Like every other Singaporean, I love a good kaobei session, and the recent Budget 2018 GST hike announcements sure provide plenty of fodder for cathartic complaining. But when all is said and done, I think all of us saw it coming. The bigger news, I think, was the increased Proximity Housing Grant (PHG) – now up to $30,000 – for resale flat buyers.
Why? Because it could very well level the playing field between BTOs and resale flats (something that has been happening over the past couple of Budget announcements). It also has implications for a very wide range of Singaporeans – singles, newlyweds, older couples, first-time buyers, home upgraders.
Let’s take a closer look at the new Proximity Housing Grant and see how different groups of Singaporeans can benefit.
What is the new and improved Proximity Housing Grant?
The Government has basically bumped up the existing Proximity Housing Grant scheme, which offsets your resale flat purchase if (a) you plan to live with your parents or (b) it is located near your parents’ home.
The grant works the other way round too – if your parents want to buy a resale flat to live with or near you (if you’re married OR single and at least 35) they can get a grant. For simplicity’s sake, we’ll assume that you are considering living with or near your parents.
Here’s a look at how much in Proximity Housing Grant you can get now:
|Couples / families||Live WITH parents||$30,000 (increased from $20,000)|
|Live NEAR parents – within 4km (increased from 2km)||$20,000 (no change)|
|Singles aged 35 and up||Live WITH parents||$15,000 (increased from $10,000)|
|Live NEAR parents – within 4km (increased from 2km)||$10,000 (new!)|
Apart from the grant amounts, the other big change to PHG is the new definition of “proximity”. This used to be a radius of 2km, but it has been revised to 4km.
That’s HUGE. If you do the math – or just draw those two imaginary circles on the map – you’ll realise that your resale flat options have almost quadrupled! Just to be sure, you can check if your desired home qualifies using HDB’s Distance Enquiry e-service.
A few other important things to note:
- This grant is for HDB resale flats only. It does not apply to BTOs.
- The resale flat needs to be at least a 2-room flat and have minimum 30 years’ lease left.
- If applying as a couple, you and your spouse need to be both Singapore citizens, or one Singapore citizen and one PR.
- At least one of your parents needs to be a Singapore citizen or a PR.
- You can apply for the grant whether your parents live in an HDB flat or private property. If it’s the latter, they must be the owner-occupiers of the property (i.e. not tenants or pure landlords).
- There is no income cap or tiered structure for Proximity Housing Grant.
For the full details, refer to HDB’s Proximity Housing Grant page.
What’s the maximum amount of grants I can get on a resale flat now?
Couples or families applying with HDB for the first time can max out their CPF grants on resale flats. They will be eligible for the following grants:
Resale flat grants for couples / families (first-time applicants)
|Enhanced CPF Housing Grant
|$50,000 (2- to 4-room flat)
$40,000 (5-room or bigger)
|Proximity Housing Grant (PHG)||$20,000 (live within 4km of parents)
$30,000 (live with parents)
|Additional CPF Housing Grant (AHG)
(for household income up to $5,000)
|Ranges from $5,000 to $40,000|
|TOTAL||Up to $120,000|
* Singapore citizen + PR couple get $10,000 less for Family Grant, i.e. $40,000 or $30,000
Unless you really dedicate yourself to gaming the system, I would imagine that the absolute maximum is difficult to attain. Here are some examples of Singaporean first-time applicants:
Cecilia and Dinesh are an engaged couple in their 30s, earning just under $12,000 per month combined (HDB’s income cap for Enhanced CPF Housing Grant). They plan to get a 4-room flat in Bishan, within 4km of Dinesh’s parents’ home.
- Total grant amount: $50,000 (Family Grant) + $20,000 (PHG) = $70,000
- Price of resale flat: $560,000 (median price for Bishan 4-room flat) – $70,000 = $490,000
Fresh grads Jia Wei and Samantha have been married for a year and have a baby on the way. They plan to buy a 5-room flat in Yishun together with Samantha’s parents, who work as part-time teachers and can help care for the baby. All four adults’ incomes fall under HDB’s $18,000 income ceiling for the Family Grant.
- Total grant amount: $40,000 (Family Grant) + $30,000 (PHG) = $70,000
- Price of resale flat: $465,000 (median price for Yishun 5-room flat) – $70,000 = $395,000
Aaron quit his job to take on full-time father duties to his and Yuna’s twins, leaving Yuna as the sole breadwinner of the family. She earns $3,500 a month, which entitles their household to AHG of $15,000. They plan to buy a 3-room flat in Choa Chu Kang to live with Aaron’s elderly father, a retired widower.
- Total grant amount: $40,000 (Family Grant) + $30,000 (PHG) + $15,000 (AHG) = $85,000
- Price of resale flat: $270,000 (median price for CCK 3-room flat) – $85,000 = $185,000
Conclusion: Combining this year’s PHG increase with last year’s Family Grant bump really levels the playing field between resale flats and BTOs for couples. It’s now possible to get a resale flat for about the same price as a BTO, with no waiting time needed – and you won’t have to compromise on the location.
Er, but I’m single. What do I get?
Well, first of all, you have been accorded unprecedented legitimacy on national television!
