SINGAPORE (EDGEPROP) - HDB has announced changes to its processes for assessing flat buyers’ incomes and eligibility for housing subsidies, effective May 9.

The changes come in tandem with the introduction of a new HDB flat eligibility (HFE) letter to replace the existing HDB loan eligibility letter. The HFE letter informs flat buyers upfront about their eligibility for a new or resale flat purchase, as well as the amount of HDB housing loan and CPF housing grants they can obtain.

Eligible housing grants will now be shared among applicants and occupiers in a core nucleus or household, regardless of whether they are Singaporean citizens or permanent residents (PR). This means that in a core nucleus comprising a Singaporean citizen and a PR, each applicant will get half the grant amount. Before this, the full grant amount was disbursed only to the flat applicant, a Singaporean citizen.

The updated disbursement guideline also applies to households where the core nucleus comprises an applicant and a core occupier who are both Singaporean citizens. Housing grants will now be disbursed equally to both, compared to previously, where it was fully disbursed just to the applicant.

The income assessment period for flat buyers has been increased to 12 months instead of the previous three or six months. The move allows for a more consistent and clearer assessment of applicants’ income levels, HDB says.

Lee Sze Teck, senior director of research at Huttons Asia, highlights that for households comprising an applicant and a core occupier, only the portion of the grant disbursed to the applicant can be used to offset the purchase price of the flat, while the core occupier’s portion will be retained in their CPF account.

For example, for a household that receives a grant totalling $50,000, the main applicant can use $25,000 to offset the purchase price of a resale flat, and the essential occupier will have $25,000 added to their ordinary account. “While there was a doubling in housing grant announced in February 2023, the full grant can be used to purchase a resale flat only if both parties in the core nucleus are listed as the applicants,” Lee adds.

He anticipates that the change in disbursement guidelines could create some uncertainty in the HDB resale market, as not every household can utilise the full grant amount towards their purchase. “It may cool down the exuberance created by the doubling in housing grants,” he says. (Find HDB flats for rent or sale with our Singapore HDB directory)

On the extended income assessment period, Lee believes the move will benefit commission-based workers, whose income fluctuates monthly.