HDB correspondence on public newsletters

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 2, 2005
Experts split over effect on price index
PROPERTY experts are divided over whether cashback schemes have inflated the Housing Board resale price index which tracks property transactions.

On one side are agents such as Mr Chris Koh, director of Dennis Wee Properties, who are sceptical that the price index issued every three months by the HDB reflects the real price movements of flats accurately.

In recent months, he remarked, the index has been rising steadily when it ought to have been falling along with the drop in the number of flats sold. HDB flat prices rose by 2.6 per cent last year, but the number of sales fell by 0.5 per cent to 33,421. 'It's due to cashback deals,' he said.

But it could be because of other reasons, say some. After all, the average valuations are based mostly on flats bought with HDB concessionary loans, while the price index is culled from all types of flats, regardless of whether owners take a bank or HDB loan.

Ms Cynthia Ng, executive director of valuation at property consultancy Colliers International, felt that even if there were two or three cashback deals for every 10 flat sales, the effect on the index would not be large. 'We can take the price index as accurate,' she said. -- TAN HUI YEE
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 2, 2005
Man jailed for having illegal in flat
'This is an incredible mix-up'
Displeased Chief Justice throws out conviction of man who has already served his time in jail, and says he'll look into conduct of case

By Elena Chong
OUTSIDE the courtroom, Mr Yeo Eng Siang, 52, told reporters he was just a 'born loser'.

The jobless man went to prison for having an illegal overstayer in his flat overnight one day last year.

He came out of jail last Saturday after having a third of his seven-month sentence cut for good behaviour, but his appeal reached the Chief Justice only yesterday.

CJ Yong Pung How not only overturned the conviction but also made plain his displeasure at the way the case had been conducted.

He found that the evidence of the main witness, the Chinese overstayer, was confusing, unreliable and 'riddled with absurdities'.

He promised to get to the bottom of what had gone wrong with the case and the appeal process.

Being cleared was cold comfort for Mr Yeo, who has a number of medical problems and told reporters yesterday that he had stayed locked in a Toa Payoh flat because of his 'mental condition'.

He said he was just happy to get justice in the end.

On Nov 26 last year, a district court found him guilty of having China national Chen Shixian, 34, overnight at the flat from Feb 26 to 27 last year.

His sentence was backdated to Sept 9, the day he was arrested.

Mr Chen, a rag-and-bone man, had testified to meeting Mr Yeo at the flat on Feb 26, and finding the gate chained and padlocked.

He said Mr Yeo offered to sell him a TV set and also asked him to deliver some documents to a lawyer.

Mr Chen said he agreed to run the errand 'out of pity'.

When he returned from the lawyer's office, he said, Mr Yeo let him into the flat by loosening the chain around the gate and creating a gap for him to squeeze through.

Mr Chen added that the flat was so messy that he decided to call a woman friend, also a China national, to help him clean the place.

The CJ found the whole story too incredible to believe.

Why would Mr Yeo hand over documents meant for a lawyer to Mr Chen, he asked.

And why did Mr Chen return to say he had delivered the papers when he had already telephoned Mr Yeo twice to tell him so?

'The evidence is so flimsy,' the CJ said.

Deputy Public Prosecutor Low Cheong Yeow said there was no reason for Mr Chen to make up the story.

But the CJ said: 'I could not make head nor tail of it.

'Why did he come back to this place with this chap who is mentally unsound and spend the night with him? Whatever for?

'I find that the evidence of Mr Chen is very confusing... very unreliable.'

The trial also heard that Mr Yeo offered to let Mr Chen and the woman stay overnight when he did not have the $100 he had agreed to pay them for cleaning the flat.

Mr Yeo insisted at his trial that he had never let them in.

As for the appeal being heard only after his release, DPP Low said that the process had 'moved very fast' after Mr Yeo filed his arguments last Thursday.

But the CJ said: 'I am very, very displeased with the proceedings here. I will call up every fellow in the Subordinate Courts... What the hell went on here?

'It is incredible, utterly incredible.'

He said he was not blaming the DPP, but the appeal was now academic.

He allowed the appeal but said he was very sorry that Mr Yeo had served his sentence.

'This is an incredible mix-up. People say the courts are very efficient. I don't think so lah. I will find out who is to blame, what went wrong,' he said.

News of the case and the CJ's remarks are already a talking point in legal circles.

Lawyer Edmond Pereira said: 'I've come across acquittals on appeal while the accused persons were on bail or serving sentence but never in my three decades of practice, have I heard of a conviction being quashed after the accused person has served his sentence.'

The entire episode has left Mr Yeo feeling like a 'victim of the system'.

Speaking to The Straits Times after returning to a sparsely furnished three-room flat in Toa Payoh Lorong 1 yesterday, he said: 'I feel miserable, yet relieved that it is finally over. It's a bad experience. I don't think anyone would have wanted to go through what I went through. It was a traumatic experience.'

The first thing he did after his release from jail on Saturday was to have a long shower and sleep in his own bed.

Mr Yeo lives alone and stays indoors most of the time because of his 'medical condition'.

A volunteer from a Christian group comes by with food every day and occasionally gives him some money as well.

On his plans, a still unsteady Mr Yeo said: 'I don't know who will help me. I wonder if there is a victim assistance programme... I want to get a job or pick up the pieces and move on with life. I keep asking, why me, why me?' -- ADDITIONAL REPORTING BY TRACY SUA
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
No rent hike since '79

HDB has held firm on prices for 1- and 2-room rental flats

Friday • February 4, 2005

In Leong Sze Hian's letter "Difficult for old to cope with rate increases" (Jan 27), he said that rents and service and conservancy charges (S&CC) for 1-room flats had risen by 160 per cent and 428 per cent, respectively, over the past decade.

