HDB Flats That Have Been Compulsorily Acquired

The Minister of State for National Development (Mr Desmond Lee)(for the Minister for National Development): Mdm Speaker, for the three-year period from January 2012 to December 2014, the Housing and Development Board (HDB) compulsorily acquired 202 flats. HDB takes Compulsory Acquisition (CA) action against flat lessees who have committed major lease infringements, such as the unauthorised subletting of flats. CA action is also taken, as a last resort, against HDB mortgagors who persistently refuse to resolve their arrears, or work towards a sustainable solution, despite the assistance given.

HDB will assist households affected by CA due to mortgage arrears to find alternative accommodation. For those who can afford smaller flats, HDB will help them buy one and may offer them another loan for the purchase, if necessary. Those who are unable to afford another flat and have no family support or other housing option, are allocated rental flats.

I thank the Minister of State. I have three supplementary questions. First, after how many months of mortgage arrears have to be accumulated for HDB to start the process of CA? Second, how does HDB help home owners manage their arrears? And third, could HDB consider assisting home owners with alternative accommodation even if they decide to sell their flats on their own instead of through CA?

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Mdm Speaker, it is not in the interest of HDB flat owners to accumulate mortgage arrears. It is not just a heavy financial burden on them but also tremendous emotional strain. HDB, therefore, intervenes early, proactively and sympathetically to help flat owners resolve their arrears issues.

There are many measures that can be taken to help these HDB home owners. Some are short term, to deal with their short-term financial difficulties. Some are longer term for those facing prolonged difficulties. For instance, loan instalments are usually paid on the first of each month, but HDB gives lessees up to the end of the month if they face temporary cash flow difficulties. If they still face problems doing so, HDB will make a call, arrange a meet-up or even do a home visit, to better understand the situation and to offer help. The Member may note that every HDB branch has housing counsellors who offer financial counselling and explore sustainable housing options for home owners in mortgage arrears.

What are some of these options? First, HDB can help the flat owner reschedule his mortgage loan, including extending the repayment up to the maximum loan period, if that would help.

Second, under the reduced repayment scheme, owners in difficulty can pay lower monthly instalments of between, say, 50% and 75% of their normal instalments for, say, up to two years.

Third, they can defer their mortgage payments if they face serious financial difficulties. This will be for an initial six-month period. It can be extended based on review.

Fourth, home owners can pay their arrears by instalments.

Fifth, they could sublet a spare room if there is one to generate additional income for themselves.

Sixth, they can also include their working adult children to help pay the loan without affecting their children's eligibility to apply for HDB loans in future.

Seventh, apart from financial measures, we also recognise that mortgage arrears are normally a symptom of other difficulties that the owners face. For instance, medical problems, medical or family issues, loss of job, loss of a loved one and the breadwinner, and so on.

HDB's counsellors, therefore, look beyond housing loan measures that I have just detailed above, and work with other agencies to help these families more holistically. These

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include Family Service Centres for family counselling; e2i, WDA or the CDC for job placement or job upgrading; the SSO for financial assistance; VWOs and so on.

Eighth, for those who are still unable to manage, as I said earlier, HDB will help them right size to the flat that they can afford and offer another housing loan to assist them, if necessary.

Ninth, if they cannot afford another flat, then HDB will allocate them a rental flat.

From January 2012 to December 2014, HDB assisted 9,752 families with one or more of the measures that I have just described above. It is only when all these attempts to solve their arrears problem fail, such as when the home owners persistently refuse to solve their arrears or work towards a sustainable solution, that HDB has no choice but to exercise CA.

The Member has asked for the timeframe. Under the legislation, CA can be taken if arrears pile up for up to three months, but in practice, HDB works with lessees, as I have just mentioned above, and this can take quite some time. It is an ongoing process.

I wish to ask the Minister of State once the date of CA has been firmed up, is there a formal written notice sent to the lessee? Second, how long is this notice period?

Mdm Speaker, yes, HDB issues a Notice of Intention to compulsorily acquire a flat and, down the line, after all measures have failed, in addition to what I have just detailed above, a revesting notice is issued. Between the Notice of Intention and the actual acquisition, if HDB does need to resort to that, it can be many months, even up to a year or beyond. That is a reflection of the effort that HDB officers put in to try to resolve the issues with the families directly.

I thank the Minister of State for the clarification earlier. I just want to move slightly to a different note. I know, most times, we have been sympathetic and I credit HDB for being sympathetic in a lot of compassionate cases out there. But in my estate, for example, we have a lot of middle-income families and, most times, we look at right sizing and when they go into arrears, it is really about credit card and other sorts of debts.

HDB has not mentioned one of those as a criterion that you consider but, most of the time, when they right size, the cash that they get is also used to pay for a lot of these debts. What is HDB's view on this because, many a time, when they want to right size, you take into account all these cash surpluses that you get as part of the settlement. I think for many of

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them, they also get stuck in trying to get a new flat or to right size. So, what is HDB's view on credit card and other forms of debts?

An HDB flat is a home and HDB does not encourage people to monetise the flat, then use it to settle debts, leaving themselves without a shelter. Having said that, we recognise the realities and difficulties of life. Families may choose to settle all these debts to the detriment of their housing needs. It is, therefore, as I said in my answer earlier, that, in the last resort, HDB offers public rental housing or interim rental housing as these families take time to sort out the various issues.

I also said earlier, in my response to the Member Zainal Sapari's supplementary question, that HDB counsellors look beyond just arrears management and work holistically across the board with various agencies to tackle these issues, such as credit cards, money lenders, social assistance, healthcare and do their best to sort out these issues holistically.