Singapore real estate cluster houses, Barker Road by asiahomes.com, Singapore

HDB upgraders in the net of HDB rules & regulations.
Be careful about using relative's name to buy private property.

XXX wrote:

Dear Sir, We are in our early thirties and are having a combined income of $90,000 yearly. Currently we are living in a 5-room HDB flat in Woodlands and it will mature in 2 year's time. We have $80k cash and are thinking of getting a private property using our mother's name. Our saving per month is $1.5k per month. Wondering with our current financial status, would appreciate it very much if you could give us your professional advice on whether we should take the plunge in the light of the current property landscape in Singapore? Will be available for more questions if necessary. Best regards, XXX

Reply to XXX:

Sun, 07 Feb 1999 12:12:16 +0800
From: "Asia USA Realty

Thank you for email. If both husband and wife (I presume you are a married couple) work for the next 10-20 years, it will be OK to buy a more expensive private property. Otherwise, you may get into financial difficulties with mortgage payments (your savings being $1,500pm) if one spouse resigns to stay at home.

Never use mother's or other relatives' name because your siblings (if any) will want to claim the estate and your mother may not want to sell it or influenced not to sell it when you need to sell it. Legally you have no case.

Since you have 2 years more to wait, please be patient, unless you want to forfeit some monies in returning the HDB flat early.

Timing is important but you are caught in the web of HDB rules and regulations and cannot own private property for the next 2 years. Work hard, save up and when you have cash, you can buy anything you want 2 years later. Property prices unlikely to shoot up the roof. You may still encounter mortgagee sales and good buys.

Best wishes.

As at January 4, 2000, Singapore's residential property prices have increased from 20% - 40%.

Single child and parent buying an HDB apartment

April 15, 1999 update of property market and
a Court of Appeal decision report.

1999 appears to be the bottom of the property cycle. Residential property prices definitely have increased by more than 10% since January 1999 in many cases. The politicians and consultants advise caution but with the Dow Jones reaching new highs, there is a great worry that one may lose out by having to pay more for properties. The CPF monies accumulated earn a pittance in interest and therefore, properties become a sought-after investment.

Some HDB buyers of new HDB apartments, being single and needing a parent to purchase an HDB apartment, may be caught in the 5-year prohibition from buying private properties and is worried about losing the opportunity to buy private property at "affordable prices" since there seems to be a spiral uptrend in property prices.

There may be 2 options, viz. sell the apartment to the HDB at a loss or changing the name of the owner to the parent who usually is not the one paying the mortgage.

In any case, be careful as illustrated in a case reported in the Singapore Straits Times dated April 17, 1999:
SIBLINGS FIGHT OVER $100,000 FLAT,
BUT WIND UP WITH LITTLE.

Engineer Cheong Kowk Kiong wanted to sell the 3-room HDB flat that costs around $100,000 after his mother's death in 1995. The flat was in his mother's name but he had paid for it after buying it in 1983. His siblings sued because they felt they had a share in the flat, being part of their mother's estate. The Court of Appeals judgment said that HDB rules prohibited him from having a stake as he was not a registered owner. It belonged to the late mother and each of the 4 siblings would be entitled to an equal share of it as she had not left a will.

Judge of Appeal L P Thean said that if the flat was a private apartment, there was no doubt that Mr Cheong would own it entirely. HDB laws would not recognise the interest of a non-registered owner unless there was prior written permission. Mr Cheong had taken out his name as one of the 2 registered owners when he bought his own flat in 1986, leaving his mother as its sole owner. He continued to pay for the flat and its expenses.

The legal costs amounted to between $60,000 and $80,000. The court ordered each party to pay their own legal cost. Mr Cheong thus did not have to pay his siblings' costs although he had lost the case.

February 10, 1999.

To: First-time Buyers

8 months ago, the Singapore residential real estate market was dead and many realtors were zombies or had gone into hibernation. Now, there is a great interest in property purchase continued into January and February 1999, with most queries on landed properties less than $1 million, purchase of HDB apartments especially the Bishan area and private condos. However, HDB owners who are not allowed to buy private properties within 5 years of purchase of the HDB apartment feel that they may be missing the bottoming of the Singapore real estate (residential).

As property experts and consultants had had been proven wrong when they predicted that the property market would not peak in around 1995/1996, advising caution, it is even more difficult for the ordinary person to know when it has bottomed.

Although there is said to be a 7-year cycle in the theory of the property market, it is not a perfect 7-year bust and boom cycle, otherwise 2003 should be the peak of the property market. 1985, 1992 and maybe 1999 should be the bottom of the cycle.

The best advice to HDB upgraders who want to buy private property is that you buy within your financial means, taking into account that one spouse may not be contributing to the mortgage payments in later years. HDB properties are usually within affordable means.

There is a formula of using 1/3 of your gross income to service the housing mortgage. It may not be a good formula for Singapore in view of the fact that car ownership costs are much higher and many Singaporean wives, no matter how highly educated, do drop off from earning an income to sustain the high cost of private property ownership for employee-type husbands who may be retrenched. Therefore, do be careful.

Note to foreign investors: HDB (Housing Development Board) apartments are for sale only to Singapore citizens and Permanent Residents. Buyers of new HDBs are NOT permitted to buy private properties for the first 5 years and if they do miss out the bargains sometimes since the property cycle may be at the bottom but they can't sell their HDB in the private sector till after 5 years otherwise they lose money selling back to the HDB.