Rationale for Imposing Resale Levy on Those Who Previously Purchased Subsidised HDB Flats and Presently Intend to Buy Executive Condominiums

Mr Murali Pillai asked the Minister for National Development for a person who has bought a subsidised flat directly from HDB and sold it before 19 May 1997 and presently intends to purchase an Executive Condominium (EC), what is the rationale for imposing on this person a requirement that he pays a resale levy based on 20% of the purchase price of the EC.

While Executive Condominiums (ECs) are built by private developers, they are sold with initial eligibility and ownership restrictions. These restrictions include an income ceiling and a minimum occupation period, similar to those applicable to HDB flats. Taking these into account, developers put in lower bids for Government land sales for EC sites. This reduces the land costs and thus the selling prices of EC projects, compared to private condominiums of similar size and location.

Since second-timer EC buyers benefit from this subsidised price, they are subject to a resale levy like second-timers who buy a new flat from HDB. This reduces the subsidy that second-timers receive compared to first-timers, thus ensuring a fairer distribution of housing subsidies.

The resale levy payable depends on the prevailing policy applicable to a second-timer buyer at the time they sold their first subsidised flat. Those who sold their first subsidised flat before 19 May 1997 but opted not to pay a graded resale levy at the point of sale would have to pay a premium on the purchase price of their next subsidised HDB flat or new EC unit.