More Flexibility to Buy a Home for Life While Safeguarding Retirement Adequacy

May 9, 2019 17:00


More Flexibility to Buy a Home for Life While Safeguarding Retirement Adequacy

Rules on CPF usage and HDB housing loans have been updated to provide more flexibility for Singaporeans to buy a home for life, while safeguarding their retirement adequacy. The rules will now focus on whether the remaining lease of the home can cover the youngest buyer until at least the age of 95. If so, home buyers will be allowed to obtain maximum CPF usage and HDB housing loan (for HDB flat buyers). Those who do not meet this criteria will still be able to use CPF and take up an HDB housing loan, but the amount will be pro-rated. 

The updated rules will take effect from 10 May 2019. Majority of home buyers will not be affected as they are already purchasing a property which lasts them to the age of 95.

Updates to CPF rules for all properties

Use of CPF for property purchase

Previously, the use of CPF to buy properties focused on the remaining lease of the property:

Remaining lease of property

Previous rules on total use of CPF

60 years or more

Buyer can use CPF to pay for the property up to the Valuation Limit1 (VL)

30 years to less than 60 years

Buyer can use CPF if the remaining lease of the property covers the youngest buyer until at least the age of 80

Total amount of CPF that can be used is capped at pro-rated VL

These rules have to be updated to take into account the changing needs and higher life expectancy of Singaporeans. Under the new rules, the total amount of CPF that can be used for property purchase will depend on the extent the remaining lease of the property can cover the youngest buyer to the age of 95.

Remaining lease of property is at least 20 years and can cover youngest buyer until at least the age of 95

New rules on total use of CPF
(with effect from 10 May 2019)

Yes

Buyer can use CPF to pay for the property up to the VL

No

Use of CPF will be pro-rated based on the extent the remaining lease of the property can cover the youngest buyer to the age of 95. This will help buyers set aside CPF savings for their housing needs during retirement (e.g. a replacement property).


To ensure prudent use of CPF monies, there will still be a minimum lease requirement for the use of CPF for property purchases. This will be lowered to 20 years (from the existing 30 years), in line with the existing criteria for HDB loans.

CPF withdrawal rules after age 55 with a property

Previously, CPF members above the age of 55 could withdraw their CPF savings above the Basic Retirement Sum (BRS) if they owned a property with a remaining lease of at least 30 years. This was to ensure that they have secured a home in retirement and a basic level of retirement income. 

To encourage CPF members to have a home for life and to secure at least a basic level of retirement income, CPF members will now need to have a property with sufficient remaining lease to cover them until at least the age of 95, before they can withdraw their CPF savings above the BRS. This change is not expected to affect most CPF members, as all HDB flats and the vast majority of private properties have leases that can last a 55-year old member until the age of 95.

Updates to HDB housing loan rules for flat buyers

Previously, buyers of HDB flats faced restrictions on the amount of HDB housing loan they could get to purchase flats with remaining leases of less than 60 years.  

With this update, buyers will now be able to take an HDB housing loan of up to the full 90% Loan-to-Value (LTV) limit , if the remaining lease of the flat can cover the youngest buyer to the age of 95.  

If the remaining lease of the flat cannot cover the youngest buyer to the age of 95, they can still take an HDB loan but the LTV limit will be pro-rated from 90%, based on the extent that the remaining lease can cover the youngest buyer to the age of 95.

Put together, these changes will give buyers more flexibility when buying a home for life while safeguarding their retirement adequacy. A summary of the updated rules on CPF usage and HDB housing loan is in Annex A. Examples of how buyers will be affected by the updates are in Annex B. Further details on the CPF changes are in Annex C.

Implementation 

The updated rules will apply to:

• HDB flats: Flat applications received on or after 10 May 2019.
• Private properties and Executive Condominium units: Option to Purchase or Sales & Purchase Agreement signed on or after 10 May 2019.
• CPF withdrawals: Applications received on or after 10 May 2019.

Buyers can click on the following links to use the online calculators to compute their allowable CPF usage (public and private housing) and HDB housing loan:

CPF usage

• HDB housing loan
  New flat
  Resale flat

Buyers who bought properties before 10 May 2019 and are still servicing their housing loans will not be affected by these changes. Members who bought their property and turned 55 years old before 10 May 2019 can continue to apply to CPF Board to withdraw their CPF savings above their BRS under the previous rules. 
 
Those who are mid-way through a property purchase can approach CPF Board or HDB for clarifications and assistance.  

For enquiries, members of the public can contact:

CPF usage

• CPF Board Service Line : 1800-227-1188 
• Write to us : cpf.gov.sg/askcpf 

HDB housing loan

• HDB Sales/Resale Customer Service Line : 1800-866-3066
• HDB Branch Service Line : 1800-225-5432

1 The VL is the lower of the purchase price or the property value at the point of purchase. Usage beyond the VL (up to applicable limits) is allowed if the property buyers have accumulated their Basic Retirement Sum.  
2 The LTV limit refers to the maximum amount of loan a flat buyer can take up, expressed as a percentage of the lower of the purchase price or flat value. The actual loan amount is subject to credit assessment which takes into account, among others, buyers’ income and age.