MND releases details on Proximity Housing Grant and other changes

The Ministry of National Development (MND) on Monday unveiled more details on the four housing measures announced by Prime Minister Lee Hsien Loong in his National Day Rally speech on Sunday.

First, the new Proximity Housing Grant (PHG), which will help Singaporeans buy a resale flat with or near their parents or married child; this will complement the various priority schemes with the same objective, but which have so far targeted only buyers of new flats.

From Aug 24, eligible Singaporeans will receive a PHG of S$20,000; eligible singles will get a PHG of S$10,000 if they buy a resale flat with their parents.

The unique thing about the grant is that all Singaporeans are eligible for it once in their lifetime - whether they have enjoyed housing subsidies before, regardless what their household income is or whether they own private property. (They are, however, required to dispose of it within six months, in line with existing rules.)

The recipients of the grant and their parents/married child must live near each other for at least five years.

This will replace the Higher-Tier CPF Housing Grant, which was not open to Singaporeans who have taken housing subsidies before, or have exceeded the income ceiling, or are private-property owners.

The raised income ceilings from S$10,000 to S$12,000 for citizen households buying new HDB flats, and from S$12,000 to S$14,000 for buyers of executive condominiums (ECs) will also kick in on Aug 24.

Correspondingly, the income ceilings for single Singaporeans to buy new or resale flats with CPF housing grants will be raised from S$5,000 to S$6,000; the income ceiling for elderly citizens to qualify for monetisation options will also be raised from S$10,000 to S$12,000.

HDB said it has found that for couples earning S$10,000 to S$12,000, being able to buy a new flat as opposed to a resale one offers significant practical dollar savings of more than S$100,000.

The changes square with the government's push to get Singaporeans to live in HDB towns for the unique experience.

When the income ceiling was last raised from S$8,000 to S$10,000 in 2011, it benefited more than 21,000 families.

On the raising of the income ceiling for the Special CPF Housing Grant (SHG), and the doubling of its maximum amount to S$40,000, the MND announced that the changes will apply from next month's Build-To-Order and Sale of Balance Flats exercise.

Households earning up to S$7,000, including median households, will enjoy the full S$20,000 increase, bumping up their grant from the current S$10,000 to S$30,000.

MND said: "If the flat is subsequently sold, the first S$60,000 of housing grants (which includes other grants besides SHG) will be credited to their CPF Ordinary Account. The additional grants will be credited to their CPF Special Account and Medisave Account. This will better help them with their housing, health care and retirement needs in a holistic way."

This change had come as a surprise to some, as the income ceiling for the grant had just been raised in 2013, from S$2,250 to S$6,500.

The SHG has evolved from being clearly targeted at low-income households to being extended to include also middle-income ones, in recognition that this group needs a financial boost too.

As for the Fresh Start Housing Scheme targeted at families with young children living in HDB rental flats, MND said it is studying the scheme with HDB and consulting the public, and also working with social services agencies to design something practical and meaningful.

There are now about 50,000 families living in HDB rental flats, half of whom belong to this category.

One suggestion is to offer these families a two-room flat on a shorter lease and with stricter resale conditions. This way, they can get out of the poverty trap and grow with the nation's development.

In an interview with reporters, National Development Minister Khaw Boon Wan said this scheme could be implemented next year.

This article was first published on August 25, 2015.
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