Use of CPF Ordinary Account by HDB Lessees to Service Home Loans

Mr Chen Show Mao asked the Minister for Manpower (a) how many current HDB lessees have reached their (i) Valuation Limit (VL) or (ii) Withdrawal Limit (WL) for the use of their CPF Ordinary Account to service their home loans; (b) how many appeals have been received by CPF Board or HDB in 2014 and 2015 for the continued use of CPF to finance HDB mortgages; and (c) how many appeals have been successful.

The Valuation Limit (VL) policy encourages Central Provident Fund (CPF) members to make prudent property purchases and take up housing loans within their financial means. This helps to minimise the risk of CPF members not being able to recover the full amount of CPF that they had withdrawn for their property purchases upon sale.

The VL is set at the lower of the purchase price or property value at the time of purchase. CPF members who have set aside their Basic Retirement Sum (BRS) can continue to use their CPF savings above the VL for housing. However, for properties purchased with bank loans, there is a cap known as the Withdrawal Limit (WL) which is set at 120% of the VL. In the case of Build-To-Order flats purchased with Housing and Development Board (HDB) loans, both the VL and WL do not apply as these are sold at subsidised prices.

Currently, more than 500,000 HDB lessees use their CPF savings to service their housing instalments. Of these, about 15,000 (2.8%) have reached their VL and are still using CPF for their housing instalments. Another 2,500 (0.5%) have less than the BRS and, hence, cannot use CPF savings beyond their VL for housing. The number of lessees who have reached WL is about 60 (0.01%).

For affected CPF members who find it difficult to service their housing loans in cash after they reach VL, flexibility can be provided upon appeal. In 2014 and 2015, CPF Board received a total of about 6,000 appeals, including repeated appeals, from members to use CPF savings beyond their VL. The majority of appeals from single property owners were successful. However, the general principle remains that members should be prudent in their housing purchase decisions, so as to put aside sufficient savings for their retirement needs.