This is not true. HDB has not raised the rents for its 1- and 2-room rental flats since 1979. Gross rents have remained at $26-$33 for a 1-room flat, and $44-$75 for a 2-room flat. These rents are highly subsidised and are substantially below market rentals.

Similarly, the monthly S&CC rate for a 1-room flat is $18.50 today compared to $15.50 ten years ago — an increase of $3.

The $10 rental and $3.50 S&CC for a 1-room flat in 1994, as cited by Mr Leong, was after deducting the rebates introduced by Government as part of the Goods and Services Tax (GST) offset package, in 1994. Although the rebates were meant to be temporary, they were extended in 1998 due to the economic slowdown, and again in 2002, as part of the offset package when the GST was increased.

The rebates announced in 2002 were meant to be phased out over a 5-year period.

From April this year, the monthly rebates that rental tenants currently enjoy will cease in line with this announcement.

The writer is wrong to conclude from this that HDB and the Town Councils are raising their rental and S&CC rates, respectively, with effect from April.

In fact, HDB tenants will continue to enjoy rental and S&CC waivers until early 2008.

This year, 1-room rental households need not pay rent for 4 months and S&CC for 5 months, as these will be paid for by the Government as part of the GST offset package.

Besides the subsidised rental and rebates, HDB will help tenants in financial difficulty by allowing them to pay their rent in instalments within a reasonable period.

HDB will also work with various agencies such as grassroots organisations, the Community Development Councils and voluntary welfare organisations to help tenants in financial hardship.

If Mr Leong's friend needs help with his rental payments, he can contact the HDB's Branch Services Line at 1800-2255432 for advice.

Mrs Julia Hang

Deputy Director (Corporate Communications)

Ministry of National Development

-------------------------------------------------------------------------------------------------------
Policy requiring singles to pair up to rent flats stays

Friday • February 4, 2005

I refer to Dr Tan Chek Wee's letter, "Compulsory pairing policy for elderly needs revision" (Jan 25).

HDB's 1- and 2-room rental flats cater to low-income families that cannot afford alternative housing. As the number of rental flats is limited and the rents are heavily subsidised, our rental policy aims to optimise the use of the flats.

In the case of singles, HDB requires two people to pair up to rent a 1-room flat under the Joint Singles Scheme to optimise space utilisation.

This pairing up requirement also encourages mutual care and support among the tenants, especially important for those who are elderly.

It prevents a situation where elderly tenants fall sick and are unable to get help on their own.

For the majority of our joint rental cases, the tenants are able to get along well. In the event that one party moves out, HDB gives the tenant a 6-month grace period, or longer if necessary, to find another single person as the replacement flatmate.

HDB also provides applicants who need help with a listing of single people who are looking for flatmates. Rental applicants, therefore, have the chance to find flatmates they can live and get along with.

HDB does not intend to change the policy requiring singles to pair up to rent a flat.

Ho Sein Yean

Deputy Director (Rental Housing)

For Director (Housing Adminstration)

Housing And Development Board
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 4, 2005
It's still 'no' to singles renting HDB flats singly

I REFER to Mr Leong Sze Hian's letter, 'Let singles rent vacant flats without pairing up' (ST, Jan 20).

HDB has a limited stock of rental housing. As they are heavily subsidised, they are meant to cater to the housing needs of lower-income families. Singles who want to rent a flat from HDB can do so under the Joint Singles Scheme. They are required to 'pair up' to optimise usage and to facilitate mutual care and support.

For singles who prefer not to share a flat, there are other options. They can rent a room or a unit from HDB flat owners. With the easing of HDB's subletting policy, more HDB flat owners can sublet a room or the whole flat.

It is not prudent to let out the vacant flats to singles just to address the situation of unsold stock. The stock arose during the economic downturn when applicants dropped out of the waiting list. These flats are now in the process of being taken up.

Tay Boon Sun
Senior Public Relations Officer
For Director (Corporate Development)
Housing and Development Board
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 7, 2005
Clampdown on flat-loan cashback scam
By Tan Hui Yee and Joyce Teo
HOUSING loan rules look set to be tightened in an effort to curb the problem of cashback deals on HDB resale flats, in which prices are falsely inflated to secure higher loans for buyers.

Following recent Straits Times reports highlighting the apparent prevalence of cashback deals - and the recent landmark conviction of an estate agent - banks giving loans on Housing Board flats will soon have to use valuations only from HDB's panel of approved valuers.

The changes are likely to take effect on Apr 1.


Sources say officials from the Central Provident Fund Board, the HDB and the Monetary Authority of Singapore met bank representatives late last month to discuss the changes.

The reforms will focus on valuations, the linchpins of any cashback arrangement. Without an inflated valuation, estate agents, buyers and sellers will not be able to collude to secure higher loans, as buyers are only allowed to take loans of up to 80 per cent of the price of the property, or of its valuation, whichever is lower.

Sources say the CPF Board, when it calculates the amount that can be withdrawn from a buyer's CPF account to pay for his flat, may enforce the new rules by refusing to recognise valuations from non-approved valuers.

The move would effectively block cashback arrangements for people using their CPF savings to pay their housing loans.

Some banks, like DBS, currently get valuations only from HDB's panel of about 50 valuation companies. Others, like Maybank, rely on their in-house valuation team, while some use a mix of HDB and non-HDB approved valuers.

