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OPPOSITION MP Low Thia Khiang crossed swords with Minister of State (National Development) Grace Fu over the upgrading of HDB flats, especially those in his Hougang constituency.

Mr Low yesterday repeatedly pressed her for answers as to when his residents could benefit from upgrading and asked if they were being fairly treated.

He accused the Government of using upgrading as a political tool to change voting behaviour, and wanted to know how much it spent on upgrading flats in different precincts.

He also claimed that the Government ‘owes every eligible flat owner in Hougang constituency $22,500 to $27,000 for the long overdue upgrading’.

This is based on the average cost of $30,000 for a basic upgrading package, of which the Government pays the major portion and residents the rest.

It has been 12 years since he was told that Hougang’s turn for the Main Upgrading Programme (MUP) would not happen for ‘many, many years’, he said during the debate on the National Development Ministry’s budget.

Noting that the MUP has since been replaced by schemes such as the Home Improvement Programme (HIP), he asked: ‘Will opposition wards need to start all over again and wait many, many years for HIP to happen?’

Ms Fu said the HIP was the result of residents asking for more flexibility and consultation in upgrading.

The programme would benefit 300,000 flats across the island.

Explaining that the MUP was restructured so that flats could be spruced up more quickly, she said the change applied to PAP and non-PAP constituencies.

Mr Low had asked about the amount spent upgrading each flat and how these government funds would be applied fairly to everyone.

Responding, Ms Fu said the amount was about $30,000 a unit. But she told Mr Low that the question of fairness did not arise in this matter.

‘It is not a case of an entitlement. It does not mean that every Singapore household can come and claim for this sum of money,’ she said.

‘It is something that we will prioritise. It’s something that we will do depending on the age, the quality of the flats.’

And who gets HIP first also depends on the funds available.

The Government’s focus now is to have lifts stop at every floor of HDB blocks by 2014, she said.

‘And Hougang residents can look forward to that by 2014,’ she said, adding that Mr Low could speed the process up by having his town council undertake the upgrading of the lifts in his constituency.

Source : Straits Times - 29 Feb 2008

It will buy back tail-end of flat lease at market rate, with money going to CPF Life.

FOR 68-year-old retiree Teng Kiat Hwa, who owns a three-room HDB flat in Toa Payoh, his home is his only asset.

Since he fell ill and stopped driving a taxi, he has had no income and his CPF money has been dried up by medical bills.

But come next year, Mr Teng will be able to sell part of his flat’s remaining lease to HDB, and receive a cash payment of $5,000 and an annuity payout of about $500 monthly from CPF Life.

Details of the long-awaited ‘Lease Buyback Scheme’, which helps the elderly sell their HDB flats to the Government for cash - while still being able to stay in them - were unveiled yesterday by National Development Minister Mah Bow Tan.

This is how it works: HDB will buy back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household. So, for example, if a flat has a remaining lease of 70 years, HDB buys 40 years of the lease from the flat owner. It pays market rate for the lease it buys and this money goes to the new CPF Life annuity in the flat owner’s name.

According to Mr Mah, the cash is enough to give a typical flat owner about $500 monthly for life. At the end of 30 years, the flat’s ownership is then transferred to HDB.

If the flat owner dies before the 30 years is up, his family gets a pro-rated refund from the HDB. If he outlives the 30-year lease, HDB may extend the lease or relocate the flat owner to rental housing.

To encourage people to opt for the scheme, HDB is also providing a $10,000 ‘bonus’ for anyone eligible for the scheme who signs up. Half of this - $5,000 - will be paid immediately in cash. The other $5,000 goes into the CPF Life annuity.

One catch: the scheme will be available only to 25,000 low-income households in Singapore. That’s because the eligibility criteria restricts the scheme to those aged 62 and above and who own two- or three-room HDB flats.

Among other things, they must also have fully paid up for their flats, or else have a loan amount outstanding of less than $5,000.

Mr Mah said in Parliament yesterday that this is consistent with the objectives of the scheme, which was first announced by Prime Minister Lee Hsien Loong at last year’s National Day Rally.

He said the scheme is meant to supplement the recently announced CPF Life annuity by providing a stream of retirement income for poor households who may not have the minimum sum needed to sign up for CPF Life, but still need steady income in old age.

He added that the 25,000 households that qualify for the scheme represent about 70 per cent of elderly households in two- and three-room flats.

Asked for his reaction, Mr Teng said in Mandarin that it was ‘an interesting option’.

‘But we must consider it thoroughly before taking it up. My wife and I wanted to leave this flat to our kids,’ he added.

Meanwhile, industry players yesterday welcomed the scheme, but expressed concern that the criteria were too strict.

This was also brought up in Parliament by Madam Ho Geok Choo (West Coast GRC), who asked if owners of larger HDB flat can qualify for the scheme.

Mr Mah replied that this can be examined after the scheme was implemented and feedback given.

Mr Eugene Lim, the assistant vice-president of ERA Realty Network said renting out the flat may give better yield or payouts than the annuity.

Source : Straits Times - 29 Feb 2008

A review of the public rental scheme will also be carried out to ensure more holistic assessment criteria.

THE Government has unveiled a three-pronged strategy to tackle rising demand for public housing rental flats.

National Development Minister Mah Bow Tan yesterday said he has asked the Housing Board to resolve the shortage in three ways.

