Business & Economy Property Revising CPF use for older HDB flats may have severe repercussions

Revising CPF use for older HDB flats may have severe repercussions




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Revising CPF use for older, resale HDB flats is “a long banana kick down the winding road”, said prominent real estate commentator Ku Swee Yong.

Ku, a licensed real estate agent with International Property Advisor Pte Ltd and the co-founder of, was commenting on the recent Government announcement on revising CPF use for purchase of older resale HDB flats.

Minister for National Development, Lawrence Wong, said in Parliament on March 7 that his Ministry is revising CPF use for the purchase of older resale HDB flats. Speaking at the 2019 Committee of Supply Debate in Parliament, Wong acknowledged that the revised CPF rules for purchase of older resale HDB flats may have disadvantaged owners of such flats.

Revising CPF use
Image credit: Wong’s Facebook

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The Minister said in his speech:

“One issue with regard to the purchase of older HDB flats is CPF rules, specifically the restriction in CPF usage for flats with less than 60 years of lease remaining. Some banks also take reference from these CPF restrictions when assessing how much loan to extend. As a result, both the CPF and loan quantums may be reduced for the purchase of such flats.

“The CPF rule is intended to safeguard the retirement adequacy of buyers who purchase older flats, but its design has led to some unintended consequences. For example, if a buyer would like to buy a 39-year-old flat, he can use full CPF; but one year later, because you hit this less-than-60-years requirement, the amount of CPF will be restricted. And there is no good reason why this should be so just because the flat became one year older.

“MND and MOM have been studying this issue. In fact, the focus should not be on the remaining lease of the flat. What we want to ensure is that buyers purchase flats with leases that are long enough to last them for life. If that is done, we can relax CPF usage rules, even if the remaining lease is less than 60 years.

I have explained the thinking behind how we intend to change the CPF restrictions. The details are being worked out, and we will announce them soon, for implementation in May this year. “

The ticking time bomb of the 99-year-leasehold HDB flats

Commenting on the Government’s impending move on revising CPF use for older, resale HDB flats, Ku described it as a “masterstroke” which achieves “triple objectives”.

Writing in his Facebook, Ku said:

“My heart goes out to the young generation of home buyers. The new policy is a masterstroke, achieving the triple objectives of: paying out less CPF funds in future, keeping resale HDB prices high, and maintaining BTO prices. The repercussions of relaxing CPF use for old flats will be that more old people in future will need to seek social welfare.

“In 25 years time, our 60-year-olds will have flats left with 25 years lease, they will not be able to monetise their flats to take out much for retirement because their CPF was used to buy an old flat whose value decayed away their retirement funds. The correct policy is one that reminds citizens to focus on the remaining lease of flats, and an even better policy is one that reminds citizens NOT to over consume on housing at the expense of retirement adequacy. But no, we just have to kick it down the road. But still this is a masterstroke that serves 3 objectives.”

Ku added that revising CPF use for the purchase of older HDB flats “will inflict pain on our loved ones… and cause suffering when foolish people become aged and sick.”

The ticking time bomb of the 99-year-leasehold HDB flats

Responding to Ku’s Facebook post, prominent economic commentator Chris Kuan said that revising CPF rules for the purchase of older HDB flats is a small relief and a small addition to HDB’s Lease Buyback Scheme, as well as schemes to downgrade to smaller flats.

Kuan added that the impending move of revising CPF rules does not resolve the long term issue of lease expiry and it encourages Singaporeans to keep avoiding thinking about the trade-offs between HDB and retirement.

Wong’s reason for revising CPF use rules – to shift the focus away from the remaining lease of the flat – seems to be at odds with the views of the Chief Executive of HDB, Cheong Koon Hean. Speaking at a Lecture series organised by the Institute of Policy Studies, Cheong said home seekers should pay less for resale flats with shorter lease.

HDB chief suggests buyers should pay less for resale flats with shorter leases

“The price you pay (for your resale HDB flat) should (be) commensurate with the lease,” she said. Cheong added that the 99 year HDB flat lease allows the Government to recycle the land, so that the children of the current home owners will be able to buy a HDB flat at “affordable prices”.

How to Secure a Home Loan Quickly

If you living in HDB flats and want to upgrade to condominiums, but unsure if you qualify for mortgage loans, our mortgage consultants at iCompareLoan can set you up on a path that can get you a home loan in a quick and seamless manner.

Our consultants have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home purchase needs. You can find out money saving tips here. You can get more resources for buying, selling and refinancing by browsing through our website, iCompareLoan.

Owning a private apartment is a common aspiration in Singapore. Or a sign that you’re one of the ‘miserable lot’ with a household income of, say, $12,001 a month – then it’s your only option because you can’t buy a HDB flat. Well don’t panic!  Whether you are looking for a new home loan or to refinance your existing one, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us.

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