HDB to buy back flats from sellers facing ‘genuine difficulties’ caused by Ethnic Integration Policy

SINGAPORE — The Housing and Development Board (HDB) will buy back flats from eligible owners who face genuine difficulties selling their flats due to constraints they face under the Ethnic Integration Policy (EIP). 

Among other considerations, owners have to have owned the flat for at least 10 years and marketed their flat for at least six months at a reasonable price. 

National Development Minister Desmond Lee announced this move, which takes immediate effect, during a debate on his ministry's budget on Tuesday (March 8).

The EIP was introduced in 1989 to ensure that there is a mix of the various ethnic communities in HDB estates, by capping the proportion of each ethnic group in each HDB block and neighbourhood based on the ethnic make-up of Singapore. 

The Ministry of National Development (MND) and HDB said in a joint statement they are aware that “a small number” of flat owners constrained by the policy may face difficulties selling their flats. 

Under the policy, a homeowner of a minority race can only sell his or her flat to another member of a minority race, once the quota for the majority race has been reached.

With this latest move, HDB will assess requests for buyback assistance on a case-by-case basis, and will take into consideration factors such as whether the household has:  

• Fulfilled the minimum occupation period and owned the flat for at least 10 years
• Made regular genuine attempts over a continuous period to sell the flat at a reasonable asking price while constrained by one or more EIP limits

HDB will also consider if the duration that the flat has been put up for sale on the market is comparable to the time taken by most flat owners to sell their flats, which is now set at six months. 

Flat owners should also keep monthly records of their marketing attempts throughout the marketing period, such as online or print property listings, and submit them to HDB when seeking assistance. 

EIP-constrained flat owners who do not fulfil these criteria, but who face extenuating circumstances, may seek special consideration from HDB.

If a flat owner is assessed to be ineligible for buyback assistance, HDB will provide advice to the owner, such as helping him or her set a reasonable asking price. 

Mr Lee said in Parliament that the decision to buy back flats from eligible owners was made after receiving feedback on the issue from both the public and Members of Parliament (MPs). 

"This is not a decision that we make lightly, because it requires significant government resources," Mr Lee said. "But we believe it is the right thing to do, because the EIP benefits all of us, and helps to foster a more cohesive society."

HOW BUYBACK PRICE WILL BE DETERMINED 

For owners assessed to be eligible for buyback assistance, HDB will appoint a professional licensed valuer to value their flat. 

The valuer will make their assessment and HDB will then determine the buyback price and make an offer for the flat at a fair price.

Flat owners can then take up to three months to decide if they wish to accept HDB’s buyback offer. Those who choose not to do so will not be eligible for buyback assistance for a period of 12 months after the offer lapses.

The flats bought back by HDB will become part of its housing stock and will be offered for sale to the public through the Sale of Balance Flats exercises or open booking. 

“As with all flats sold through these modes, HDB will apply a significant subsidy to the assessed market value of the flat to determine the sale price,” HDB and MND said. 

“A household’s eligibility to book the flat will depend on the prevailing ethnic proportions in the block and neighbourhood when they are invited to select a flat.”

OTHER MEASURES NOW IN PLACE 

HDB added that the new move will complement existing measures already in place to help such owners. 

The agency has put in place a “range of measures” over the years to give EIP-constrained flat owners, the statement said. 

This includes giving them more time to sell their existing flat if they have purchased another one and waiving the EIP limits in exceptional circumstances to allow flat owners to sell their flat to buyers from any ethnic group.

However, it is not possible to waive the limits of every owner who runs into difficulties selling their flats due to the EIP.

“Doing so may lead to a further imbalance in the proportions of the various ethnic groups in specific blocks or neighbourhoods, which would undermine the objective of encouraging more social mixing across different races in our HDB heartlands,” MND and HDB said.

Mr Lee said in Parliament that for now, nearly one in three HDB blocks, and 16 per cent of HDB neighbourhoods, have reached one of more of the EIP limits. 

"Without the EIP, racial concentrations could be much higher in various parts of Singapore," he added.

Buyback assistance will be implemented with immediate effect.

THE 'LAST RESORT SOLUTION'

Responding to a clarification from Workers' Party chief Pritam Singh, Mr Lee said this is not the first time that the Government is offering to buy back homes from residents.

People could surrender their flats to HDB for "any reason" up till 2000, he added.

Mr Singh noted that the buyback option announced on Tuesday was the "original last resort solution" mooted by then-Minister for National Development S Dhanabalan when he introduced the EIP in 1989.

Mr Singh thus wanted to know if HDB had applied the buyback option earlier, and if not, why not?

Mr Lee said that when the EIP was introduced, the resale market was really at the birthing stage, with transactions that "pale in comparison" to those seen today.

When the resale market became mature, he said that HDB stopped the buyback option as the last resort and then put in various measures such as waiving the EIP requirements on an "exceptional basis" and giving homeowners more time to sell their property.

MP Chong Kee Hiong of the Bishan-Toa Payoh Group Representation Constituency asked whether the flats bought back by HDB will be used for the public rental scheme to meet rental demand for singles or families in the eligible minority ethnic groups.  

Mr Lee replied that flats bought back will likely be prioritised for homeownership and be offered on its Sale of Balance Flat exercises to meet housing demands.

"But depending on circumstances and location, we may also consider them for the Parenthood Provisional Housing Scheme or other uses, subject of course, to the EIP," he added.

Flat owners constrained by the EIP may seek assistance at http://www.hdb.gov.sg/efeedback.