One is to increase flat supply. Secondly, the eligibility criteria for rental flats will be reviewed; and thirdly, enforcement will be stepped up to weed out those who abuse the rules on use of flats.

To address stronger demand, the stock of rental flats will go up by 20 per cent to 50,000 over the next few years, said Mr Mah. Since 2006, when building for rental flats resumed, some 2,200 new units have been built.

Another 930 rental flats converted from vacant blocks will also be ready by next month.

This year, another 2,000 units will be built across different estates, and ready for families to move in from 2011.

Mr Mah was responding to calls by some MPs to review the policy on rental flats.

Ms Irene Ng (Tampines GRC) questioned whether the current 5 per cent of total housing stock for rental was sufficient. She also called for rules on rental flats to be relaxed ’so that Singaporeans have more access to them’.

Mr Mah disclosed that a ‘comprehensive review’ will be done on the public rental scheme.

‘This review will put in place more holistic assessment criteria of rental flat applicants,’ he said.

Mr Mah also noted that Singaporeans who can afford home ownership or have family support should not join the queue, otherwise, ‘the more needy cases will be crowded out’.

He referred to an example raised by Mr Masagos Zulkifli (Tampines GRC) of elderly residents who had no place to go after selling their flats and giving the proceeds to their children who subsequently refused to live with them.

‘Our rental flats cannot be used to support such irresponsible behaviour of the children,’ said Mr Mah.

Addressing another point raised by Ms Ng on low-income divorcee families who are increasingly turning to rental flats, Mr Mah said: ‘We have to look at the overall issue of low-income dysfunctional families from a wider perspective together with the Ministry of Community Development, Youth and Sports and other ministries. The issue cannot be just limited to housing.’

Among others, the review will also study how existing tenants can buy their own homes when their situation improves.

In reply to MPs who shared anecdotes of tenants installing air-conditioning units or sub-letting their rental flats, Mr Mah said that ‘HDB will not hesitate to terminate the flat tenancy of those who abuse or violate the conditions of the lease’, and will re-distribute these to the more deserving cases in the queue.

The Government will continue to be flexible to help families in financial hardship, added Mr Mah.

‘But the individual has to exercise prudence and financial responsibility.’

WEEDING OUT THOSE WHO ABUSE RULES

‘HDB will not hesitate to terminate the flat tenancy of those who abuse or violate the conditions of the lease.’

NATIONAL DEVELOPMENT MINISTER MAH BOW TAN, responding to MPs who shared anecdotes of tenants installing air-conditioning units or sub-letting their rental flats.

Source : Straits Times - 29 Feb 2008

But banks now have to deal with slowing economy

A heart-thumping sub-prime ride for local banks may be nearing to a halt after two quarters of hefty provisions for risky investments.

But investors looking to banks repeating the double-digit earnings gain of recent years could be disappointed. A slowing economy is likely to put a squeeze on interest margins and earnings growth, suggesting this year could turn out to be, at best, unexciting.

“The banks have already provided significant coverage against collateralised debt obligation portfolio (CDOs) as far as asset-backed CDOs are concerned … but currently, there is no strong growth catalyst. Business is driven by mostly organic growth and core business,” said Kim Eng analyst Pauline Lee.

For fiscal year 2008, she predicted core bank earnings to grow at an average of 6 to 8 per cent, slower than last year’s 10 per cent.

Loan growth should remain strong on a robust construction sector as borrowers start to draw down on loans made during last year’s property boom, said Phillip Securities’ Brandon Ng.

But lower margins caused by falling interest rates could cloud the positive prospects. Inter-bank rates have been easing since late last year, taking their cue from United States rates.

Stock markets which appeared to defy gravity helped boost non-interest income substantially last year, but the reverberations from the sub-prime crisis shook capital markets and weakened sentiment, suggesting this source of income would be affected this year, said Daiwa Institute of Research analyst David Lum.

While “one of the major external risks” may be removed this year, “there’s nothing really new to look forward to”, he said.

Global banks sent a shiver through the world’s financial system when they disclosed massive losses related to their investments in sub-prime debt. In Singapore, banks created shocks too although their exposures were viewed as more limited.

But their shares dropped yesterday in line with broad market declines, with DBS Group Holdings shedding 18 cents to $17.52. Oversea-Chinese Banking Corporation lost 9 cents to $7.69 while United Overseas Bank slipped 8 cents to $18.34.

Source : Today - 29 Feb 2008

City Developments (CityDev) said fourth-quarter profit rose 71 per cent after home prices surged to an 11-year high in the city state.

Net income rose to $235 million in the three months ended Dec 31, from $137.3 million a year earlier, the company said. Full-year profit climbed to $725 million, or 76 cents a share, from $351.7 million, or 36.6 cents.

CityDev and rivals CapitaLand and Keppel Land may face declining demand in Singapore this year amid concerns the economy could fall into a recession. Government data showed private home prices surged 31 per cent last year, but prices rose at a slower pace after the Government took steps to cool the market and the United States subprime crisis dampened sentiment.

“Moving forward, the performance of the property market will largely depend on how the sub-prime crisis pans out and its impact on global economies,” CityDev said. “Transaction volume and rental increase have slowed down in the fourth quarter.”

CityDev shares closed up 1.3 per cent at $12.48.

Source : Today - 29 Feb 2008