BTO flat buyers affected by Covid-19 construction delays may be able to cancel booking without penalties

HDB will waive the financial penalty and the one-year wait-out period for BTO buyers who are successful in their appeal.
HDB will waive the financial penalty and the one-year wait-out period for BTO buyers who are successful in their appeal.PHOTO: ST FILE

SINGAPORE - Home buyers affected by Build-To-Order (BTO) construction delays may be able to cancel their flat booking without penalties. They can appeal, and the Housing Board will consider each case depending on the individual circumstances.

For instance, there could be buyers hoping to cancel their BTO booking to get a resale flat to meet urgent housing needs, the Ministry of National Development (MND) said in various written parliamentary replies on Monday (July 5).

"We recognise the challenges faced by flat buyers given the Covid-19 situation and HDB will consider waiving forfeiture based on an assessment of the flat buyers' specific circumstances," said MND.

Typically, buyers who cancel their flat booking will have to forfeit either their option fee which ranges from $500 to $2,000, or the 5 per cent of the flat purchase price paid in advance, depending on which stage of the process they are in.

In addition, they have to wait out a one-year period before they can apply for another subsidised unit, either BTO or a resale flat with grants.

"These measures are in place to ensure that buyers are serious when they buy a flat and do not deprive others with urgent housing needs of the opportunity to do so," said MND.

However, if buyers are successful in their appeal, the HDB will waive the financial penalty and the one-year wait-out period.

"The waiver of the one-year wait-out period will allow first-timer families with urgent housing needs to receive housing grants if they decide to buy a resale flat," said MND.

Eligible buyers can receive up to $160,000 in grants when they purchase a resale flat.

Many BTO projects are facing delays of up to one year or more, as the construction industry continues to grapple with a manpower shortage caused by tighter border controls during the Covid-19 pandemic.

While buyers could appeal for a waiver of forfeiture earlier, this is the first time the MND has said HDB will consider waiving the penalties for BTO buyers affected by construction delays.

In its replies, MND said it is also looking at ways to increase the supply of temporary housing to support affected flat buyers.

First-time applicants waiting for their BTO flats can apply for temporary housing under the HDB's Parenthood Provisional Housing Scheme (PPHS).

Demand for such interim housing had almost doubled during the pandemic.

Last year, HDB had received 2,350 applications for a PPHS unit, but there were only 160 available flats.

"Given the limited supply of PPHS flats, we are considering how to fine-tune allocation to give priority to families in greater need of temporary housing," said MND.

For low-income households with no family support and no other housing option, HDB will consider offering interim rental housing on a case-by-case basis, said MND.

Affected flat buyers are encouraged to find alternative housing arrangements with family members, relatives or on the open market.

Notwithstanding the current challenges faced by the construction industry, MND said HDB is on track to launch about 17,000 BTO flats this year as planned, higher than the 16,800 flats launched in 2020, and 14,600 units in 2019.

The BTO flat supply is also supplemented by balance flats offered through the twice-a-year Sale of Balance Flats exercises and open booking, which is available all year round, said MND.

A buyer who wanted to be known only as Ms Low is among those who successfully appealed to cancel her BTO flat booking earlier this year.

Ms Low, 27, and her husband had applied for a five-room BTO flat in Tampines GreenVines via open booking last March, thinking that construction would be swiftly completed as the project had been launched in 2018.

It was their sixth try, after the first five attempts did not yield a queue number.

"When HDB first notified us of the nine months' delay after the circuit breaker period, we were already thinking of cancelling the BTO flat. But it wasn't easy to get one so we decided to wait," said Ms Low, who works in a bank.

"But when we heard news of even further delays, we decided we need to get a resale flat so we engaged a property agent while submitting the appeal to cancel the BTO flat at the same time."

The couple have been living apart since their wedding last October.

Ms Low said her appeal took about two months in what she described as a "tedious process". But she considers herself lucky to secure the full waiver.

They have since bought a resale four-room flat in Canberra and are waiting for renovations to be completed.

"Because of all these delays, we now have to throw our savings into a resale flat which is more expensive than a BTO flat. But if we held on to the BTO flat, we would have to delay our plans to start a family till much later," she said.