HDB Fresh Start Housing Scheme 2022: How Low-Income Singaporeans Can Afford a 2-room Flexi Flat

·8-min read

Since time immemorial, the affordability of housing in Singapore has been a key concern of the citizenry, especially millennials. Nothing new there. But the pandemic housing boom has sent prices through the roof worldwide, Singapore included. And with other financial pressures like the impending GST hike and rising fuel prices on the horizon, more Singaporean households could find themselves falling through the cracks.

The HDB Fresh Start Housing Scheme, designed to help households in public rental flats purchase their own 2-room Flexi flats, is all the more relevant in these uncertain economic times. Let’s find out what it entails and whether you qualify.

What Is the HDB Fresh Start Housing Scheme 2022?

The HDB Fresh Start Housing Scheme aims to assist households in their purchase of a 2-room Flexi flat. Buyers have the option of a shorter 45- to 65-year lease, provided it covers all owners until they are at least 95 years old.

They will have to serve a 20-year Minimum Occupation Period (MOP) before being able to resell or rent out the flat.

Households will receive the following forms of assistance:

  • Option to buy a short-lease 2-room Flexi flat ranging from 45 to 65 years provided all owners and spouse-occupiers are covered till they are 95 years old

  • Fresh Start Housing Grant of $50,000, consisting of:

  • $35,000 lump sum to be paid into applicants’ CPF Ordinary Account (OA) just before key collection

  • Remaining grant of $15,000 to be paid into applicants’ CPF OA over a period of five years after key collection

  • Cap on resale levy at $30,000, to be adjusted downwards based on length of the lease

  • Access to HDB concessionary loan subject to credit assessment

  • Priority allocation in HDB’s BTO and SBF sales launches of up to 10% of 2-room Flexi units, making it easier to be successfully allocated a flat

Related article: HDB HLE Application: 6 Important Things HDB Flat Buyers Need to Know

Who Is Eligible for the HDB Fresh Start Housing Scheme 2022?

HDB-Fresh-Start-Housing-Scheme (1)
HDB-Fresh-Start-Housing-Scheme (1)

Broadly speaking, the HDB Fresh Start Housing Scheme is targeted at second-timer families with young children currently living in public rental flats.

Second-timer households are defined as households that have already received one housing subsidy from the HDB. A household is considered to have received housing subsidies if they have purchased a flat directly from the HDB such as a BTO flat, received any CPF Housing Grants or received any other benefits from the HDB, such as through the Selective En Bloc Redevelopment Scheme (SERS).

Here is the full set of eligibility criteria for the HDB Fresh Start Housing Scheme:

  • Applying as a Second-Timer family nucleus

  • Applicant and spouse (if any) must be at least 35 and below 55 years old

  • Applicant(s) can be married, divorced, or widowed

  • Family nucleus must include at least one Singapore Citizen parent and at least one Singapore Citizen child aged 18 or younger

  • At least one applicant must be in stable employment in the preceding 12 months

  • Have lived in a public rental flat for at least one year without accumulating three or more months of rental arrears in the preceding 12 months

  • Have not received any public rental tenancy discount under Relocation, Sale of Flat to Sitting Tenants or Rent & Purchase Schemes

  • Qualify for a Letter of Social Assessment (LSA) issued by HDB*

  • Undergo annual reviews by the HDB to renew LSA until 5 years after key collection. Might require face-to-face interviews or following up with action plans

  • Have an average gross monthly household income of not more than $7,000

  • Not own any other properties overseas or locally, nor have disposed of any within the last 30 months

Related article: 2-Room BTO Flat: Who Is It For and 8 HDB Resale Flat Alternatives You Can Buy

*To qualify for the LSA (valid for one year), the family will be assessed based on the following factors:

  • Family stability

  • Employment stability

  • Ability to manage their finances well

  • Regularity of school attendance for all children below 16 years old

How to Buy a 2-room Flexi Flat with the HDB Fresh Start Housing Scheme

Let’s see how much an applicant would need to pay to buy a hypothetical resale 2-room Flexi flat with a 60-year lease.