Finance Minister Heng Swee Keat acknowledged in his Budget 2018 speech that the duties of caring for elderly parents tend to fall to their single adult children. You are now sort of a national hero, holding together a society threatening to fall apart due to its rapidly greying population.
But you can’t pay for your flat with mere dignity. Here’s a look at what precious grants you can now get on a resale flat, assuming, of course, that you’re at least 35 and an eligible first-time applicant:
Resale flat grants for singles (first-time applicants)
|Enhanced CPF Housing Grant (Singles Grant)||$25,000 (2- to 4-room flat)
$20,000 (5-room flat)
|Proximity Housing Grant (PHG)||$10,000 (live within 4km of parents)
$15,000 (live with parents)
|Additional CPF Housing Grant (AHG)
(for household income up to $2,500)
|Ranges from $2,500 to $20,000|
|TOTAL||Up to $60,000|
Here are some examples of what these grants look like in real life:
Lata’s 35th birthday is approaching. She has her eye on a stylish 3-room flat in Kallang for herself and her miniature dachshund, Mr Biscuit. Conveniently, it’s near her parents’ condo in Mountbatten, so she can often have dinner with them.
- Total grant amount: $25,000 (Singles Grant) + $10,000 (PHG) = $35,000
- Price of resale flat: $310,000 (median price for Kallang 3-room flat) – $35,000 = $275,000
Khairul plans to get a 4-room flat to live in with his recently-retired parents and his sister, who is still in JC. They want to get a resale flat in Yishun that’s close to his sister’s school. He earns $2,000 a month, which allows him to receive $7,500 under AHG.
- Total grant amount: $25,000 (Singles Grant) + $15,000 (PHG) + $7,500 (AHG) = $47,500
- Price of resale flat: $341,000 (median price for Yishun 4-room flat) – $47,500 = $293,500
Conclusion: The biggest housing bugbear for single people is the fact that you can only get 2-room BTOs in non-mature estates – and they’re always snapped up fast. Many singles have no choice but to turn to resale flats, which are much more expensive. At least PHG can soften the blow a little.
What about non-first-time applicants?
You are automatically disqualified from Family Grant, Singles Grant AND Additional CPF Housing Grant if you are not a first-time applicant. So if you have ever bought any sort of public housing (HDB, EC or DBSS) before, you’re out.
As far as resale flats go, Proximity Housing Grant is the ONLY grant that non-first-timers can get. The amount – $10,000 to $30,000 – isn’t massive, but it makes enough of a difference that it should incentivise you to get a flat near or with your parents (or adult children).
Let’s say you and your spouse have a BTO in Sengkang, like many young couples do. It’s awfully far away from your parents’ HDB flat in Jurong, so they are thinking of moving into a flat in nearby Hougang. This is what how much your parents can get with PHG.
- Total grant amount: $20,000 (PHG)
- Price of resale flat: $283,000 (median price for Hougang 3-room flat) – $20,000 = $263,000
A couple of years later, you decide that everyone should just move in together because it really does take a village to raise your unruly brats. Assuming PHG remains the same, you’ll get $30,000 to get a larger 5-room flat in Punggol with your parents.
- Total grant amount: $30,000 (PHG)
- Price of resale flat: $438,000 (median price for Punggol 5-room flat) – $20,000 = $408,000
Conclusion: For non-first-timers in the market for a new home, it is an absolute no-brainer to take advantage of PHG, given its relative lack of restrictions. With the new 4km radius, you can still enjoy the benefits of living close to your parents or children, without actually being all up in each other’s faces.
Show me the money! How do I get hold of this grant?
When you register an intent to buy via HDB’s Resale Portal – see this page for step-by-step instructions – the portal will show you the grants you are eligible for. Thereafter, follow the steps to purchase your resale property.
Like the other CPF grants available for HDB applicants, Proximity Housing Grant is not given in cash but credited to your CPF account to offset your purchase.
The key benefit of PHG (and other grants) is that you can lower the mortgage amount you need to borrow. You can pay a larger down payment with your now boosted CPF savings and reduce your financial burden for the years to come.
However you will still need sufficient cash savings to pay for at least the following:
- Option fee + deposit (max. $5,000 in total)
- Down payment if you’re taking a bank loan (usually min. 5% of purchase price)
- Various admin and processing fees
If you’re taking an HDB loan instead, you don’t have to worry about having that 5% in cash – you can pay the initial payment fully with CPF. (Unless it’s your second HDB loan, in which case things are a little more complicated.)
Of course, all this assumes that there’s enough money in your CPF account after the grant(s) have been credited. If there is any shortfall, you’ll have to make it up with cash too.
The Proximity Housing Grant is one of those rare grants that actually can benefit almost everyone:
- For singles wanting to move out, it makes buying your own resale flat slightly more affordable.
- For newlyweds getting your first home – especially those who get hitched later and have higher incomes – you can consider resale flats as a viable alternative to the usual BTOs.
- For older couples whose children have moved out to far-flung BTOs, moving closer to them has just become more attractive.
- For everyone who is up for multi-generation living, the increased grants for living together can help offset the hefty price tag of a larger home that can accommodate everyone.
Is the enhanced Proximity Housing Grant enough to sway you into buying a resale flat? Tell us why in the comments.
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