Home Ownership for the People Scheme

Background

The Home Ownership for the People Scheme (or Home Ownership Scheme) was introduced by the Housing and Development Board (HDB) in 1964 to enable the lower-middle-income group to own their homes.¹ Under this public housing scheme, new HDB flats were available for sale, especially to those unable to afford homes from the private housing market.² Prior to the introduction of the scheme, HDB flats were only available for rental.³ Over the years, HDB has expanded the eligibility conditions for buying and reselling HDB flats as well as its loan and flat offerings to ensure that housing remains affordable to Singaporeans.

Background
HDB’s first five-year building programme began in 1960, providing basic, low-cost one-room rental flats to meet the urgent housing demand.⁴ By 1963, the housing shortage was steadily being resolved, and the building programme evolved from providing rental flats for the masses to enabling homeownership for Singaporeans.⁵

Home Ownership Scheme
Then Prime Minister Lee Kuan Yew believed that homeownership would give citizens, particularly those who had to serve National Service, a sense of ownership in the country and promote social and political stability.⁶ The non-profit-making public housing scheme aimed to promote property ownership among the population, especially the lower-middle-income group,⁷ and was announced by then Minister for National Development Lim Kim San on 12 February 1964.⁸

The following day, HDB kickstarted the public housing scheme at Queenstown, with 2,068 three-room and two-room units offered for sale on 99-year leases.⁹ The take-up rate in the first four years of the Home Ownership Scheme was lower than expected, primarily because many applicants could not afford the 20 percent cash downpayment.¹⁰ In response, the government introduced the Central Provident Fund (CPF) (Amendment) Act in September 1968, allowing CPF savings to be used for the downpayment and monthly instalments for new flats purchased from HDB. Subsequently, demand for owned flats increased.¹¹

Reselling HDB flats
Over the years, HDB has changed the conditions for reselling flats under the Home Ownership Scheme to ensure that public housing subsidies are not taken advantage of.¹²

Initially, flat owners who wished to purchase a second new flat from HDB had to sell their existing flats back to HDB at the original purchase price.¹³ However, in 1971, to encourage upward mobility, HDB allowed owners who had met the three-year minimum occupancy period (MOP) to sell their flats in the open market.¹⁴

As demand for flats rose and more HDB flats were sold in the open market, in 1973 HDB extended the MOP to five years to curb attempts at profiteering and speculation.¹⁵ This condition was stipulated under HDB’s resale policy introduced in 1979. A five-percent levy on the flat’s resale price was also introduced to prevent sellers from profiteering.¹⁶

The HDB resale policy was further refined in 1982 to emphasise the original objective of the Home Ownership Scheme, which was to allow Singaporeans to own the homes they lived in.¹⁷ The second and subsequent flats bought from HDB had to be sold back to HDB either at the flat’s original purchase price, or at market price if the five-year MOP had been met.¹⁸

At this point, the five-percent resale levy was changed to a graded system for second-time flat owners, in which the percentage of levy was contingent on the flat type.¹⁹ The fixed levy system resumed in 2006.²⁰

In response to soaring housing prices in 1996, eligible buyers were limited to a maximum of two subsidised HDB loans.²¹ In May that same year, HDB lengthened the MOP from 5 to 10 years.²²

The MOP reverted to five years in 2005 for flats that were not classified as Prime Location Public Housing (PLH).²³ The PLH model was introduced in 2021 to ensure that HDB flats located in prime, central areas would remain affordable and accessible. These flats are subjected to stricter buying and selling regulations such as a 10-year MOP before they can be sold on the open market.²⁴

Expanding accessibility to homeownership
HDB has changed its policies to ensure that the Home Ownership Scheme’s objectives are still being met and to adjust to the demographic and socioeconomic changes, as well as changing expectations among Singaporeans.²⁵

Housing for single Singaporeans
Initially, only those with a family nucleus were eligible for the Home Ownership Scheme.²⁶ The scheme was extended to unmarried individuals in 1972: orphans aged 21 and above were allowed to apply for an HDB flat if they could form a group with one or more unmarried orphans of the same gender.²⁷ In addition, unmarried women above 40 could apply for a flat with two or more unmarried women. Spouses of deceased Singapore citizens could also purchase HDB flats if they were permanent residents and had children who were citizens.²⁸

A wider group of singles became eligible for homeownership in 1978 with the introduction of the Senior Citizen’s Scheme.²⁹ This allowed elderly singles – women aged 40 years and above, and men aged 55 years and above – to rent or purchase flats directly from HDB with another Singaporean above 21 years old who would share the flat with them.³⁰

In 1990, this scheme was renamed the Joint Singles Scheme, and the minimum qualifying age was lowered in response to public feedback. Women aged 35 and above and men aged 40 and above were eligible if they had a joint applicant who was at least 21 years old.³¹ Subsequently, there was a long queue for new flat applications, and single applicants were not actually sharing the flats with the elderly persons. As a result, the policy was rescinded in 1998, and singles could purchase only from the resale market.³²

By then, the Single Singapore Citizen Scheme had been introduced in 1991, allowing eligible single Singaporeans above 35 years old to buy resale HDB flats that were three-room or smaller and located in non-central areas.³³ In 2013, singles aged 35 and above were eligible to purchase two-room flats directly from HDB again^.34

