Buyers and sellers of resale HDB flats may have something to look forward to as changes in the use of CPF monies for housing purposes may come soon.
Buyers to be able to use more CPF monies for ageing flats
Previously, buyers of ageing flats can only use a limited amount of their CPF monies for the payment of their flat. This in addition to comments made about how the leases of older flats may not be renewed could have caused some anxiety amongst HDB flat owners.
Many of them are unable to sell their units but due to age, are also in need of money.
With the policy changes, the focus will now not simply be on the age of a flat but on whether the property can last its homeowner for life. This means HDB flats need only have at least 20 years left on their lease in order to use CPF monies for the purchase.
Previously, HDB flats need to have at least 30 years of the remaining lease in order for buyers to utilize CPF funds for their purchase.
With this change, older buyers can now use CPF for being homes though younger buyers who may outlive the leases of older flats may be deterred from doing so.
Older flat owners can take up HDB loan to safeguard retirement
In addition, for buyers who are aged 55 years and above, their flat must only have at least 40 years left on their lease, compared to the 30 years minimum requirement from before.
This means the leases for their flats must cover them till age 95, and only after can they withdraw funds in excess of their Basic Retirement Sum from their CPF savings accounts.
This means that when HDB flat buyers reach the age of 55, they can:
- Withdraw any amount above the Basic Retirement Sum (BRS) when pledging a HDB flat with the remaining lease of at least 40 years.
- Reserve the savings in his Ordinary Account in order to serve his mortgage payments.
- (If they do not have a property that covers them till age 95, that is if their flat has less than 40 years left on the lease,) They have to put aside the Full Retirement Sum (double that of the BRS) before being able to access funds from their Ordinary Account to buy other properties.
In short, the government’s main aim is to make the selling and buying of older resale flats easier, thus maintaining market liquidity.