askST: Why won't the Housing Board waive the 10 per cent deposit for a retiree buyer?

Reader Yuen Kar Wai, 58, wrote to askST about the 10 per cent Housing Board deposit he needs to pay for his upcoming four-room flat. His request for a waiver was rejected even though he was unable to pay the deposit now. He wrote: "(The proceeds from the sale of my current flat) is sufficient to pay for half of the Build-to-Order flat. Why is HDB so inflexible in dealing with problems faced by retirees like me where most of the money are stored away in the retirement account? Why does HDB need the 10 per cent so badly?"

Housing reporter Ng Jun Sen replies.

Just like many other big ticket items purchased in Singapore or overseas, whether it is a car or a home, a deposit ensures that buyers are committed to their purchase.

Deals fall through all the time and often at the last minute. In the case of Housing Board flats, this is usually due to changes in the homebuyers' financial situation while completing their purchase or other personal reasons that may be beyond their control.

Between 2016 and the March this year, 45 buyers opted to cancel their new flat bookings and forfeit their deposit due to these reasons, National Development Minister Lawrence Wong said in Parliament last month.

Currently, homebuyers need to pay a down payment of 10 per cent of the flat purchase price when they first sign the lease agreement with the HDB, if they do not take any housing loans.

The balance is due when the keys of the new flat are ready for collection.

In the meantime, most buyers will try to sell their current home and use the proceeds to pay for the balance. But some buyers, like Mr Yuen, may not have the cash available until then.

This is why this year, more help was given to the elderly with cash flow problems or those whose funds are tied up in their existing flats.

Starting from last month's BTO sales exercise, a new deferred down payment scheme (DDS) allows eligible buyers aged 55 and above to pay a down payment only at key collection.

With the DDS, elderly buyers need to pay only the stamp and legal fees when they sign the lease, deferring the down payment to later.

Since March, a new temporary loan scheme (TLS) became available to buyers to finance their completed purchases without taking out a mortgage. This bridging loan is offered at the prevailing non-concessionary interest rate.

Mr Yuen, who has booked a four-room BTO flat, should note that the DDS applies only to two-room Flexi or three-room flats, and one can take out the temporary loan only when the new flat is ready.

If buyers are experiencing financial hardships, HDB does grant time extensions and waiver of forfeitures on a case-by-case basis, according to Mr Wong.

Even with these assistance schemes, flat buyers should still be prudent in their home purchases and be careful not to spend beyond their means.