Ms Angela Zeng will be one of 8,000 owners of two-room Housing Board flats across the country who can benefit from a new "Step-Up" grant announced by Prime Minister Lee Hsien Loong on Sunday.

The grant targets low-income families currently staying in two- roomers who need a hand in upgrading to a three-room unit.

Home for 32-year-old Ms Zeng, who is divorced, and her two children is currently a two- room flat in Toa Payoh which she bought in the resale market.

All three sleep in the flat's only bedroom: She sleeps on a mattress on the floor, while her children, aged eight and 10, use a bunk bed.

"I hope we can have a bigger flat to live in," said the administrative assistant, who earns $1,700 a month. About a third of this goes to her maid. But "if I have extra money, I'd rather spend it on my kids", she added.

A new three-room unit in a non-mature estate can cost up to $200,000.

The exact details are yet to be revealed, but property analysts have floated ideas on how the step-up grant scheme may work.

Chief among these is the possibility of scrapping the $15,000 resale levy that existing two-room flat owners have to pay when they buy direct from the HDB. "This is the quickest way to help this niche market," said ERA Realty key executive officer Eugene Lim.

The resale levy, designed to maintain a fair allocation of public housing subsidies, applies to those who have either bought a subsidised flat from the HDB, or have accepted a housing grant in buying from the resale market.

Other possibilities include giving out higher subsidies for new flats, but their impact would depend very much on how the grant itself is structured, and whether it is open to just new units or resale flats as well, noted R'ST Research director Ong Kah Seng.

"The key is to make upgrading affordable," he said.

DARYL CHIN

CHARISSA YONG