EIP buyback assistance will 'level the playing field': analysts

THE Housing Board's (HDB) new Ethnic Integration Policy (EIP) Buyback Assistance Scheme would level the playing field for EIP-constrained flat owners in the property market, analysts said.

HDB will offer to buy back flats on a case-by-case basis for eligible owners who face "genuine difficulties" selling their homes due to EIP constraints, announced Minister for National Development Desmond Lee at the Committee of Supply (COS) Debate on Tuesday (Mar 8).

Ismail Gafoor, chief executive of PropNex Realty, noted that EIP-affected sellers often take at least a year longer to sell their flats, compared to their neighbours who are not affected by EIP limits.

They may also sell their units at discounts of more than S$50,000, he added.

That said, Gafoor expects that the number of potential applicants for the scheme will not be significant enough to distort the HDB resale market.

"This policy change will help to ensure that certain groups of flat owners, such as minority sellers, will not be unfairly burdened by the EIP limits - one of the tools to promote racial harmony in Singapore," he said.

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OrangeTee & Tie senior vice-president of research and analytics Christine Sun added that the scheme could result in more EIP-constrained flat owners looking towards flats in mature estates.

She said: "In the past, some potential buyers may avoid such flats as these flats are usually pricier than those in non-mature estates. They fear difficulty in offloading their units later as there may be few eligible buyers who can meet the ethnic quota. The risk of selling at a potential loss could also be higher if they were to buy expensive resale flats in mature estates."

To qualify for the scheme, flat owners must have fulfilled the Minimum Occupation Period (MOP) and owned the flat for at least 10 years. They must also provide proof of "genuine attempts" to sell the flat.

Homeowners must also have attempted to sell their units at a "reasonable asking price" over a continuous period of time, comparable to the time taken by most other homeowners to sell their apartments.

"Based on HDB's experience, 6 months is presently sufficient for most flat owners to do so. This may change, depending on prevailing market conditions," the agencies said.

Huttons Asia senior director (research) Lee Sze Teck said: "The 6-month period is reasonable as it strikes a balance between a buoyant and slow market."

However, he noted that flat owners may not use their best efforts to sell their flat, knowing they have a back-up buyer.

He added: "Will HDB be able to recover the amount they paid for the flats bearing in mind these flats were difficult to sell in the first place? If not, there is a cost to be borne by taxpayers."

Once a flat owner is assessed to be eligible for buyback assistance, HDB will appoint a professional valuer to determine the buyback price.

Flat owners can take up to 3 months to decide if they wish to accept HDB's buyback offer. Those who reject the offer will not be eligible for buyback assistance for a period of 12 months after the offer lapses.

Minister Lee added that those who are EIP-constrained but have not met the 10-year MOP can still apply for special consideration.

The buyback assistance will be implemented with immediate effect.

The MND COS covered 4 priority areas: keeping public housing affordable and accessible and inclusive; transforming the built environment sector; improving integration with nature; and heritage.

Among other efforts, the government is ramping up funds for research into green buildings and urban sustainability, as Singapore works towards its Singapore Green Building Masterplan and climate change goals.

This includes an additional S$45 million for the Green Buildings Innovation Cluster (GBIC), and an additional S$64 million into research and developments (R&D) under the City in Nature and Greater Sustainability pillars of the Cities of Tomorrow programme.

Another S$63 million will also be granted to the Green Mark Incentive Scheme for Existing Buildings to help building owners in their sustainability efforts. Under the enhanced scheme, the minimum qualifying standard will be raised to Green Mark Platinum, from the previous Green Mark Gold.

"In addition to transforming the way we build, we need to change the way we maintain our buildings through facilities management (FM)," said Minister of State for National Development Tan Kiat How.

The government will also introduce a new S$30 million grant to co-fund up to 70 per cent of a building's initial capital investment and retrofitting costs for Integrated and Aggregated FM.

To qualify for funding support, building owners will need to work with FM firms to install smart infrastructure and rework their procurement practices to integrate at least 3 FM services, for at least 3 buildings in their portfolio.

Building owners can apply for Green Mark the scheme from Q2 2022, while the FM grant will be available from H2 2022. (see Amendment note)

Amendment note: An earlier version of this article had misstated that the FM grant will be available from Q2 2022, when it is actually H2 2022.