Valuers on HDB's panel get more detailed information on recent HDB resale flat transactions, so they can value a flat more accurately.

Property agents say HDB's valuers tend to give lower and more realistic valuations than those engaged by banks.

One valuer from a big firm, who declined to be named in a recent interview, accused some banks of using valuers who were willing to inflate valuations, in their bid to get more people to sign up for housing loans.

According to him, some of these valuers endorse a valuation report without even looking at the property.

Last month, Propnex property agent Kereen Teo Pei Pei, 27, was fined $8,000 for her involvement in a cashback deal. Though she was the first agent to be convicted of such a scam, eight property agencies contacted The Straits Times to warn that such deals are rife.

They complained that they are losing business because about 80 per cent of agents who call them are seeking cashback deals on behalf of buyers.

The chairman of the government parliamentary committee for National Development and Environment, Dr Amy Khor, welcomed the tighter rein on valuations.

Dr Khor, who also chairs the Singapore Institute of Surveyors and Valuers, said: 'It helps to ensure professionalism among valuers and that's good for consumers. The problem now is even valuers are colluding in cashback transactions.'

She also said she had recently submitted a question to Parliament asking what the Government planned to do to curb the cashback problem.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
NEWS ANALYSIS
Cashback deals: Buyers' bane, not boon

By Tan Hui Yee
IT'S A tempting idea. You buy a flat, declare a higher price than the amount you paid and get to withdraw cash early from your Central Provident Fund account.

No one will know, as long as the housing agent, the flat seller and the conveyancing lawyer do not squeal.

The seller gets to sell his flat faster. The agent and the lawyer get their fees. You get cash in hand to deck out your new home, or settle a debt.

Everybody wins.

Then again, maybe not.

The dice in this arrangement are heavily loaded against the buyer.

Not only does he draw down on his retirement savings prematurely, he also forgoes the additional income he would have received from the interest on those savings. That's an annual income of 2.5 per cent, based on the interest rate of the CPF Ordinary Account.

A conventional flat-buyer ends up paying about 1 1/2 times or even twice the amount he borrowed from the bank by the time he fully pays off his loan in 20 or 30 years. A cashback buyer, on the other hand, has to deal with a much bigger debt burden.

Not only that, he has to deal with higher conveyancing fees, stamp duties and mortgage insurance premiums, which are pegged to the declared price of the property.

Somewhere down the road, when he sells his flat, the selling price will most likely be lower than his declared purchase price, making it what real estate agents call a 'negative sale'.

Then, after settling the outstanding mortgage loan with the bank, the money he has left over to put back into his CPF account would probably be less than the amount he took out.

For those whose finances were shaky to begin with, cashback leads only to a bigger financial burden.

It is akin to borrowing from credit cards to pay for present expenses, the difference being, of course, that spending on credit is legal, while cashback deals are not.

Under the Housing and Development Act, buyers and sellers convicted of giving false information to the HDB can be fined up to $5,000 or jailed up to six months, or both.

Housing agents say that buyers doing cashback deals tend to have minimal education and come from the lower income bracket. These buyers trust their housing agents to handle all the aspects of the transaction, making them more vulnerable to being cheated in the process.

Since pricing negotiations tend to be handled by housing agents, dishonest agents can siphon off money for themselves by giving the buyer false information on the agreed price.

Take, for example, a five-room flat that's been put on the market by a desperate seller.

An agent can get the seller to declare a selling price of $350,000 even though he only gets $280,000 for it.

Meanwhile, the agent reports to the buyer that the seller was willing to part with the flat for $300,000.

Thus, the agent pockets an extra $20,000 from the deal.

Even if this scam is discovered, it will most likely go unreported.

Since cashback deals are illegal anyway, buyers are not likely to blow the whistle on their agent for fear of drawing attention to themselves.

They end up paying for it quietly, with their retirement savings.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
HDB judged parts intended for use in upgrade unsuitable

Tuesday • February 8, 2005

I refer to the letter, "Upgrade now to meet the pressing needs of rental-flat tenants" by Mr David Goh Chee Hoe.

Mr Goh stated that the Housing and Development Board (HDB) did not allow him and his grassroots leaders to replace the squat pans with pedestal pans in two HDB rental blocks to help the senior citizens staying in these blocks.

I wish to relate the facts of the case. In the middle of November last year, the West Coast-Ayer Rajah Town Council informed the HDB of Mr Goh's proposal. The pedestal pans were sponsored by a grassroots leaders. HDB was asked to provide the manpower for the installation.

HDB supported the idea and met with the grassroots leaders to work out the details.

However, the pedestal pans offered were older models that are no longer installed in HDB flats. These models had proven to be defective. They also required more water per use. As they were discontinued models, the availability of spare parts was another concern.

Given these facts, while the HDB supported the project, we could not allow the old pedestal pans to be installed, as they might inconvenience the elderly tenants.

We explained our concerns to the grassroots leaders and informed them that HDB would be happy to assist in the installation if they could provide models approved by the HDB. This is still our position.

HDB carries out upgrading and improvement work in phases to improve the living conditions at its rental blocks.

To date, more than 70 per cent of our 1- and 2-room rental blocks have been upgraded under various programmes such as the Main Upgrading Programme, Rental Flat Upgrading Programme and Project to Improve Living Conditions for the Elderly.

The improvement work carried out includes the upgrading of toilets, replacement of electrical wiring and modification of lifts to stop on every floor. We plan to gradually upgrade the remaining blocks if they are not affected by future redevelopment plans.

