First-timers who reject HDB’s offer to pick BTO flats will lose priority for a year

SINGAPORE – First-timer applicants who do not select a Build-To-Order (BTO) flat when invited to do so will be considered second-timers in subsequent flat applications for a year.

This takes effect from the August sales exercise.

The tightening of the rule is meant to reduce the number of people who decline to pick a flat and ensure more efficient allocation so that those who need a flat can secure it more quickly, National Development Minister Desmond Lee said on Thursday.

Currently, first-timers will be moved to the second-timer category for a year when balloting for flats only if they do not book a BTO flat twice. Far fewer flats are set aside for second-timers – 5 per cent of four-room and larger flats, versus at least 95 per cent for first-timer families.

Mr Lee also announced other measures to help first-timers secure their home during the debate on his ministry’s budget, including setting aside more flats for a new subset of first-timer families – those with Singaporean children aged 18 and below as well as married couples aged 40 and below.

From the August BTO exercise, up to 40 per cent of the flat supply will be reserved for this group of applicants, up from 30 per cent now. Up to 60 per cent of Sale of Balance Flats (SBF) units will be set aside for them as well, an increase from the current 50 per cent. SBF flats are typically either completed or in various stages of construction.

Applicants under this new First-timer (Parents and Married Couples) priority category will also get one additional ballot chance in their BTO and SBF applications, for a total of three ballot chances. Various MPs, including Mr Zhulkarnain Abdul Rahim (Chua Chu Kang GRC), Ms Foo Mee Har (West Coast GRC) and Mr Seah Kian Peng (Marine Parade GRC), asked if more support could be given to help Singaporeans buy their first home amid the strong housing demand and elevated resale prices.

Help will be provided on several fronts, starting with the ramping up of housing supply in the next few years, said Mr Lee. Close to 100,000 homes are expected to be completed between 2023 and 2025 across both the private and public housing markets, he said.

Of these, almost 40,000 homes will be completed this year – the highest in the last five years, including the pre-Covid-19 years of 2018 and 2019, he added. This increased supply should help to alleviate some pressure in the rental market as those who have been waiting for their keys will stop renting, and new homes will provide additional rental supply, said Mr Lee in response to Mr Louis Chua (Sengkang GRC).

On tightening the rules for BTO flat selection, Mr Lee said it strikes a balance between considering the interests of flat applicants with urgent housing needs and being fair to those who successfully balloted for a flat. He noted that the drop-out rate for BTO flats has hovered around 40 per cent in the past few years, even as strong housing demand pushed up application rates.

This means that four in 10 applicants either do not turn up or decline to book a unit at their flat selection appointments. The reasons include people wanting flats only on high floors or trying their luck, and the remaining flats being out of their budget, the minister said.

“Understandably, some would rather give up the opportunity to select a flat now, and wait longer for a better flat. But whatever the reason, such applicants do crowd out other home buyers who may have more pressing needs,” he added, urging Singaporeans to apply for flats only if they really intend to purchase one.

Mr Lee said his ministry had received various suggestions to bring down the drop-out rate, including removing first-timer privileges for two years, raising the BTO application fee from $10 now to $1,000, and imposing a fine for not selecting a flat.

The Government decided to tighten the rules for first- and second-timers after careful consideration, he added. Second-timers who do not pick a BTO flat when invited to do so will have to wait one year before they can apply for a flat again. Currently, this kicks in only after they fail to book a flat twice.

Mr Lee said the Housing Board will waive the rule only if applicants have 10 or fewer BTO flats, or five or fewer SBF flats, to choose from. “We understand that some applicants may have genuine reasons for not selecting a flat. Buying a home is a large financial decision, so we want to be fair to applicants who have very limited options when they are invited to select their flat,” he said.

Where there are extenuating circumstances, HDB may exercise flexibility to waive the rule, he added. Mr Lee said the new First-Timer (Parents and Married Couples) priority category is targeted at those buying their first home and to help young families settle down more quickly.

The current first-timer category covers a wide range of applicants, including those who already have their own homes but have not previously received housing subsidies. About 10 per cent of all first-timer applicants fall into the new category, Mr Lee said.

To qualify, families must not have owned or sold a residential property before, or not have had a chance to book a flat in the five years before their application. This is on top of having at least one Singaporean child or meeting the age limit of 40 for married couples. Applicants do not need to submit additional documents to qualify for the new category.

HDB may exercise flexibility on a case-by-case basis to allow those with extenuating circumstances to qualify, said Mr Lee.

Citing adult children from lower-income families who co-own flats with their parents to help with mortgage payment, Mr Lee said: “When they eventually remove their names to apply for a new flat and set up their own families, HDB may consider allowing them to qualify for this priority category.”

In addition, those under the new category will get first priority when applying for four-room or smaller BTO flats in non-mature estates, Mr Lee said. He said these applicants will be shortlisted ahead of all others who come under the expanded Family and Parenthood Priority Scheme – previously known as the Parenthood Priority Scheme. They thus stand a substantially higher chance of being invited to select a flat, he added.

On why the measures will kick in only from August, Mr Lee said: “We are announcing the changes early to give everyone some time to understand how these changes may affect them. And HDB will also need some time to stress-test and implement the system changes.”

Noting that some MPs had asked for more support for fiance-fiancee couples, he said this group will continue to receive two ballot chances when they apply for a new flat. Young Singaporeans who have yet to get married typically apply for BTO flats as fiance and fiancee and are required to solemnise their marriage within three months of collecting the keys to the flat.

“We understand that they also hope to settle down quickly, similar to young married couples and families with young children. But with the tight supply now, let us first help those who are already married or have children, but have yet to secure their first home,” Mr Lee said.