Housing and Development Board (Amendment) Bill
(6 min) Mr Louis Ng Kok Kwang (Nee Soon): Madam, this Bill makes two key changes. First, it enables banks to use HDB loans as collaterals to borrow from MAS. Second, it empowers the HDB to seize flats in certain cases where homeowners provide falsehoods to HDB.
I agree with these changes. They help banks release funds into a tight economy. They penalise the use of falsehoods by HDB applicants.
Sir, I have three clarifications to make. My first clarification is about HDB loans. The Bill allows banks to use HDB loans granted by them to obtain credit facilities and repurchase transactions from MAS. Previously they could not. This empowers MAS to inject more liquidity into our financial system. Indeed, MAS has recently created a new credit facility that allows certain banks to pledge home loans as collateral.
But there are risks. In this crisis economy, homeowners will increasingly feel the brunt of unemployment and salary cuts. More home loans will become delinquent or default. MND itself said in 2018 that prolonged unemployment and drops in household income are two main reasons why households fall into mortgage arrears. If households cannot repay their loans, banks will find it harder to repay MAS.
To clarify the significance of this amendment, I have two questions.
First, can Minister share data on what has been the default rate of HDB bank loans in the past five years? Second, what is HDB's forecast of the default rate of HDB bank loans in the next 24 months? I was initially going to ask if HDB will continue to suspend late payment charges on HDB mortgage arrears. I am glad the Minister has announced that given the current economic conditions, HDB will further extend this to 31 March 2021. This is indeed a much needed lifeline for many Singaporeans. Sir, ensuring that homeowners can repay their bank loans is in the interest of homeowners, banks and our financial system.
My second clarification relates to falsehoods, transfers and acquisitions. This Bill gives HDB new powers to compulsorily acquire flats in certain cases. In particular, HDB now has the power to do so in cases where applications for flat ownerships in an acquisition or transfer between relatives contained a false or misleading statement. I have two sets of questions related to this proposal.
One, in relation to both the existing section 56 and the new amendment, can Ministry clarify whether homeowners are allowed to amend the false or misleading statements in HDB applications they have submitted? If so, what are the channels for them to amend their statements? We must take a strong stance against the use of falsehoods in HDB applications. But where such falsehoods are assessed to be innocent or non-material, we should provide channels for voluntary correction.
Two, the amendment of section 56 introduces the terms "transfer" and "acquisition". There is no definition for either term in the Act for the purpose of section 56. Can Minister clarify what situations do "transfer" and "acquisition" refer to? In particular, does the definition of "transfer" in section 56 differ from its definition in section 49, which expressly states to cover only section 49? Section 56 has significant impact on lives, as it empowers HDB to compulsorily acquire flats. Clear definitions with examples, provided on Parliamentary record, will help avoid any doubt in its interpretation.
My final point is that we have not gone far enough in reviewing our HDB policies. The policy of not allowing the keeping of cats in HDB flats has to be reviewed and changed. I have spoken up about this for more than a decade now. I know this is not part of this Bill but I hope Minister will address this point.
Let me reiterate what I said in this House in March this year, "HDB has stated that cats are generally difficult to contain within the flat. When allowed to roam indiscriminately, they tend to shed fur and defecate or urinate in public areas and also make caterwauling sounds, which can inconvenience your neighbours. It does not make sense that one is allowed to keep a dog and now a big dog, but not a cat, not even a little kitten. Dogs can also shed fur and defecate or urinate in public areas. What is more, they bark. HDB's concerns can be easily addressed. We can ensure that pet cats do not roam indiscriminately and are sterilised. Sterilised cats do not make caterwauling sounds. I have seen first-hand how all these simple measures can be taken and people can keep cats in their flats without affecting their neighbours."
In response to my question, MND said, "When HDB receives a complaint, they go down and investigate. If the cat is not causing any disamenities, the resident will not be asked to remove the cat". I appreciate this reply but my question then is, what is the point of having a rule that we do not enforce? So many people are already keeping cats in HDB flats. Many of us, as Members of Parliament, see this during our home visits and some of us even take photos with our HDB residents and their cats.
Sir, I sincerely hope that MND will amend the Housing and Development (Animals) Rules to reflect what we already accept in reality – that HDB residents are allowed to keep cats, which can be removed if they are found to cause disamenities in the community.
Sir, notwithstanding my clarifications, I stand in support of the Bill.
