Young couples, including students and NSFs, can apply for new flats with lower initial down payment from June

SINGAPORE: Eligible young couples will get more help when buying a new Housing Board (HDB) flat from June, including a reduced initial down payment of 2.5 per cent of the purchase price.

Currently, young couples – full-time national servicemen (NSFs), students, or those who have completed their studies or National Service within the last 12 months of applying for the HDB flat eligibility letter – can apply for a new flat first and defer their income assessment for housing grants or loans to just before key collection.

This is because if income was assessed at the time of application, these couples may not be eligible for grants such as the Enhanced CPF Housing Grant (EHG), which requires at least one party to be continuously employed for a minimum of 12 months.

By deferring income assessment to the collection of keys, they are more likely to be eligible for the grant and may even qualify for a higher loan amount, said the Ministry of National Development and HDB in a press release on Tuesday (Mar 5).

Other eligibility conditions for deferred income assessment include the requirement for at least one applicant to be 30 years old or below. The couple must be married or are applying for a flat under the Fiance-Fiancee Scheme, which has a minimum age requirement of 21 years old.

In addition, under a staggered down payment scheme, these young couples are currently able to pay the minimum down payment of 20 per cent for their flat in two instalments. The first down payment is either 5 or 10 per cent, depending on the type of loan taken. The second instalment is due at key collection.

National Development Minister Desmond Lee said on Tuesday that since 2018, more than 3,700 couples have tapped on the deferred income assessment, with support from the staggered down payment scheme, to ease their upfront costs and start their home ownership journey early.

The government wants to do more to help lighten the initial financial burden for such young couples, he told the House.

“Since they have deferred their income assessment, they will only receive their EHG closer to key collection and must rely on their own savings or support from family for initial costs of booking a flat,” Mr Lee said. 

For some, the reduced initial down payment is still a “significant financial barrier”, he added.

The staggered down payment scheme will be enhanced by reducing the initial down payment to 2.5 per cent. This will ease the initial cost for these couples in buying a flat, the authorities said.

The change will kick in from the Build-to-Order (BTO) sales exercise in June.

TEMPORARY RENTAL VOUCHERS

Families who qualify for the Parenthood Provisional Housing Scheme (PPHS) will also get further support in the form of temporary rental vouchers worth S$300 a month.

Under the scheme, families can rent a flat from HDB while waiting for their homes to be completed. HDB is increasing its supply of such rental flats to meet demand, and targets to double the current 2,000 units to 4,000 by the second half of 2025.

In the interim, to help more eligible families rent an HDB flat or bedroom in the open market, the government will provide them with a PPHS (Open Market) Voucher for one year starting from July.

Mr Lee said authorities have “scoped the parameters of the voucher carefully” and will be monitoring closely the impact of the vouchers on the rental market.

“Some may ask, why not a higher amount? The S$300 quantum was carefully calibrated to provide some relief to eligible families, while mitigating the potential inflationary impact on the rental market for others,” he said.

To be eligible for the new voucher, families must meet the criteria under PPHS and have a rental tenancy registered with HDB at the point of application.

Those that qualify will receive the voucher on a reimbursement basis based on the duration of their tenancy that falls within the stipulated one-year period.

Families renting from immediate family members or close relatives will not be eligible.

More details will be shared closer to implementation, the authorities said.