Housing for Singaporeans with foreign spouses
Following public feedback, Singaporeans with non-citizen spouses became eligible to buy HDB flats in March 1992, but only three-room or smaller flats from the resale market.³⁵ This marked the first time non-citizens could buy HDB flats without first becoming PRs.³⁶ In 2005, such couples were allowed to purchase any type of resale flat. Following an upward trend in marriages between citizens and non-Singaporeans, in 2013 the HDB allowed these couples to apply for two-room flats if they meet eligibility rules.³⁷

From rental to homeownership
To encourage its tenants to become homeowners, the HDB launched the Sitting Tenants Scheme in 1994, enabling tenants of two- or three-room HDB flats to purchase their rental flats at discounted prices, with full mortgage loans provided.³⁸

In December 2016, the Fresh Start Housing Scheme was implemented to help rental families with young children who were applying for a HDB flat a second time to purchase flats at a lower price. Under the scheme, such families could purchase two-room flexi flats with shorter leases.³⁹

Additional grants and subsidies
As building and housing costs have risen over the years, the government has provided additional grants to make housing more affordable to low-income families and couples buying their first home.⁴⁰

Announced during the 1994 National Day Rally by Prime Minister Goh Chok Tong, the CPF Housing Grant Scheme (renamed Proximity Housing Grant in 2015⁴¹ aimed to promote stronger family ties among Singaporeans, while helping more people to own their first homes.⁴² It provided a $30,000 grant to first-time buyer families purchasing resale HDB flats near where their parents or married children lived.⁴³ In 1995, the grant amount was increased to $50,000.⁴⁴

Housing grants were first made available to singles in 1998 with the CPF Housing Grant Scheme for Singles worth $15,000.⁴⁵

To help low-income households buy their first two- or three-room flat, the Additional CPF Housing Grant and Special CPF Housing Grant were introduced in 2006⁴⁶ and 2012 respectively.⁴⁷ These grants became the Enhanced CPF Housing Grant in September 2019.⁴⁸

Housing as an asset
In late 1990s, about 81 percent of Singaporeans were HDB homeowners.⁴⁹ Housing became recognised as an asset that could become part of one’s retirement fund.⁵⁰ To ensure that the value of older flats would not depreciate, the HDB embarks on various estate renewal programmes to enhance the appearance and upgrade the facilities of older HDB flats and housing estates.⁵¹

The Studio Apartment Scheme was also introduced in 1997 to allow HDB homeowners above 55 years old to convert their housing assets into cash by selling their existing flats to purchase smaller ones designed specifically for the elderly.⁵²

Awards and recognition
The HDB received the United Nations’ Public Service Award for the Home Ownership Scheme in 2008. This international award recognises “transparency, accountability and responsiveness in the public service”.⁵³

Timeline
Feb 1960: The HDB is formed.
12 Feb 1964: Home Ownership for the People Scheme is introduced.
Sep 1968: The CPF (Amendment) Act is introduced allowing CPF savings to be used for purchasing an HDB flat.
1971: HDB flats can be sold in the open market after meeting the three-year MOP.⁵⁴
1973: The MOP is extended to five years before HDB flats can be sold on the open market.⁵⁵
1978: Senior Citizen’s Scheme is introduced.
1979: HDB introduces its resale policy in which flats can only be sold on the open market after a five-year MOP, and a levy had to be paid for the purchase of a second HDB flat.⁵⁶
1982: HDB tightens its resale policy. Flat owners can only sell their first HDB flat in the open market after the MOP and subsequent flats purchased from HDB must be sold back to HDB.⁵⁷
Aug 1990: Senior Citizen’s Scheme is renamed Joint Singles Scheme.⁵⁸
1991: Single Singapore Citizen Scheme is introduced.⁵⁹
1992: Singaporeans with foreign spouses become eligible to buy resale HDB flats.
1994: Sitting Tenants Scheme and CPF Housing Grant Scheme are introduced.
April 1997: HDB flat buyers are limited to two loans from HDB.⁶⁰
May 1997: MOP is extended from 5 to 10 years before HDB flat owners can purchase their second HDB flat.⁶¹
1998: CPF Housing Grant Scheme for Singles is introduced.
2005: MOP before HDB flats owners can purchase their second HDB flat reverts to five years.⁶²
2006: Additional CPF Housing Grant (AHG) is introduced.
2008: HDB receives the United Nations’ Public Service Award for the Home Ownership Scheme.
2012: Special CPF Housing Grant (SHG) is introduced.⁶³
2013: Singles aged 35 and above and Singapore citizens with foreign spouses are eligible to purchase two-room flats directly from HDB.⁶⁴
August 2013: Step-up CPF Housing Grant is introduced.⁶⁵
2015: CPF Housing Grant Scheme is renamed Proximity Housing Grant.
2016: Fresh Start Housing Scheme is implemented.⁶⁶
2019: AHG and SHG combine to become the Enhanced CPF Housing Grant.
2021: Prime Location Public Housing (PLH) flats is introduced. These flats have a MOP of 10 years before they can be resold.

Author
Andrea Kee



References
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The information in this article is valid as of 22 June 2023 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.