Response from Mr Desmond Lee: Mdm Deputy Speaker, I would like to thank Members for their comments on the Bill. Allow me to address the issues raised.
Ms Cheryl Chan asked if the MAS Singapore Dollar Term Facility is a temporary or permanent facility and if MAS can direct the banks to on-lend the funds borrowed from MAS to local businesses instead of chanelling them to overseas investments.
Madam, the facility is a pre-emptive measure to strengthen the resilience of the banking sector, given the significant economic headwinds created by COVID-19. The facility will remain in place throughout the COVID-19 crisis. After the crisis is over, MAS will review if the facility needs to be retained.
The intent of the facility is not for the banks to directly on-lend the funds borrowed from MAS. Instead, the facility serves as a backstop that will provide banks with greater certainty of funding and provide the banks assurance and, in doing so, supports their lending to businesses and households during periods of heightened market uncertainty.
Ms Cheryl Chan also asked if HDB flat owners will be notified when banks pledge their HDB loans to MAS. Ms Nadia Samdin asked about the administrative implications on flat owners when MAS takes over the HDB loans and if the terms of HDB loans from banks will stay the same.
The borrower-lender relationship between the HDB flat owner and the bank, as set out in the terms and conditions of the housing loan, remains unchanged when the bank pledges the HDB loan to MAS. HDB flat owners continue to service their HDB loans with their respective banks and the bank still retains the legal title to the loan. There is, therefore, no change in the relationship between banks and the flat owners and, therefore, MAS will not require the bank to inform the HDB flat owners that their loans have been pledged to MAS as part of a portfolio of loans, both private and public, in return for this facility.
But in the highly unlikely scenario where a bank defaults on its loan from MAS, MAS will take ownership of the HDB loans and will appoint an agent bank to administer the loans on MAS' behalf. Under this scenario, HDB flat owners will be promptly notified to re-direct loan repayments to the agent bank. This is an administrative process and the terms and conditions of the HDB loans, including the interest rates charged, will not be affected in the process. Again, we emphasise that this is a very unlikely scenario, as banks in Singapore are well capitalised and maintain healthy liquidity buffers and this is, indeed, a pre-emptive measure.
Mr Louis Ng shared his concerns that increased default rates on home loans during periods of economic uncertainty may increase the likelihood of banks defaulting on their loans from MAS and asked about the current and projected default rate of bank loans on HDB flats. The current housing non-performing loan ratio remains low and stable at around 0.5%. The majority of borrowers are able to service their mortgages and should continue to avoid further build-up of debt. But, we will keep a close watch on the situation as the crisis unfolds.
As Mr Ng has pointed out, economic and employment conditions remain challenging for many households, and we can expect homeowners to face difficulties in the period ahead. For borrowers in financial difficulties, MAS has worked with financial institutions on further support measures that allow them more time to resume their monthly mortgage instalments. These measures, which were announced yesterday, will help ease individuals’ cashflow while gradually encouraging them to resume their home loan repayments in 2021. This complements HDB's own loan arrangements which were announced a couple of days before MAS.
Ms Nadia Samdin also asked if the use of HDB loans as security will increase the pressure on banks to foreclose loans with outstanding arrears. The MAS facility does not impact how banks manage their residential property loan portfolio. As banks now have access to an added layer of liquidity insurance provided by MAS, their ability to deal with liquidity stress should in fact be enhanced.
Finally, Miss Cheryl Chan asked how the proposal would interact with various scenarios relating to material changes in the ownership of the flat. In short, there is no impact on how such cases will be handled. The existing HDB policies will continue to apply. The banks will also continue to administer the loans based on their existing procedures.
I have sought to respond to Members’ queries regarding the amendments made to enable the MAS SGD Term Facility. If there are further technical queries relating to this or to the financial system, my colleague Minister Ong Ye Kung will be here to address them.
Next, let me address the points made regarding compulsory acquisition.
Ms Nadia Samdin asked if this would excessively penalise flat owners who may be innocent and unaware of the false statements or misrepresentation of facts. I would like to assure the Member that HDB will not exercise its powers to compulsorily acquire flats lightly, and will generally only contemplate such action as a last resort for egregious and severe cases, and where the flat owners refuse to regularise the ownership of the flat. Before initiating acquisition action, HDB will investigate each case thoroughly. Depending on the circumstances of each case, HDB may instead consider imposing a financial penalty or issue a warning. HDB will consider the interest of the parties involved, including any non-complicit owners and occupiers of the flat, and may allow the flat to be sold on the open market if there are extenuating circumstances.
