Guide To Understanding HDB Ethnic Integration Policy (EIP) And Singapore Permanent Resident (SPR) Quota

Did you know that there are ethnic and permanent residency restrictions on the purchase and sale of HDB? If you have heard of stories where you cannot buy a flat from family of a different ethnicity, mostly it is because of the Ethnic Integration Policy (EIP). Likewise, SPRs may find themselves out of luck even if they meet all the other requirements for HDB purchase. Here’s a guide to understanding the HDB EIP and SPR Quota today.

History Of EIP And SPR Quota

Originally intended to address the growing issue of communal clustering, the EIP was introduced in 1989. Back then, the permissible proportion of flats for Malays was up to 22% in the neighbourhood and 25% in each block. For Chinese, the allowed proportions were 84% and 87% respectively, and for Indians and other minority groups, the proportions were 10% and 13% respectively.

This was revised in 2010 to increase Indian/Others limits to 12% and 15% respectively. Along with the EIP proportion revision, the SPR Quota was also introduced in 2010 to facilitate better integration of non-Malaysian SPRs and to prevent enclaves from forming in HDB estates. Malaysian SPRs are excluded as they have close cultural and historical similarities with Singaporeans.

What Is The Current EIP And SPR Quota?

Ethnic Integration Policy (EIP) limits the total proportion within a block or neighbourhood that may be occupied by a certain ethnicity. It applies to the sale and purchase of all new and resale HDB flats and is implemented for all ethnic groups.

There is no current EIP proportions listed on HDB’s website. Instead, buyers and sellers will have use the enquiry service to check if they are eligible under the EIP.

SPR Quota restricts the total proportion of non-Malaysian SPR households within a block or neighbourhood.

The SPR Quota for non-Malaysian household is currently 5% and 8% at the neighbourhood and block levels respectively. It applies in addition to the existing limits of EIP. This means that it is potentially more difficult for non-Malaysian SPRs to buy into a desired neighbourhood or block even if they meet the EIP proportions.

Source: HDB

How Ethnicity Of Households Are Determined

The ethnicity of the household is determined at the purchase of an HDB flat. Once an ethnicity is chosen for the household, you cannot change it when you subsequently sell their flat on the open market.

A mixed-race household can choose to classify their household ethnicity under the ethnic group of any owner or spouse (co-owner or occupier), according to the race shown on the NRIC. For example, a Chinese and Malay couple can choose to classify as either a Chinese or Malay household and this classification will be the same when you sell your flat in the future.

For buyers or sellers with double-barrelled ethnicity indicated in their NRIC should use the first component to check their eligibility. For example, “Malay-Chinese” buyers or sellers should use the ethnicity “Malay”.

How EIP Affects HDB Buyers And Sellers

As both buyer and seller, the EIP and SPR quota restricts your pool of potential buyers and sellers. This can have implications on the purchase or sale price of your HDB, due the restricted availability.

New Sale-Of-Balance/ Open Booking Flat in Mature Estate

A look at the Build-To-Order (BTO) flats available for sale-of-balance or open booking also shows the asymmetry created because of EIP. Most of the flats remaining after the initial BTO sales launches are reserved for Malay or Indian/Other ethnicities due to EIP.

Flats available for open booking (March 2020) (Source: HDB)

Resale Flat in Mature Estate

A query of a resale block in a mature estate (Bishan) showed that a Chinese buyer can only buy from a Chinese seller, but Malay and Indian/Other Ethnic Group buyers can buy from all sellers. Conversely, a Chinese seller can sell to all ethnicities, but Malay and Indian/ Other ethnic group sellers can only sell to Malays and Indian/Other ethnic groups. This suggests that either the neighbourhood and/or the block has already reached the maximum proportion for Chinese owners.

In such a case, Chinese buyers (especially Chinese SPRs because of the additional restriction of the SPR quota) may find it harder to find the flat they want in this block. Meanwhile, Malay and Indian/Other ethnic group sellers may find that it is harder to sell their flats because they cannot sell to the potentially larger pool of Chinese buyers.

Read Also: HDB Resale Levy: What Second-Time Flat Buyers Need To Understand Before Buying Another Flat

What Can You Do If You Cannot Sell Your HDB Because Of EIP?

While the government has iterated in 2018 that there is no plan to change the EIP, they have said that depending on the individual case, HDB may grant an extension of time to sell and exercise flexibility for those who are in extenuating circumstances. It is also possible to wait for the quota to change over time as people move in and out of the estate.

Regardless, as a potential HDB buyer or seller, you should be aware of the potential restrictions that the EIP and SPR quotas will place on you and your pool of available flats to buy or buyers who can buy your flat and make your decision to sell or buy at the opportune time.

Read Also: Housing Agents Share: How Can Homeowners Improve The Chances Of Selling Their “Hard-To-Sell” HDB Flat?

Listen to our podcast, where we have in-depth discussions on finance topics that matter to you.