CPF rule-changes help buyers and sellers of HDB flats with shorter leases

About 10 days ago, new rules for the use of CPF funds for HDB flats with shorter leases kicked in.

This may be good news for buyers who are looking at resale HDB flats in specific locations.

New CPF rules open up options for resale HDB flat buyers

HDB, 424 Woodlands Street 41. Picture: iProperty

While these changes may not affect most HDB buyers, they may come in handy to those for whom location is an important criteria.

Buyers who are looking to live near schools may not now need to rent and could instead purchase a resale flat in the area even if there are limited years left on the leases. The changes would also be useful to those looking to live near their children or parents.

For sellers of older flats, this would be most welcome as it could bring more buyers.

See more: 8 Places to Rent Near International Schools

The new rule stipulates that buyers can now use CPF funds to pay for up to 79% of the flat’s valuation. This reduces the amount buyers have to pay upfront for flats with 59 years or less left on their leases.

For example, to purchase a $300,000 resale HDB flat with less than 59 years of leases left, the buyer will now be able to save up to $90,000 or will now only have to pay 21% of the purchase price instead of the 51% under the previous rules.

Older buyers of older resale flats to receive more assistance

Block 460 Hougang Avenue 10. HDB. Picture: iProperty

To pay for 100% of the flat’s valuation at purchase, the criteria are:

  • Remaining lease of the flat is at least 20 years.
  • The lease of the flat can cover the youngest buyer until he/she is at least 95 years old.

This means that for a 48-year-old single is able to buy a resale flat with 47 or more years left on its lease will be able to utilise his CPF funds to pay for 100% of the valuation price of the flat instead of the previous 80%.

This will help older sellers or older flats plan for their retirement as Singaporeans now on average have a longer life expectancy of 85 years.

Though the new CPF rules may not turn mindsets around completely, they are expected to at least facilitate the buying and selling of older resale HDB flats and keep the liquidity going within the market.

See more: CPF policy changes to help buyers and sellers of ageing HDB flats