The statutory appeal channel to the Minister under section 56 of the Act serves as yet an additional safeguard to the interests of potentially non-complicit owners.
Mr Louis Chua asked about the rationale for this amendment and, like Miss Cheryl Chan, also asked if there had been a significant rise in false statements or misrepresentations in the transfer of flats. I would like to clarify that this is not the case. By and large, HDB's existing process and system checks are able to reduce such occurrences. In fact, HDB had found around 10 such cases in the past three years. They principally revolve around false statements or misrepresentations about eligibility, about ownership of other properties, both locally and abroad and, of course, other statements that are material to the transfer or to purchase. This is thus a pre-emptive move to deter any such potential infringements in relation to the transfer of flat ownership.
Mr Louis Ng asked about avenues for owners to amend unintentional or non-material errors in their applications to HDB. I would like to assure the Member that we will apply this provision to those who intentionally make misleading statements or misrepresentations.
He asked also about the specific definitions of the terms “acquisition” and “transfer” in the amendment. The Member is right that the definition of the term "transfer" in section 49 applies expressly to that section only. Section 49 sets out the various transactions for which HDB may act for parties who do not engage their own solicitors. Such transactions include, among others, the purchase, sale, transfer of ownership interest, and surrender of HDB flats. The definition of "transfer" in section 49 is therefore purposefully broad, to cover the range of transactions where HDB can act for, some of which do not apply to the intended amendment in section 56.
For the purposes of section 56 amendment, we should take the ordinary meaning of the terms "acquisition" and "transfer". To explain, the term "acquisition" in this amendment refers to the obtaining of an interest in the ownership of the flat by an incoming owner. The term “transfer” here refers to an interest in the ownership of the flat being passed to an incoming owner. Let me use an example to illustrate. When a couple includes their child as a co-owner of a flat, the child acquires an interest in the flat, while the parents transfer an interest in the flat to the child.
Finally, Miss Cheryl Chan and Mr Louis Chua raised some queries with regard to the amendments relating to the HDB Board.
As I mentioned earlier, the HDB Board plays a strategic role in guiding the development of the Board. When appointing Board members, we seek a diverse representation of perspectives to cover the breadth of its work. In fact, with the current Board size, HDB has had to make trade-offs in selecting and bringing on expertise.
On the Member’s question as to whether HDB had considered enlisting the help of external consultants or industry experts instead, I would like to share that HDB does, indeed, engage such experts when dealing with specific projects or issues. For example, HDB has several advisory panels comprising industry experts to guide HDB in technical areas such as Architecture, Research, and Civil and Structural Engineering. Such panels are useful when HDB needs advice in more specific and technical areas. But they will not be able to replace the Board’s role in offering strategic guidance and contributing diverse viewpoints, including beyond their core areas of expertise, to guide HDB’s overall development.
With the expansion, HDB’s Board size will be comparable to that of other Statutory Boards such as the LTA, CPF Board and JTC Corporation.
Mr Louis Chua had asked about the appointment of a Deputy Chairman prior to the appointment of Dr Lily Kong as Deputy Chairman with effect October 2020. Prior to appointment, at the start of each term of HDB's Board, there would be appointed in HDB's Board a temporary chairman who would for all purposes and intents perform the role of a Deputy Chairman in managing the Board and holding Board meetings in the absence of the Chairman. This amendment brings the structure and composition of the HDB's Board in line with other Boards such as JTC, URA and LTA.
Finally, let me address an issue that is unrelated to the Bill but is very close to Mr Louis Ng's heart. This Bill relates to credit, compulsory acquisition, courts and candidates for the Board – four Cs – and that does not include the cats. Nevertheless, let me address Mr Louis Ng's point about the need to review HDB’s policy that disallows the keeping of cats in HDB flats.
Let me first declare that I am a cat lover and I have had four stray cats in the course of the last 15 years. HDB’s pet ownership policies seek to strike a balance between residents who are pet lovers and those who are not. We will continually review and I assure the Member that we will review and update our pet ownership policies to ensure that they are effective and balance the needs of different stakeholders. Mdm Deputy Speaker, I beg to move.
Source: Hansard