Ho Sein Yean

Deputy Director (Rental Housing)

For Director (Housing Administration)

Housing And Development Board
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Plenty of free parking space during CNY
Tuesday • February 8, 2005

I refer to the letter, "Free parking on Chinese New Year?" by Stephanie Sung Lim Eng.

Currently, more than 80 per cent of HDB car parks are already under the Free Parking Scheme (FPS), which allows no-charge parking from 7am to 10.30pm on Sundays and public holidays. Hence, parking at these car parks is already free during Chinese New Year.

The remaining car parks are not suitable for the FPS because of the high demand from residents.

HDB has to strike a balance between the parking needs of residents and visitors.

For this reason, it is also not appropriate to extend the FPS to these car parks on the first day of the Chinese New Year, as suggested by Ms Sung.

Eng Soh Seng

Deputy Director (Car Parks)

For Director (Housing Administration)

Housing & Development Board
 

yoongf

Supremacy Member
Joined
Nov 25, 2000
Messages
5,545
Reaction score
873
jq75 said:
Plenty of free parking space during CNY
Tuesday • February 8, 2005

HDB has to strike a balance between the parking needs of residents and visitors.

For this reason, it is also not appropriate to extend the FPS to these car parks on the first day of the Chinese New Year, as suggested by Ms Sung.

Eng Soh Seng

Deputy Director (Car Parks)

For Director (Housing Administration)

Housing & Development Board

I wonder.. if the residents through their RCs, requested for free parking on festive seasons.. will HDB then allow FPS? This is one area which I find decentralised planning will be of greater benefit, rather than let HDB decide for everyone.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
HDB BUYERS BEWARE:
Cashback deals can backfire


BY LARRY HAVERKAMP
mail@AskDrMoney.com
Feb 8, 2005

CASHBACK is taboo under HDB rules.

It happens when a buyer and seller conspire to overstate the selling price of a flat.

The purpose is to help the buyer to get a larger loan from the bank or HDB. More subtly, it also helps the buyer convert CPF money into cash.

Bank loans are the main target of cashback schemes. In a way, banks have brought this problem on
themselves by making high property valuations.

But change is in the air. Yesterday, it was reported that from Apr 1, the CPF Board may recognise only valuations from HDB's panel of approved valuers.

This would certainly reduce cashback transactions but would it eliminate them?

I spoke to property agents who pointed out that all HDB sales fall into three categories: Those below valuation, at valuation and above valuation.

As I will explain, whenever there are sales below valuation, cashback is possible. In fact, it is likely as property agents aggressively push these deals.

Even with the proposed reforms, it is still important to understand and avoid the pitfalls of cashback deals, especially for buyers.

HOW IT WORKS

Let's say an HDB flat is valued at $300,000.

The buyer pays the seller $300,000 - of which $240,000 is from a bank loan, $12,000 is the required cash payment (4 per cent of purchase price) and the remaining $48,000 is from CPF.

To make it simple, I assume the true value of the flat is $252,000. After the sale, the seller gives the buyer cashback of $48,000 ($300,000 - $252,000).

In effect, this converts $48,000 of buyer's CPF money into cash. But the buyer usually doesn't get all of the cashback payment. A property agent and lawyer often take a cut.

This plus the required 4 per cent cash payment can reduce the buyer's cashback by more than half.

In our example, the buyer used $12,000 cash for the downpayment. On top of that, legal fees could come to $3,000 with another $15,000 going to the housing agent.

This leaves the buyer with just $18,000 from his original $48,000 cashback.

Some buyers are desperate for cash. Others don't understand how expensive cashback is when you consider the agent and lawyer costs.

Others think cashback is 'free money'. They don't see it as simply a transfer from their CPF ordinary account to cash. Income or profit is NEVER generated from cashback.

HOW WIDESPREAD?

Estimates of the number of HDB resale transactions involving cashback range from 30 to 80 per cent. Last week, the Straits Times sent reporters to pose as buyers and found all 7 agents they contacted offered cashback schemes.

A good place to look for evidence of cashback deals is on the HDB website under resale transactions.

I printed out a list of four-room transactions in 10 neighbourhoods for November to January totalling over 300 transactions. I asked three housing agents: 'Which HDB resale prices are too good to be true?'

For example, 31 four-room flat sales in the 800 block of Yishun sold for an average price of $215,000 during November to January.

One flat sold for $280,000. My agents said this was likely a cashback deal. But other transactions are not so clear-cut.

The agents felt that about one-third of the transactions looked like they could be cashback deals.

WHY IS IT HAPPENING?

Many don't see it as wrong. A property agent told The Straits Times: 'No-one gets hurt as long as the buyer goes in with his eyes open.'

This is not quite correct since a third party - the bank - does get hurt. Cashback causes the bank to
underestimate the true risk of the loan.

In our example, the bank thinks it is making a loan equal to 80 per cent of the property's value. In reality, it is making a loan equal to 95 per cent of the property's value. Cashback ALWAYS tricks the bank into making a riskier loan than it intends.

On the other hand, banks also benefit from a larger loan since the interest payments it receives are higher.

It seems to be an easy crime to get away with. Only one agent has been caught so far. That agent was fined $8,000 for her role in inflating the flat's price by $100,000.

It is a buyer's market and many buyers demand cashback deals.

Eight realtors reportedly said 80 per cent of the calls they get from agents acting for buyers are seeking cashback deals.

Property prices are down, home sales are flat and commissions are stuck at 2 per cent for the seller and 1 per cent for the buyer. Buyers are often charged zero per cent. Cashback deals seem to offer an easy way for agents to make a quick profit.

