One of the restrictions on public housing in Singapore is the Ethnic Integration Policy which limits the total proportion within a block or neighbourhood that may be occupied by a certain ethnicity. This applies to the sale and purchase of all new and resale HDB flats and is implemented for all ethnic groups. If you or someone you know were unable to buy a flat from or sell their flat to a family of different ethnicity, it is likely due to the Ethnic Integration Policy (EIP).
To better support HDB flat owners who face difficulty selling their flats at a reasonable price due to the Ethnic Integration Policy (EIP) quotas, Minister for National Development, Mr Desmond Lee, announced during the Committee of Supply 2022 that HDB will now be able to buy back flats from eligible EIP-constrained flat owners.
#1 Flat Owners Must Be Constrained By EIP And Meet The Eligibility Criteria
As the buyback is only for those who have been affected by the EIP quotas, HDB will only buy back flats from eligible EIP-constrained flat owners who face genuine difficulties selling their flats at a reasonable price. This applies to flat owners who bought their flats from HDB and those who purchased their flats on the resale market, regardless of whether the flat was EIP-constrained at the point of purchase.
To qualify for this flat buyback assistance, HDB will evaluate the requests on a case-by-case basis. One of the considerations is whether the flat owners have fulfilled the Minimum Occupation Period and owned the flat for at least 10 years.
#2 Eligible Flat Owners Must Demonstrate Genuine Attempts To Sell
The other consideration is whether the flat owners have made regular genuine attempts to sell at a reasonable price. This is assessed in 3 ways:
- Whether the flat owners have marketed the flat for a comparable period of time to sell the flat as other unconstrained flat owners. Based on current records, this period is approximately about 6 months and may change based on prevailing market conditions.
- Whether the selling price is reasonable. HDB provides reference prices in form of recent transaction prices for flats located within 200m of their flat. Sellers can then use these reference prices and make adjustments to account for their flat’s specific attributes, such as storey height and orientation. These transactions details can be found using HDB’s Transactions Within 200 Metres e-Service.
- Whether regular attempts have been made. Monthly records of the marketing attempts throughout the marketing period. These could include online or print property listings which include the asking price and listing date, records of flat viewings, etc. These records should be submitted when seeking HDB’s buyback assistance.
In most cases where EIP-constrained flat owners are ineligible due to a short marketing period or inappropriate selling prices, HDB would provide direct advice and consider the application if the flat owner is still unable to sell after adjusting their marketing period or selling price.
If ineligible flat owners have extenuating circumstances, they may also still seek special consideration from HDB.
#3 HDB Will Determine The Buyback Price After Valuation
For many EIP-constrained flat owners, the key concern would be whether they would be able to sell their flat for a fair value if they end up selling to HDB under the flat buyback.
Once it is assessed that a flat is eligible for buyback, HDB would first obtain a valuation before making a buyback offer. This valuation will be carried out by a professional licensed valuer who is licensed by the Inland Revenue of Singapore (IRAS) and a member of the Singapore Institute of Surveyors and Valuers (SISV). These valuers will make their assessment based on established valuation principles.
After the valuation is obtained, HDB will then make a buyback offer to the flat owner at a fair price. Flat owners have up to three months to decide if they wish to accept HDB’s buyback offer. If they do not accept the offer, they would not be eligible for buyback assistance for a period of 12 months after the offer lapses.
Read Also: Complete Guide To Understanding HDB Valuation For Buyers And Sellers
#4 Flats Bought Back Will Be Offered For Sale
Once HDB buys back the flat, the flat will become part of HDB’s housing stock and be offered for sale to the public through the Sale of Balance Flats exercises or open booking. These flats will be treated like all other flats sold via SBF or open booking and be subsidised for eligible flat buyers.
The new flat buyers will be subject to the prevailing ethnic proportions in the block and neighbourhood at the point of flat selection. While the odds may not be high, if the prevailing ethnic proportions have changed, it is possible for the previously EIP-constrained flat may be sold without constraints to a new flat buyer. However, if the prevailing ethnic proportions have remained the same, the EIP constraints will likely apply to the new flat buyer.
Read Also: Complete Guide To Understanding And Applying Under HDB’s Open Booking Of Flats Option
Aside from the flat buyback, the existing assistance measures for EIP-constrained flat owners will continue. These measures include giving EIP-constrained flat owners more time to sell their existing flat if they have purchased another one, and waiving the EIP limits in exceptional circumstances to allow flat owners to sell their flat to buyers from any ethnic group.
However, the waiver of the EIP limits for every EIP-constrained flat owner would defeat the original purpose of imposing these limits to encourage social ethnic integration. Instead, HDB has implemented the flat buyback option to provide additional assistance to EIP-constrained flat owners.
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