HDB eases income assessment rules, giving young couples more BTO options

The Housing Board will relax the way it assesses the income of young couples when they buy a Build-To-Order (BTO) flat, making it easier for those who are still studying or just started working to buy their preferred units.

From the next BTO exercise in July, couples can choose to delay their income assessment for a housing loan until just before they collect the keys to their flat, as long as one party is a full-time student or national serviceman.

This would effectively mean that couples would be able to qualify for a higher loan amount, as they would have been working for some time by then.

National Development Minister Desmond Lee announced this on March 26 during an engagement session about public housing at the National University of Singapore.

Mr Lee also said the authorities are ramping up the supply of BTO flats with shorter waiting times of below three years.

Some 12,000 such flats will be launched from 2025 to 2027 - more than what HDB put out over the past five years. They will be among the more than 50,000 flats that the authorities will roll out in that period.

On relaxing the deferred income assessment criteria, Mr Lee said this would help couples settle down earlier and buy a four- or five-room flat if they plan to have children

To qualify for deferred income assessment before this change, both parties would have to be either full-time students or national servicemen, or have completed their studies or national service in the 12 months before they applied for an HDB flat eligibility letter.

At least one of them must also be aged 30 or below.

"Each young couple's life journey is different. Regardless of which path you take, if you are looking to settle down early... we hope to support you in achieving your housing aspirations," Mr Lee told NUS students.

To illustrate how the deferred income assessment would help applicants buy larger flats, Mr Lee raised the example of a couple - where one person is studying and the other has worked for about a year - with a household income of $3,500 a month.

Previously, their budget would allow them to buy a three-room BTO flat in Yishun.

"However, the three-room flat might be small if they plan to have many children," he said.

Under the expanded scheme, the couple can apply for a BTO flat first, and their HDB housing loan and assessment for the Enhanced Central Provident Fund Housing Grant will be deferred for about three years, nearer to the key collection.

"At that point, both parties would have started working. With a combined income of, say, $7,500, they will qualify for a sufficient loan to buy a four- or five-room BTO flat," Mr Lee said.

He added that the scheme would also help couples who think a three-room flat is sufficient, but prefer to purchase a home closer to the city centre and amenities, which tends to be more expensive.

The initial down payment they would have to fork out would be 2.5 per cent of the flat price.

Mr Lee said the expansion of the scheme will benefit a wide range of young couples, such as university, polytechnic and Institute of Technical Education graduates.

In his speech, Mr Lee also addressed concerns about the stock of BTO flats and waiting times.

The authorities are on track to exceed their initial commitment to launch 100,000 new flats from 2021 to 2025, he said.

The median waiting time for BTO flats has been shortened to less than four years, comparable with pre-pandemic waiting times, he added.

Mr Lee also acknowledged calls to lower the minimum age for singles to buy BTO and resale flats, currently set at 35. This is something that the authorities are reviewing, even though they are "not quite ready to do so", he said.

He noted that singles have been able to apply for two-room flexi flats in all locations since October 2024. From mid-2025, singles will also get priority access when they buy a home near or with their parents under the Family Care Scheme.

Turning to housing affordability, Mr Lee acknowledged the anxiety felt by students after hearing about resale flats selling for more than $1 million.

"I want to assure you that there is a wide range of affordable housing for different housing budgets," he said.

The new flat classification system, which sorts BTO projects into Standard, Plus and Prime categories based on their proximity to the city centre, transport connectivity and amenities, is meant to limit the "lottery effect" of owning flats in prime and central locations, Mr Lee said.

Plus and Prime flats will come with stricter resale conditions, such as a 10-year minimum occupation period and a subsidy clawback. They also have extra subsidies on top of existing BTO subsidies to keep them affordable for first-timers, Mr Lee added.

Fourth-year business student Stefanie Gan said that with the relaxed rules for the deferred income assessment, she would look into applying for a four-room Prime or Plus flat with her boyfriend, who started working full time a year ago.

At present, a four-room flat in those categories would not be within reach, as they are typically priced above $500,000, the 23-year-old said.

"I would like a flat in Bayshore, but I was worried we would not be able to afford it," she said, adding that she felt confident they could qualify for a larger housing loan after she enters the workforce.