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Revising CPF use for older HDB flats may have severe repercussions

Revising CPF use for older, resale HDB flats is “a long banana kick down the winding road”, said prominent real estate commentator Ku Swee Yong.

Ku, a licensed real estate agent with International Property Advisor Pte Ltd and the co-founder of HugProperty.com, was commenting on the recent Government announcement on revising CPF use for purchase of older resale HDB flats.

Minister for National Development, Lawrence Wong, said in Parliament on March 7 that his Ministry is revising CPF use for the purchase of older resale HDB flats. Speaking at the 2019 Committee of Supply Debate in Parliament, Wong acknowledged that the revised CPF rules for purchase of older resale HDB flats may have disadvantaged owners of such flats.

Revising CPF use
Revising CPF use

Image credit: Wong’s Facebook

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The Minister said in his speech:

Commenting on the Government’s impending move on revising CPF use for older, resale HDB flats, Ku described it as a “masterstroke” which achieves “triple objectives”.

Writing in his Facebook, Ku said:

“My heart goes out to the young generation of home buyers. The new policy is a masterstroke, achieving the triple objectives of: paying out less CPF funds in future, keeping resale HDB prices high, and maintaining BTO prices. The repercussions of relaxing CPF use for old flats will be that more old people in future will need to seek social welfare.

“In 25 years time, our 60-year-olds will have flats left with 25 years lease, they will not be able to monetise their flats to take out much for retirement because their CPF was used to buy an old flat whose value decayed away their retirement funds. The correct policy is one that reminds citizens to focus on the remaining lease of flats, and an even better policy is one that reminds citizens NOT to over consume on housing at the expense of retirement adequacy. But no, we just have to kick it down the road. But still this is a masterstroke that serves 3 objectives.”

Ku added that revising CPF use for the purchase of older HDB flats “will inflict pain on our loved ones… and cause suffering when foolish people become aged and sick.”

Responding to Ku’s Facebook post, prominent economic commentator Chris Kuan said that revising CPF rules for the purchase of older HDB flats is a small relief and a small addition to HDB’s Lease Buyback Scheme, as well as schemes to downgrade to smaller flats.

Kuan added that the impending move of revising CPF rules does not resolve the long term issue of lease expiry and it encourages Singaporeans to keep avoiding thinking about the trade-offs between HDB and retirement.

Wong’s reason for revising CPF use rules – to shift the focus away from the remaining lease of the flat – seems to be at odds with the views of the Chief Executive of HDB, Cheong Koon Hean. Speaking at a Lecture series organised by the Institute of Policy Studies, Cheong said home seekers should pay less for resale flats with shorter lease.

“The price you pay (for your resale HDB flat) should (be) commensurate with the lease,” she said. Cheong added that the 99 year HDB flat lease allows the Government to recycle the land, so that the children of the current home owners will be able to buy a HDB flat at “affordable prices”.

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