HDB to waive wait-out period to buy resale flat for some downgraders

Private property downgraders who can show they obtained an option to purchase an HDB resale flat before the cooling measures kicked in can have their 15-month wait-out period waived, said the Housing Board on Thursday.

As at Tuesday, HDB has received about 450 appeals from former and current private property owners over the wait-out period, it said in response to media queries.

Based on a preliminary screening of some 200 appeals, about 50 per cent are cases where the owners had obtained an option to purchase for an HDB resale flat before Sept 30, it added.

Since Sept 30, private home owners must wait 15 months after the sale of their home before they can buy a non-subsidised HDB resale flat.

Exceptions are made for those aged 55 and above who are moving from a private property to a four-room or smaller HDB resale flat.

Since the announcement, some who have sold their private property but have yet to complete the application to buy an HDB resale flat have found themselves in a tight spot.

HDB said it will exercise flexibility for buyers with documentary proof that they had obtained the option to purchase before the policy changes and waive the 15-month wait-out period.

These buyers would have to show proof of payment of the option fee or the option exercise fee made before Sept 30, for HDB to process their appeals favourably.

HDB will also verify on its system for buyers using their Central Provident Fund monies or taking an HDB housing loan for the flat purchase, as they would have to make a request for an HDB valuation.

The remaining appeals received by HDB include cases where the option to purchase a resale flat has not been obtained but the owners may have committed to sell, or have sold, their private property.

HDB will review the documents submitted and assess these appeals on a case-by-case basis.

In instances where buyers are no longer eligible for the purchase due to the wait-out period, the option to purchase will be voided and sellers will have to refund the option fee paid to the buyer, said HDB.

A buyer pays an option fee of between $1 and $1,000 in cash to the seller to "reserve" the property.

Within the option period of 21 days, the buyer can exercise his option to purchase, which means he has legally agreed to buy the flat.

On Thursday, HDB said the number of private property owners buying HDB resale flats has doubled in 2021 and the first quarter of 2022, compared with 2019 and 2020.

HDB said it is unable to share specific figures for this group of buyers, as requested by The Straits Times.

Prior to the cooling measures that kicked in on Sept 30, private property owners who wanted to buy a non-subsidised resale flat were only required to sell their property within six months of the flat purchase.

On Tuesday, National Development Minister Desmond Lee told Parliament that this group of downgraders accounts for about one in 10 HDB resale flat buyers in the last five years.

The latest curbs came as HDB resale prices rose by 7.8 per cent in the first nine months of 2022, even in the face of rising interest rates.

HDB reiterated on Thursday that the measures aim to slow the momentum of price increases in the HDB resale market, by deferring demand from private property owners, so that resale flats will continue to be an affordable option for first-time home buyers.

It said: "Private property owners generally have more financial means to buy resale flats, as compared with first-time home buyers or existing HDB home owners.

"Some may not even need to take loans to complete their purchase. They therefore tend to pay higher amounts of cash over valuation when buying resale flats."

It also noted that the wait-out period is a temporary measure that will be reviewed.

A civil servant who had exercised his option to purchase for an executive apartment in Pasir Ris before Sept 30 was relieved to hear the news. Mr M.S., 40, had intended to sell his three-bedroom condominium unit as his three children, aged nine to 14, are outgrowing his current home.

"At least there's some light at the end of the tunnel and my kids can look forward to the new home."