By MP for Hougang SMC, Png Eng Huat
[Delivered in Committee of Supply on 10 March 2015]
Madam,
The resale levy policy was revised in 2006 primarily to address the uncertainty for HDB upgraders created by the previous policy. The revised resale levy is a fixed amount based on the flat type while the previous resale levy is a moving target based on a percentage of the resale price.
Under the old policy, flat owners who sold their first HDB flats without paying the resale levy at the point of sale could end up with a huge compounded levy if they wish to buy another subsidized flat a few years down the road.
Take Mr. A for example. He deferred his resale levy of about $80,000 when he sold his first flat in 1999. He said he has to fork out more than $180,000 in cash for the compounded resale levy by the time his new BTO flat is completed in 2017.
For all the policy intent, Mr. A did not enjoy an actual subsidy of $180,000. There is also no opportunity cost to HDB as Mr A. could have avoided paying the levy altogether by buying a resale flat instead. So in short, HDB is prepared to write off the original resale levy if Mr. A takes the resale option.
I have no doubt that the resale levy is meant to reduce the subsidy enjoyed by second-timer flat owners and to ensure a fair distribution of the limited subsidies. But I have doubt about the policy intent of the interest charged for the deferred resale levy.
I hope HDB can take steps, just like in 2006, to bring some certainties to second-timers caught by the interest issue so that they can finally buy a flat from HDB.