Purchase of 2-room Flexi flat with 60-year lease

Selling price

$120,800

Resale levy

$25,000

Total cost (Selling price + resale levy)

$145,800

Fresh Start Housing Grant

Upfront grant (paid into CPF OA just before key collection)

$35,000

Remaining grant (paid into CPF OA over five years after key collection, can be used to reduce loan tenure)

$15,000

Total grant

$50,000

In our scenario, the selling price of the flat is $120,800, and the buyer will also have to pay a resale levy of $25,000 since he/she is a second-timer.

Based on the above, the buyer will need to budget a total of $110,800 in cash and CPF ($145,800 - $35,000).

This sum does not include the buyer's stamp duty and legal fees, which must also be paid by the buyer.

Now, let’s assume the buyer wants to take out the maximum HDB Concessionary Loan amount of 85%. Let’s see what sums of money need to be paid.

Upon booking of flat /signing of Agreement for Lease

Resale levy - cash

$25,000

Downpayment (15%) - cash and/or CPF

$18,120

Upon collection of keys & reception of $35,000 lump sum portion of Fresh Start Grant

Monthly mortgage payment (25-year loan at 2.60% p.a. interest rate) – cash and/or CPF

$465.83

In summary, here is what the buyer needs to pay:

  • Resale levy of $25,000 in cash.

  • Downpayment of $18,120 in cash and/or CPF.

  • Monthly mortgage repayments of $465.83 in cash and/or CPF. The $35,000 lump sum portion of the Fresh Start Grant will be disbursed upon key collection, at the same time the buyer commences home loan repayments and can cover over 6 years of loan repayments.

Related article: 9 Ways Singaporeans Pay for Their Home Loans: HDB vs Bank Loan, Cash vs CPF and More

If the buyer can afford it, he/she can also opt to spend the $35,000 lump sum portion of the HDB Fresh Start Grant immediately upon disbursement to shorten the loan tenure.

The buyer will also receive $15,000 paid to CPF OA over a period of five years after key collection. This amount can be used to pay for the monthly mortgage repayments or shorten the loan tenure without any penalty.

Thinking of applying for the HDB Fresh Start Housing Scheme? You can submit an online application via the HDB website.

Conclusion: Applying for the HDB Fresh Start Housing Scheme

types of housing sg-unsplash-hdb
types of housing sg-unsplash-hdb

The HDB Fresh Start Housing Scheme enables households to purchase a home so they will no longer need to rent a flat under the Public Rental Scheme (this is different from the Parenthood Provisional Housing Scheme).

Monthly rents for 2-room flats are tiered according to monthly household income and whether the household is a first-timer or second-timer. Successful applicants for the HDB Fresh Start Housing Scheme are likely to be paying the top rent tier of $205 to $275 a month.

One big drawback is the resale levy. Although the HDB Fresh Start Housing Scheme caps it at $30,000, the resale levy must still be paid in cash, which might be too onerous for some households.

For those households who have enough cash for the resale levy, the HDB Fresh Start Housing Scheme could potentially enable them to pay for the flat almost entirely using CPF money. This could be preferable to paying rent in cash through the Public Rental Scheme as it leaves them with more money for daily expenses.

Related article: How Much to Budget for A New Home: A Complete Breakdown of Payments

More FAQs about the HDB Fresh Start Housing Scheme

Who Is Eligible for the HDB Fresh Start Housing Scheme?

Second-timer families with young children currently living in public rental flats are eligible for the HDB Fresh Start Housing Scheme.

How Much Is the HDB Fresh Start Housing Grant?

The HDB Fresh Start Housing Grant is $50,000, of which $35,000 is paid out in a lump sum to CPF OA upon collection of keys and the remaining $15,000 is paid to CPF OA over five years after collection of keys.

Are Singles Eligible for the HDB Fresh Start Housing Grant?

No. Applicants must have a child aged 18 and under and be applying in an eligible family nucleus.

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This article was written by Joanne Poh. A former real estate lawyer, she writes about property and personal finance and spends her free time compulsively learning languages and roller skating in carparks.

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