HDB clarifies rule change on flat ownership transfers
Singapore
AMID market rumblings that recent regulatory changes on the transfer of HDB flat ownership rule are meant to plug loopholes, the Housing & Development Board (HDB) has made clear that its policies are not a reaction to potential ABSD abuse cases.
"The changes are not meant to prevent married couples from decoupling to avoid ABSD (additional buyer's stamp duty)," HDB said in a late-night response to media queries.
Under the eligibility conditions that kicked in since April 1, changes in flat ownership are allowed only on grounds of marriage, divorce, death of an owner, financial hardship, renunciation of citizenship and medical reasons.
On average, some 6,000 applications for transfer of ownership were approved each year from 2012 to 2015. "These were mainly due to reasons such as marriage, divorce, death of an owner and financial hardship," an HDB spokeswoman said. "For cases where the change in the flat ownership are not due to the above reasons, HDB will assess the requests on a case-by-case basis, based on the merits of each case."
But since April 1, online rumblings reflected a rampant interpretation of HDB's move as a clampdown on flat owners trying to "game" the system.
Various forums have been sharing about how Singaporean couples can decouple their flat ownership in order to avoid ABSD on the second home purchase prior to the regulatory changes on April 1. Now, many are saying that this can no longer be done since HDB has spelt out specific conditions for flat ownership transfers to take place.
"Decoupling" is the process whereby one co-owner of a property transfers his or her share in the property to the other co-owner in the most common situation of a property co-owned by two persons. The outgoing owner would then be eligible to buy a private home without having to pay ABSD on the new purchase and may also be able to obtain a higher loan-to-value limit for the mortgage if he does not have other outstanding loans.
Ownership in the property could either be transferred by way of gift or sale of part share that involves monetary consideration. Traditionally, resale part-share is not allowed between a married couple or when the purpose of the transaction is solely to include another family member as a co-owner of the flat.
"HDB recognises that changes in household structures could happen over time. Hence, to facilitate such changes, we allowed transfer of flat ownership, if the proposed owners met the eligibility conditions to own a HDB flat," the HDB spokeswoman said.
Now, under the eligibility criteria for transfer of flat ownership, there has to be a change in the existing family structure such as divorce, marriage or demise of an owner, or the existing owners need to do an ownership change to retain the flat. The proposed owners must be an immediate family member of the existing owners, must be able to take over ownership of the flat under one of the existing eligibility schemes, and be at least 21 years old. A full list of eligibility conditions are listed on HDB's website.
Century 21 Singapore CEO Ku Swee Yong felt that HDB could go further by tracking past approved cases of flat ownership transfers since the ABSD was implemented to see how many went on to buy private homes. "Those doing so are going against the raison d'etre of the public housing scheme," he said.