MY ADVICE

It is the buyer who benefits from cashback but I would say it is not worth it. It is expensive if the property agent and lawyer take a cut, which is typical. And there is always a risk of getting caught.

Also, the buyer CANNOT rely on a contract that requires the seller to return his over-payment
since contracts for illegal activities are unenforceable.


--------------------------------------------------------------------------------

Should you use all your CPF to pay your HDB loan?
HERE is a problem: Suppose you buy a four-room HDB resale flat for $250,000. You borrow 80 per cent from HDB, which comes to $200,000. The 20 per cent downpayment costs $50,000 and it comes from your CPF ordinary account.

Suppose you have $80,000 in your ordinary account. Then, HDB doesn't take just $50,000, but the entire $80,000 and applies it towards your purchase.

But there is a way out. If you want to keep a cushion, like $30,000, you can do it.

All you need to do is switch the $30,000 into a fixed deposit for one month during the time your HDB purchase is being processed. Then HDB will take ONLY the $50,000 it finds in your ordinary account.

After one month, switch the money back to your CPF account to earn the higher 2.5 per cent interest.

I believe HDB has no objection if you use this strategy to put less money in your flat and keep more money in your CPF ordinary account.

HDB told me: 'The amount of CPF monies to be set aside will be determined at the point of purchase and based on the available amount of CPF monies in the flat buyer's ordinary
account at that time.'

On the one hand, if you pay down your housing loan, it reduces interest costs.

On the other hand, it is risky. Should you lose your job and your CPF ordinary account is close to zero, you run the risk of defaulting on your HDB loan. It is safer to keep some money in your ordinary account, in case of emergencies.

It doesn't cost much. You earn 2.5 per cent in your ordinary account and your HDB concessionary loan rate is 2.6 per cent. The 0.1 per cent difference costs you just $1 per year for every $1,000 borrowed.

Think of that $1 as an insurance premium. Having money in your CPF ordinary account will come in handy should you find you are unable to continue your CPF contributions.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
CPF and HDB interest rates remain unchanged

SINGAPORE : The Central Provident Fund (CPF) Board will continue to pay interest to its three million CPF members at the rate of 2.50 percent per annum for CPF savings in their Ordinary Accounts.

Under the CPF Act, 2.50 percent is the legislated minimum CPF interest rate.

Savings in the Medisave Account, Special Account and Retirement Account will earn interest rates of 4.00 percent per annum.

The Housing & Development Board's concessionary interest rate for mortgage loans, which is pegged at 0.1 percentage point above the CPF interest rate for the Ordinary Account will also remain unchanged from 1 April to 30 June 2005.

The next revision of the CPF interest rate is scheduled for 1 July 2005.

The rate of 2.50 percent paid by CPF to Ordinary Accounts has remain unchanged since July 1999. - CNA
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 14, 2005
Convicted cashback agent says life is 'hell'

She was fined $8,000 and lost her job; also, she has to pay $55,000 settlement

By Tan Hui Yee
ON A night when most Chinese families in Singapore were gathered round the table for their annual New Year feast, former property agent Kereen Teo was eating by herself, too depressed to join her folks at a restaurant.

A month ago, she became the first person in her line here to be convicted for trying to falsely inflate the price of a Housing Board flat, commonly called a 'cashback' arrangement.

'It's been hell,' she told The Straits Times over the phone on Friday from her home, which she has hardly left since the news broke in April last year.

She was fined $8,000 for her part in the scam, and lost her job.

The 27-year-old has also had to find $55,000, determined in an out-of-court settlement, to pay the seller of the flat for the aborted deal.

Worse, fliers bearing copies of a Straits Times article on her case were slipped into letterboxes in housing estates in Bishan, Bedok, Toa Payoh, Pasir Ris and Jurong last year.

According to her former employer, they have also been available at the reception counter of a rival real estate agency.

Ms Teo, who used to work for Propnex, the biggest property agency in Singapore, had been in the industry for about a year when she was caught trying to arrange a cashback deal.

Under this, the buyer and seller of a flat declare a higher price than what it was sold for, so the buyer can get a bigger loan for the home than is allowed, giving him some extra cash to settle debts or renovate, while the seller, usually of an unpopular property, gets to dispose of it fast.

Ms Teo had helped a couple, Mr Francis Hong and Madam Elizabeth Bong, both in their 40s, arrange to buy a five-room flat in Redhill for $390,000, but declare it for $490,000 in 2003.

One of the flat's owners, Mr Koh Kia Sang, 52, had initially agreed to the deal, but changed his mind later and blew the whistle.

As of Tuesday last week, charges had not been brought against the buyers or sellers. I feel both sellers and buyers shld be penalised as well, as they are part of the deal... :s27:

Cashback arrangements like Ms Teo's are apparently rampant in the resale Housing Board flat market.

According to some property agents, as many as eight of 10 calls they receive from other agents acting for buyers are for cashback deals.

After Ms Teo was convicted last month, eight housing agencies contacted The Straits Times to call for tougher penalties, even jail terms, because the illegal deal sometimes earns an agent much more than he would from his 1 or 2 per cent commission.

Since Ms Teo's case, moves have been made to tighten the way housing loans are given out by banks, which are expected from April to have to base their property loans on valuations by the HDB's panel of private valuers.

Ms Teo, who insists she would not have got a cut of the difference in the real and declared prices had the sale gone through, said it was her first cashback deal.

She claims she got involved to help the buyers, who she understood were in financial difficulty.

