SOME young couples waiting for their new Housing and Development Board (HDB) flats will need to fork out less in their initial down payment, with the revision of the Staggered Downpayment Scheme (SDS), Minister for National Development Desmond Lee said on Tuesday (Mar 5).

The extension of support was announced during the ministry’s Committee of Supply debate. The changes aim to help lighten the burden for young couples looking to settle down earlier, but who have not yet started working or have just started working and may not qualify for a sufficient housing loan.

To be eligible, couples must be current full-time students, recent graduates or national servicemen. At least one party must be aged 30 or below, and the couple must be married or applying for a flat under the Fiance-Fiancee Scheme.

The revised scheme will take effect from the next Build-To-Order (BTO) sales launch in June this year.

Under the SDS, young first-timer couples can pay for the down payment for their uncompleted HDB flat in two instalments – the initial down payment when signing the Agreement for Lease, which takes place within nine months of booking a flat, and the remainder at key collection. 

Currently, the initial down payment under the scheme is 5 or 10 per cent of the flat price, depending on the financing option chosen. In comparison, the down payment for most homebuyers taking an HDB housing loan is 10 per cent, and 20 per cent for those taking a loan from financial institutions.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

For some young couples, “the reduced 5 per cent initial down payment under the SDS is still a significant financial barrier”, said Lee.

Starting from the June 2024 BTO sales exercise, couples who are eligible to defer their income assessment for the HDB housing loan and the Enhanced Central Provident Fund Housing Grant (EHG) will see their initial down payment halved to 2.5 per cent of the flat price, regardless of their financing option. 

Deferring their income assessment will mean that the couple is more likely to be eligible for the EHG, which requires one party to be in continuous employment for at least a year. They may also qualify for a higher loan amount after working for some time. 

Since 2018, more than 3,700 couples have tapped the deferred income assessment, with support from the SDS, to “ease their upfront costs and start their home ownership journey early”, said Lee. “For couples who are ready to purchase a flat and have been saving up to afford the down payment, I hope this enhancement will help you to settle down earlier and start your families earlier.”

Lee also noted the Progress Singapore Party’s proposal to expand singles’ access to public housing at a younger age. But their suggestion may result in BTO application rates spiking and resale prices soaring, he said.

In any case, singles will already be allowed to purchase two-room flexi BTO flats islandwide from the second half of this year, and the government is ramping up flat supply, added Lee.

Rental vouchers for families

Eligible families waiting for their new HDB flats will also get S$300 a month to rent a public flat or bedroom in the open market, said Lee.  

The S$300 rental voucher is part of a new scheme for couples eligible for the existing Parenthood Provisional Housing Scheme (PPHS), which provides subsidised HDB rental flats to families with urgent housing needs. 

Lee said the S$300 quantum was “carefully calibrated” to provide relief to some families, while “mitigating the potential inflationary impact on the rental market for others”.

Families must have booked an uncompleted HDB flat and include either a married couple with at least one first-timer buyer, a divorced or widowed parent with children, or applicants under the Fiance-Fiancee scheme. They must also have a household income of not more than S$7,000 and a rental tenancy registered with HDB at the point of application. Those renting from immediate family members or close relatives will not be eligible for the vouchers. 

The scheme will run for a one-year period from July 2024 while the government ramps up the supply of PPHS flats – doubling its supply from around 2,000 units to 4,000 by the second half of 2025, he said. 

Analysts said that both moves will keep public housing affordable and accessible for more young people.

The down payment reduction will allow eligible young couples to apply for Plus and Prime flats, which typically cost more and might have been out of reach, said ERA key executive officer Eugene Lim.

The PPHS voucher can help offset around 15 to 25 per cent of rental cost for eligible households, given that median rent in neighbourhoods such as Punggol and Geylang ranges from S$1,175 to S$1,825 a month, said Christine Sun, OrangeTee Group’s chief researcher and strategist.

PropNex chief executive Ismail Gafoor noted that since the voucher scheme is temporary and the amount is “not too significant”, it is unlikely to have an inflationary effect on the HDB rental market.

Still, Lee Sze Teck, Huttons senior director of data analytics, noted that most tenancies in the open market span two years. The couple may therefore face difficulities once the vouchers end. “The take-up is (therefore) not likely to be high as the amount is too little, and does not cover the full tenancy period of two years.”