'I hope it'll help you start families earlier': Desmond Lee says young couples can soon apply for flats with lower downpayment

Two years into the relationship, Hebe Woon knew that her boyfriend Julian was someone she wanted to spend the rest of her life with.

The 24-year-old sales development representative told AsiaOne that it "made sense" to ballot for a Build-to-Order (BTO) flat while they were undergraduates at Nanyang Technological University back in 2022.

Woon, who met her 28-year-old university sweetheart at the school's dance club, said: "It takes a while for BTO flats to be completed, and considering we want to get married at 25 and 30, it seemed like a good timeline.

"And we have stayed together for much of our relationship, it makes sense to get a BTO flat."

But applying for their first home - a four-room flat in Yishun that costs $329,000 - without a full-time job to fund it was challenging for the young couple.

"We didn't come from a wealthy background, and we both had to support ourselves through university," Woon said, adding her combined savings with Julian in the bank amounted to just $5,000 at that time.

"But we planned ahead to make sure we would have enough Central Provident Fund (CPF) savings and cash for the flat before applying.

"And the deferred income assessment and staggered downpayment scheme really helped to relieve some of the stress we had."

Reduced upfront downpayment for young couples

The Government will be providing more support for young couples, like Woon and Julian, to help them settle down and start families earlier, National Development Minister Desmond Lee told Parliament on Tuesday (March 5).

Speaking at his ministry's budget debate, Lee said that the initial down payment after booking an uncompleted five-room or smaller flat will be further reduced for full-time students and national servicemen.

These applicants are those whose assessment of their income for HDB housing loans and grants can be deferred to just before they collect the keys to their homes, instead of at the time of application.

They also currently benefit from a Staggered Downpayment Scheme (SDS) where the amount they pay upfront when they sign the Agreement for Lease (AFL) is at between five and 10 per cent of the flat price. The remaining down payment is payable at key collection.

Lee said that these couples who deferred their income assessment will only receive housing grants closer to key collection, and must rely on their own savings for the initial cost of booking a flat. 

"For some of them, the five per cent down payment is still a significant financial barrier," he added. 

Lee said that from the June BTO sales exercise onwards, the down payment payable at the signing of AFL will be further reduced to 2.5 per cent of the flat price - regardless of the financing option they choose.

"These couples will pay the balance downpayment at key collection, when they are in a better position to do so," he added.

"I hope this enhancement will help you to settle down and start your families earlier." 

Applicants must be full-time students or NSFs

In a press statement today, MND and HDB said that eligible applicants must be full-time students or NSFs within the last 12 months, with one party must be 30 or below.

Applicants must be married or applying for a flat under the fiance/fiancee scheme. At least one party must be a first-timer, they added.

Speaking to AsiaOne after the minister's announcement, 21-year-old student Rebecca Chong said that reducing the "hefty" initial down payment is "definitely helpful" to help young couples settle down and start families earlier. 

Chong and her NSF boyfriend had applied for a BTO flat in Woodlands last December after graduating from Nanyang Polytechnic. 

But she is concerned the latest move will lead to an increase in young couples breaking up and forsaking their BTO flats. 

"They might not think much about the financial implications," Chong said. "And they might cause young people to think that since it's easier to own a BTO flat, it's also easier to forsake it.

"They will have little to lose." 

ALSO READ: Expect shorter waiting times of below 3 years for some BTO flats up for sale this year: HDB

chingshijie@asiaone.com