'I'm not a hardcore criminal,' she declared. 'I was naive.'

Since her involvement came to light, she has had no income and has to rely on her family to get by.

Her family, she said, has been very supportive.

The O-level certificate holder, who made more than $100,000 in commissions in 2003, has also had to borrow from friends to pay her fine and the settlement sum.

'I was just a peanut agent, a small agent, out there trying to make a living,' said Ms Teo, adding that those who produced the fliers of the news report are making use of her case to ruin her former company's name.

'I want to say 'sorry' to Propnex and all its agents who have suffered because of this.'

She confided: 'I liked what I was doing. I liked meeting people and looking at houses and decor. And I could make a decent living for myself. I thought it could be my career...'

Asked what she intends to do now, she said: 'I don't know. But I need to move on.'



--------------------------------------------------------------------------------



NAIVE, NOT CRIMINAL

'I'm not a hardcore criminal... I was naive.'
-- FORMER PROPERTY AGENT KEREEN TEO (right) on why she got involved in a cashback deal


EKING OUT A LIVING

'I was just a peanut agent, a small agent, out there trying to make a living.'
-- On her mistake


A DECENT CAREER

'I liked what I was doing. I liked meeting people and looking at houses and decor. And I could make a decent living for myself. I thought it could be my career...'
-- On her previous job
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 14, 2005
Cashback crackdown: Property firm hunts down rogue agents


By Tan Hui Yee
RIVALS of real estate firm Propnex, labelled the 'cashback company' after two of its agents were investigated last year for attempting to inflate the price of a flat, are having a field day questioning its integrity.

Fliers reproducing a Straits Times article on the case have been slipped into letterboxes of Housing Board estates in various parts of the island.

And yet, Propnex itself is the victim of impersonation, with its undercover operation revealing that agents from other firms are posing as its representatives.

Propnex has been trying to uncover agents touting cashback services in anonymous newspaper advertisements.

In a surprise find two weekends ago, five agents its undercover people spoke to, who claimed over the phone that they were from Propnex, turned out to be working for other companies.

Propnex chief executive Mohamed Ismail said that the problem of other firms' agents riding on its brand name to boost their business was not new.
Maybe is to condem the Company as a company famous for Cashback deals.. :s8:

In fact, he claimed, his firm has so far amassed enough evidence against three such agents, and is seeking legal advice on what to do next.

But the cashback issue has lent weight to the belief that Propnex agents actively offer such illegal arrangements.

In a recent interview with The Straits Times, Mr Mohamed said: 'The allegations have damaged the confidence of our agents and clients.'

But the fact was, he said, no real estate firm could guarantee that none of its agents was engaging in cashback deals, where flat prices are inflated to get buyers bigger-than-allowed housing loans.

Eight housing agencies had told The Straits Times recently that as many as eight out of 10 calls their agents got were from agents acting for clients seeking cashback deals.

Commenting on that, Mr Mohamed said: 'We don't have 80 per cent of the market share (for HDB resale flats), we have 40 per cent.'

It was clear, he said, that cashback was practised by unethical agents in all companies, if the cashback problem was as widespread as these agencies had suggested.

The five-year-old company has expanded rapidly to become the largest agency in Singapore, with over 3,000 agents, and in the last four months alone, recruited more than 40 agents from other big companies.

Mr Mohamed said it would be naive to claim that all his agents were entirely above-board, but added that if the company ever found evidence of an agent's cashback deal, the police would be informed.

Apart from checking newspaper advertisements to weed out rogue agents, Propnex also scrutinises the invoices for agents' commissions it sends out to buyers and sellers.

Questions will be asked if the commission is higher than the usual 1 or 2 per cent of the price of a property.

Commissions received by its top 50 agents are also checked by senior partners.

This is done to weed out agents who use an inflated commission as a cover for the cashback practice.

In 2003, one agent resigned after the company raised questions over his $30,000 'commission' on a transaction involving a three-room flat worth about $180,000, disclosed Mr Mohamed.

However, the company has been unable to find hard evidence of cashback cases since then, and Mr Mohamed is looking forward to the tightening of bank loan rules, expected to happen in April.

Banks are expected to use only valuations from the Housing Board's panel of private valuers when giving out loans for resale HDB flats.
 
Last edited:

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 15, 2005
Clampdown on cashback deals soon, says Mah

No details yet, but tighter rein on HDB flat valuation is expected in April

By Tan Hui Yee
THE practice of falsely inflating the price of a flat to get the buyer a bigger loan than allowed must be stopped, said National Development Minister Mah Bow Tan yesterday in his first comments on the issue.

He said the Central Provident Fund Board, Housing Board and Monetary Authority of Singapore are working on measures to clamp down on such illegal 'cashback' arrangements.

Details should be announced in a few days' time, Mr Mah told reporters after opening an attraction at the Botanic Gardens yesterday.

Asked what changes are expected, he said: 'We'll need to primarily see in what way people are able to take advantage of the current system, and make changes.'

The Straits Times reported earlier this month that banks will be expected to use the Housing Board's panel of private valuers when they compute the loan amount for an HDB resale flat.

This change is expected to take effect from April.

Since banks are allowed to lend only up to 80 per cent of the price of a property or its valuation, keeping a tighter rein on valuation will effectively minimise cashback arrangements.

Buyers who resort to cashback arrangements usually have debts to settle or need money to renovate their home.

They get fast cash by getting a bigger housing loan than allowed, and pay it back gradually from their Central Provident Fund savings.

