The new HDB scheme for staggered payments will help more young couples purchase HDB flats

The government has taken steps to help such households, including a reduction of their initial outlay as well as S$300 per month for open-market rent.

Desmond Lee, Minister of National Development and Housing and Development Board (HDB), announced on Tuesday (5 March) that the revised Staggered Downpayment Scheme will allow some young couples to pay less for their first downpayment.

The Ministry’s Committee of Supply discussed the extension of assistance. The changes are intended to ease the burden on young couples who want to settle down sooner, but haven’t started work or just started and may not be eligible for a housing loan.

Couples must be full-time student, recent graduates, or national servicemen to be eligible. The couple must have at least one person aged below 30 and be married, or be applying for an apartment under the Fiance-Fiancee scheme.

The revised scheme will come into effect at the next Build-to-Order sales launch, which is scheduled for June of this year.

The SDS allows young couples to pay for the downpayment of their HDB unfinished flat in two installments – an initial payment at the time they sign the Agreement for Lease (within nine months after booking the flat) and the remaining amount when collecting the keys.

The initial down payment is currently 5 or 10% of the flat-price, depending on which financing option you choose. Comparatively, the downpayment for homebuyers who take out an HDB housing mortgage is 10%, while it’s 20% for those who borrow from financial institutions.

The reduced initial down payment of 5 percent under the SDS can be a financial barrier for some young couples.

Couples who qualify to defer income assessment for HDB housing loans and the Enhanced Central Provident fund Housing Grant (EHG), regardless of the financing option, will have their initial downpayment halved, to just 2.5 per cent, starting with the BTO sales exercise in June 2024.

The couple will be more eligible for EHG if they delay their income assessment. This is because the EHG requires that one partner be continuously employed for at least an entire year. After working for a while, they may be eligible for a larger loan amount.

With the support of the SDS since 2018, over 3,700 couples have taken advantage of the deferred assessment to reduce their upfront costs, and begin their home ownership journey earlier. This enhancement is for couples who have been saving to pay the down payment and are ready to buy a flat. I hope that this will allow you to start your family earlier.

The Progress Singapore Party has proposed to increase singles’ eligibility for public housing. Their suggestion could lead to a spike in BTO applications and an increase in resale values.

Lee added that singles would be able to buy two-room BTO flexi flats on the island from the second half this year. The government is also increasing the supply of flats.

Family Rental Vouchers

Lee said that eligible families who are waiting for their HDB flats can also receive S$300 per month to rent an open market flat or bedroom.

The S$300 voucher is part a new scheme that couples who are eligible for the Parenthood Provisional Housing Scheme can apply for. This scheme provides HDB flats at subsidised rates to families in urgent need of housing.

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The S$300 threshold was calculated to offer relief to certain families while minimizing the inflationary impact of the rental market on other families.

Families that qualify must have purchased an unfinished HDB flat. This includes a married couple, at least one of whom is a first-time buyer, a widowed or divorced parent and their children, or those who apply under the Fiancee-Fiancee Scheme. The applicant must have a household earning not exceeding S$7,000, and an HDB rental agreement registered at the time of application. The vouchers are not available to those renting from close family or immediate relatives.

He said that the scheme would run from July 2024 for a year while the government increased the supply of PPHS apartments – doubling it from 2,000 units to 4,000 in the second half 2025.

Both moves, according to analysts, will make public housing more affordable and accessible to a greater number of young people.

This reduction in the down payment will allow young couples who qualify to apply for Prime and Plus flats that would have otherwise been unattainable.

Christine Sun, OrangeTee Group’s chief researcher, strategist and researcher, explained that the PPHS voucher could help households eligible for it offset 15 to 25% of their monthly rental costs. The median rents in areas such as Punggol or Geylang are between S$1,175 and S$1,825 per month.

The voucher scheme, which is only temporary and does not have a significant amount of money, is unlikely to cause an inflationary impact on the HDB market.

The average lease on the open market is two years. Couples may face difficulties once vouchers expire. It is unlikely that the vouchers will be used as they are too small and do not cover a full two-year tenancy.