pay off their housing loans (based on an interest rate of 3 percent) using no more than 20 percent of their gross income. This further reduces the financial burden of home buyers many of whom currently service their loans on a 30-year basis.
The lowered housing expenditure will free up capital for homeowners to save for their retirement or use it for other purposes such as starting a business, paying for education or medical care, investing in other instruments, etc.
NOM flats will only be available to Singapore citizens. Owners of such flats will not be allowed to own private property and will only be allowed to rent out their flats under strict restrictions such as when owners are posted overseas in their work.
The rationale behind this scheme is that the Government should not profit from Singaporeans when it comes to public housing and Singaporeans should not use it as a means of investment for capital gain. Public housing is a social good and should be used to meet the housing needs of the population, not profit-making for the government or citizens.
Current homeowners
Existing HDB owners of flats can continue to sell their flats in the open market, hence they will be termed Open-Market (OM) flats. In addition, OM flat-owners can simultaneously own private property or rent out their flats. In other words, policies regulating OM flats will remain relatively unchanged.
However, owners who wish to dispose of their OM flats to take advantage of the NOM scheme can simply convert the status of their existing flats.
The Government will return the difference between the original price of their flats (as purchased from the HDB) and price of an equivalent NOM flat subject to a cap. This money will be credited back to the owner's CPF account or used to pay any outstanding housing loan that one may have taken.
The converted flats will then be subjected to rules governing NOM flats.
Advantage homeowners
The NOM scheme essentially gives Singaporeans an added option of buying a home at a greatly reduced price. Current HDB owners also have the choice of converting their flats to an NOM one if they so wish. As mentioned this will free up capital for use for other purposes. However, the trade off will be that they are bound by the restrictions under the scheme.
Those who wish to remain on the OM scheme can continue to do so and be able to sell/rent their properties on the open market. Of course, they are subjected to the vagaries of the open housing market.
First-time HDB buyers can choose to buy an OM or NOM flat.
Housing market
 Under the SDP plan, there are enough restrictions/disincentives under the NOM scheme coupled with existing incentives under the OM system that will discourage homeowners from making an exodus out of the OM market into the NOM scheme.
In addition, the NOM scheme will be introduced in a gradual manner to prevent a shock to the existing system and a sudden market correction.
This will provide stability to the OM prices while making NOM flats affordable for those who want it. This is the strength of the SDP plan. We envisage that if there is going to be a market correction of prices (which is the desired outcome), it will take place in a gradual and measured way that will not cause financial distress to current homeowners.
Other policy initiatives
Housing a Nation also makes the following policy recommendations:
1. Implement the Young Families Priority Scheme (YFPS), a targeted priority scheme that grants balloting priority for first-timer families with children or couples who are expectant for Balance Flats or new Built-To-Order Flats in non-mature estates.
2. Increase the inclusiveness of public housing by enabling single-parent families with children as well as singles to purchase and own their flats. The SDP plan will also increase the range of lower-income Singaporeans for housing rental.
3. Enhance the Lease Buy-Back Scheme to more effectively assist needy senior citizens to have a secure retirement.
4. Bar Permanent Residents and non-citizens from buying or renting NOM flats.
Under the SDP plan, the NOM system will increase the affordability and access to public housing for all
Singaporeans. While our suggestions for young families and Singaporeans with special needs will ensure our public housing system is caring and inclusive.
Collectively, these SDP policies can contribute towards resolving some of the major problems affecting public housing in Singapore today.
The full document of the paper can be viewed here. As this paper is offered for public consultation, we welcome comments and suggestions. Please send your feedback to: sdp@yoursdp.org.
More event photos at SDP's photo gallery or facebook album.
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| Total comments: 3 | |
0   3
Kevin (28 November 2012 3:25 PM)
@ tigris, this will fall under the point 1) in the 'other housing initatives' section for singles who wish to own a flat.
i think this is a very well-thought out proposal, maybe the government will be willing to look over this proposal and give a response?
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Tigris (07 November 2012 8:42 PM)
What about singles who want to live along first?
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Tan Ray (05 November 2012 3:38 PM)
In the 1970's Singapore citizens doing NS were given priority when applying for flats. They were affordable at $7800 for a 3-room flat at Toa Payoh, even though my salary was only $200. In 1984 when I moved to Potong Pasir, to a 5-room flat which was sold at $113,000, it took me 10yrs. to repay a $49,000 loan at $500 monthly instalment from the HDB. My wife and I deducted a total of $70,000 from both our CPF accounts for the flat. Singaporeans doing NS or who have completed their army conscription should still be given priority in purchasing the non-open market housing scheme for a 3-room flat at let's say $90,000, a 4-room flat at let's say $150,000 and a 5-room flat at let's say $210,000 respectively. They should be given a choice either to sell it back to the HDB at a price the HDB deem appropriate, or they can sell it in the open market subjected to a cape of let's say after an occupancy of 5 or 10yrs. If they were to sell it in the open market, they will be barred for life from applying another flat. This way they will treasure their existing flat more and not to speculate their flat for a profit, or they will have to get another flat at the mercy of the open-market pricing. They will be given only one chance for such a scheme, instead of two chances previously. If they were to sell it back to the HDB they will be given a 2nd chance to upgrade to a larger flat under the Non-open market scheme at the prices stated. Singles and young married couples should be accorded such a scheme too. They must be Singapore citizens, and always remember that a comfortable and cosy home is a lasting commitment and not for speculation for profit gains. Hopefully we should see our fertility rate for the next generation heading North.
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