The flat involved is typically an unpopular one, and the cashback arrangement enables the seller to dispose of it more quickly.

Sometimes, the seller and the housing agent get a cut of the difference between the real and the declared price.

Mr Mah said: 'This is not good for the seller or for the buyer. It will create problems down the road for the buyer, the seller and the banks.'

Some housing agents have complained that cashback deals are so rampant, eight out of 10 agents acting for buyers are seeking one.

Just last month, Ms Kereen Teo Pei Pei, 27, became the first property agent to be convicted of attempting such a deal.

She was fined $8,000.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 18, 2005
Cash Back -Talk of the Town

MPs to discuss cashback deals :s8:
THE practice of falsely inflating the price of a flat to enable a home buyer to get a bigger bank loan will be discussed in Parliament today.

Dr Amy Khor (Hong Kah GRC) will raise the issue when the House sits, before the Budget is presented by Prime Minister Lee Hsien Loong, who is also Finance Minister.

Other subjects that MPs will raise during question time include Singapore's aid to tsunami-battered Aceh, as well as the teaching of Chinese in schools.

Dr Khor's question to National Development Minister Mah Bow Tan will centre on what measures the Housing Board will take to prevent such illegal deals.

She wants to know how many cases the HDB has come across so far and whether this has artificially inflated resale prices and raised the financing risk for home buyers.

This is how the 'cashback' practice works: When the seller is paid the inflated price, he passes the excess amount to the buyer. The buyer, often cash-strapped, will use the cash to settle his debt or to renovate his home.

Its appeal lies in a buyer getting fast cash in hand which he can take his time to pay gradually from his Central Provident Fund (CPF) savings.

Last month, property agent Kereen Teo Pei Pei, 27, became the first person to be convicted of arranging such a deal.

Mr Mah has said previously that the CPF Board, HDB and Monetary Authority of Singapore are working on measures to clamp down on such illegal cashback arrangements.

He said details would be announced soon.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Resale flat buyers to provide valuation from HDB-assigned valuer

SINGAPORE : From April 1, HDB resale flat buyers who want to take bank loans and use their CPF savings for their flat will have to provide a valuation from an HDB-assigned private valuer.

The move is aimed at curbing the illegal practice of "cashback agreements" in the housing sector.

National Development Minister Mah Bow Tan announced this measure in Parliament on Friday.

Cashback agreements are where both the buyer and seller of a flat inflate the actual price of the flat.

This lets the buyer get a bigger loan than allowed, while the seller manages to get rid of his property quickly.

Already, if a buyer or seller makes a false declaration in the standard HDB contract, he is liable to six months' jail and/or a fine.

The transaction may also be cancelled and the person may be debarred from buying a flat, while a housing agent is liable for up to three years in prison and/or a fine for such an offence.

Mr Mah said the HDB would not hesitate to report such cases to the police.

So far, one person has been prosecuted and two others are under investigation for such practices. - CNA
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 19, 2005
Anti-cashback rule starts from April 1
Resale flat buyers must appoint HDB-assigned valuers

By Goh Chin Lian
TO CURB the practice of falsely inflating the price of a flat to get a bigger loan, buyers will have to appoint a private valuer assigned by the Housing Board.

The new ruling will be from April 1 for resale flat buyers who wish to take bank loans and pay up with their Central Provident Fund (CPF) savings.

National Development Minister Mah Bow Tan made the announcement in Parliament yesterday, following a report in The Straits Times on the apparently prevalent practice.

The ruling already applies to existing buyers who take up HDB loans, Mr Mah said.

He also told the House that two more housing agents were being investigated for illegal cashback deals.

Ms Kereen Teo Pei Pei, 27, became the first property agent to be convicted of attempting such a deal last month, and was fined $8,000.

The HDB knows of only these three cases, though media reports suggest there are many more, Mr Mah said.

'It is very, very difficult to detect instances of cashback arrangements if all the parties involved collude and do not blow the whistle,' he said.

'We do not know how rampant these practices are and therefore we also do not know how much the prices have been inflated... unless somebody spills the beans.'

The HDB and CPF Board will announce more details of the new ruling soon, he said.

He also noted the current penalties for cashback deals. Now, buyers and sellers who give false information to HDB could be jailed for up to six months, fined and be barred from buying an HDB flat. Errant housing agents could be jailed for up to three years and fined; HDB could strike off their agency from its list.

Despite such penalties, buyers who need fast cash have resorted to cashback deals to secure a bigger housing loan, which they slowly pay back with their CPF savings.

But Mr Mah warned that not only is the arrangement illegal, 'but it also exposes buyers to greater financial risk, to high loans and erodes their retirement savings'. He also noted that buyers would incur higher stamp and legal fees, and that sellers may end up paying a higher resale levy if they subsequently buy a second subsidised HDB flat. This is because the levy is based on the sale price of the first subsidised flat.

Dr Amy Khor (Hong Kah GRC), who raised the question on cashback deals, asked if the ministry would allow only real estate agents from firms listed with the HDB to carry out resale flat transactions. Mr Mah did not think having such a restriction was necessary as it was not compulsory for real estate agents to be on the HDB's list, even though most are.

When Dr Khor pressed her point again, arguing that the onus was on these firms to ensure their agents do not cheat, Mr Mah agreed to consider her suggestion should a review be necessary.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
Feb 19, 2005
Residents must give nod to lift upgrades
TOWN councils can dip into sinking funds to do lift-upgrading works but they must still get residents' approval first.

Residents will also pay part of the costs.

