New BTO Exercise to Include Staggered Down Payments

The September Build-To-Order exercise began on Wednesday with the Housing and Development Board announcing that it will offer staggered down payments for existing flat owners. The program launched 4,630 new flats in the non-mature districts of Bukit Batok, Hougang, Jurong West and Kallang Whampoa.

The intention of the new staggered down payments is to help existing flat owners that are trying to “right size” from a larger flat to a 2 or 3-room unit. This new program is to address the concerns that many residents voiced about trying to downgrade their flat for one that was smaller and better suited to their needs.

Khaw Boon Wan, the National Development Director, wrote in a blog post of his interactions with older Singaporeans who expressed the desire to move to a smaller flat and how many of them were having problems because they are reliant on the money that is tied-up in the larger flat that they are currently living in.

In this regard he said, “The sale proceeds for their existing flat will be enough to pay for the new flat, but they need to sell the flat first to raise the funds for the new purchase.”

With the new fee arrangement, existing flat owners that are looking to “right size” will only have to pay half of the down payment upfront, with the remaining half to be paid when they collect the keys. This will provide the owners of existing flats the time that is necessary to sell the larger flat and get access to the funds that they need to complete the transaction.

This new arrangement is a good step toward addressing a financial issue that can affect the ability of existing flat owners to move into a new flat. Obviously, these individuals will have the ability to pay the balance with the proceeds from the sale of the existing flat; the problem lies in their ability to access the cash when they need it.