Written answer by Ministry of National Development on subsidies provided to Prime Location Public Flat owners
Nov 28, 2022
Mr Leong Mun Wai: To ask the Minister for National Development
(a) how does HDB intend to reassure Prime Location Public Housing (PLH) flat owners that the subsidies provided by HDB are more than the subsidies recovered from them if it does not release the exact subsidies provided for PLH flats;
(b) whether HDB seeks to recover nominal or inflation-adjusted subsidies provided; and
(c) whether HDB will reduce the subsidy recovery percentage if there is a greater than expected price appreciation by the time PLH flats exceed their minimum occupation period.
Answer:
The Prime Location Public Housing (PLH) model ensures that new public housing built in prime, central locations will remain affordable, accessible, and inclusive for Singaporeans. Left solely to market forces, housing in prime locations would be out of reach for many given their attractive locations and attributes, and corresponding higher prices, and it is likely that only the better-off would be able to afford them.
2 To ensure that these flats remain affordable for a wide range of Singaporeans, flats offered under the PLH model are priced with additional subsidies, on top of the substantial subsidies already provided for Build-To-Order (BTO) flats today.
3 As a result of these additional subsidies, PLH flat owners benefit from the opportunity to enjoy an uplift from the price appreciation of these flats when they are sold on the open market, which is typically much higher than other BTO flats in non-prime areas. To mitigate these windfall gains and to ensure equity with other BTO flat owners who are not accorded the additional subsidies, PLH flat owners who choose to sell their flats will have to return to HDB a percentage of the resale price or the valuation of the flat upon the sale of their homes (whichever is the higher). For the 10 PLH projects launched thus far, the subsidy recovery rate is fixed at 6 percent.
4 The subsidy recovery rate therefore does not equate to the amount of the additional subsidy. Rather, the subsidy recovery rate is imposed on a percentage basis to ensure that PLH flat buyers do not have disproportionately higher gains upon the sale of the flat than BTO flat buyers.
5 As HDB does not recover an amount equal to the additional subsidy, the question of whether it seeks to recover nominal or inflation-adjusted subsidies does not arise.
6 For the same reason, the subsidy recovery rate would not vary even if there is a greater-than-expected price appreciation by the time PLH flats exceed their minimum occupation period. The PLH owner would still have to pay 6% of the resale price or valuation, but by the same token the PLH flat owner would also get the benefit of the 94% of the greater-than-expected price appreciation.
7 The subsidy recovery rate is made known to all flat buyers during HDB’s sales launches. PLH flat owners who do not sell their flat will not be required to pay the subsidy recovery rate.
8 Overall, the PLH model seeks to support Singaporeans’ homeownership aspirations. It offers more than just the additional subsidies, as it gives Singaporeans the chance to live in and enjoy the benefits of prime, central locations. We will continue to review the PLH model, including the extent of additional subsidies and the subsidy recovery rate, to ensure that public housing remains affordable and accessible to a wide range of Singaporeans.
Issued by: Ministry of National Development
Date : 28 Nov 2022