National Development Minister Mah Bow Tan reiterated this point yesterday, which Prime Minister Lee Hsien Loong made when he announced last month that the Government would let sinking funds be used for lift upgrading.

Potong Pasir Town Council's chairman Chiam See Tong said then that it planned to do so and residents need not pay a cent.

Yesterday, Mr Mah said his ministry would announce guidelines for the use of the sinking funds during the Budget debate in the coming weeks.

His ministry is also studying how lift upgrading for low-rise blocks ought to be done, Mr Mah said, in response to Dr Amy Khor (Hong Kah GRC).

She had asked whether low-rise flats would be considered for lift upgrading. She also suggested that those blocks which found the costs too prohibitive be considered for the Selective En Bloc Redevelopment scheme (Sers).

Mr Mah said his ministry would want to implement Sers for low-rise blocks, but added that it might not be able to redevelop those blocks located next to high-rise ones.

On another housing issue, Mr Leong Horn Kee (Bishan-Toa Payoh) called for a change on the resale levy for HDB flats, which buyers of a second subsidised flat must fork out.

It should be based on the net profit of the sale of the flat rather than on the resale price, he said. The current policy was inequitable for those who sold their flat at a loss, but had to pay the levy, he added.

Minister of State for National Development Cedric Foo maintained the levy was still necessary to ensure the 'equitable distribution' of HDB flat subsidies, with priority for first-time home owners.
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
HDB resale levy, cashback schemes questioned

Weekend • February 19, 2005

SOME residents had approached him when they could not afford to buy a second subsidised Housing Development Board flat, as it meant incurring a resale levy.

The resale price of their first flat did not offset its initial cost with the levy tacked on.

But when MP Leong Horn Kee (Bishan-Toa Payoh) asked yesterday in Parliament if the levy could be based on the net profit of the sale of a flat rather than its resale price, a familiar debate ensued on what constitutes a subsidy — or a double subsidy.

Minister of State for National Development Cedric Foo said the levy ensures that those who buy a second flat — either directly from the HDB or by taking over a subsidised resale flat — do not consume more than their fair share of subsidies.

It would be "inequitable" if the HDB allowed a lessee to take a "second bite of the cherry" because he or she had made a loss on the sale of the first flat.

But, Mr Leong felt it was unfair to a resident if the subsidy for the first flat never materialised because he or she did not benefit from its sale later.

Mr Foo said such lessees should consider other options, such as buying a smaller resale flat or renting a flat.

When MP Amy Khor (Hong Kah) suggested the levy be based on a flat's purchase price, since the subsidy is pegged to the difference between that price and HDB's estimation of the flat's market value, Mr Foo said the original purchase price was not relevant.

"The resale levy is really not (meant) to take back the original subsidy," he said. "What the resale levy does is to reduce the second subsidy."

So, wouldn't it be simpler to give a lower or no subsidy for the second purchase, asked Mr Leong.

To which Mr Foo reiterated there would be no levy if residents do not buy another flat.

The HDB was a hot topic in Parliament for another reason: Recent media reports on illegal "cash-back" practices. Dr Khor tabled some questions.

National Development Minister Mah Bow Tan said the HDB was aware of such arrangements — where the buyer, seller and housing agent agree to over-declare the resale price — and was investigating two cases.

He said that, from April 1, HDB resale flat buyers who wish to take bank loans and use their Central Provident Fund savings in the flat purchase and servicing of the loan will have to furnish a valuation from an HDB-assigned private valuer.

Currently, this applies to resale flat buyers who take HDB loans.

Dr Khor wanted more deterrents and proposed that real estate companies and their agents be appointed to an HDB-approved panel, which Mr Mah said he would consider. — Derrick A Paulo
 

jq75

Honorary Member
Joined
Dec 5, 2000
Messages
135,998
Reaction score
2,453
CPF conducts independent valuation on suspected over-valued flats

CPF conducts independent valuation on suspected over-valued flats

SINGAPORE : The HDB is tightening its noose on cashback arrangements for all resale flat transactions from the 1st of April.

From that day a valuation report from a private valuer assigned by HDB is needed for all HDB resale flat transactions involving a bank loan.

In the meantime, the CPF Board says it will also conduct independent valuation on any suspected over-valued flats.

This valuation will then be used to determine the quantum of CPF withdrawals and housing loans.

Buying or selling a flat is not all black and white these days.

Under the table cashback arrangements have been going on recently.

These are when housing agents make arrangements with both the buyer and seller of the flat to inflate the actual price of the unit.

This lets the buyer get a bigger loan than allowed while the seller manages to get rid of his property quickly.

HDB says all these arrangements are also supported by valuation reports which are on the high side.

A more pressing concern for HDB about these cashback arrangements is that they are a burden on the buyer's retirement savings.

HDB says CPF savings are eroded when more money is withdrawn than needed for the actual purchase.

Buyers also expose themselves to greater financial risks by taking on bigger mortgage loans resulting in more interest being incurred.

And that's not all. Buyers will also end up paying higher stamp and legal fees which are computed on the declared resale price.

Sellers may also be liable for a higher resale levy if they subsequently purchase another subsidized flat directly from HDB.

HDB warns that parties involved in cashback arrangements can be prosecuted for cheating or making false declarations.

A housing agent was recently jailed for being involved in such illegal transactions. :s11:

Housing agents found involved in cashback transactions will also be reported to the Inland Revenue Authority of Singapore, which licences housing agencies.

And if the housing agent is from an agency under HDB's Listed Housing Agents Scheme, HDB may also delist the agency. - CNA
 
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top