Questions, answers and concluding (?) remarks on this new
HDB ruling
19 July 1997
Dear Sir/Madam
Applicants for Housing and Development Board (HDB) flats under the
fiance/fiancee scheme are now required to pay a deposit of $5,000 when they
apply. The same amount will be regarded as part of the downpayment for the
flat. In effect, applicants will have to forego whatever returns they could
have earned on their $5,000 during the period between application and
downpayment.
Withdrawers who have paid the deposit out of their CPF accounts would have
the money returned, but must pay the forfeited amount in cash before they
can apply for another flat. HDB has announced that payment may be deferred,
but at 5% interest.
Assuming the same rate of return and a waiting period of two years,
applicants could have earned $500 interest on their $5,000. No doubt, $500
is a small sum of money relative to the price of the flat. However, as a
matter of principle and goodwill, HDB should credit to applicants whatever
interest is earned from their registration deposits.
Yours sincerely
_____________________
Chong Fu Shin Francis
======================================
Response:
4 August 1997
Dear Mr Chong
SHOULDN'T INTEREST BE PAID ON HDB DEPOSIT
Thank you for your e-mail feedback dated 23 Jul 97 on the above.
2 The Housing and Development Board (HDB) replied that applicants under the
Fiance/Fiancee Scheme are required to pay the $5000 registration deposit at
the point of application. The deposit can be paid using cash or CPF, or a
combination of both. The purpose of the deposit is to prevent frivolous
applications and ensure that young couples apply under the Scheme only when
they are certain that they are going to get married and set up a home.
3 HDB will not pay interest on the registration deposit. Applicants under
the Fiance/Fiancee Scheme must realise that, unlike married couples, they
do not have a family nucleus at the time of application. They are getting a
'head start' in applying for a HDB flat without forming a proper family
nucleus. HDB needs to safeguard the interests of eligible applicants and
thus must ensure that applicants under the Fiance/Fiancee Scheme are
committed to the marriage and not submit applications frivolously which
would affect those who are in genuine need of a flat.
4 Please feel free to call or write to us if you have other comments or
suggestions on our national policies and issues.
5 Regards.
Yours sincerely
TAN THIAM HENG GREGORY
EXECUTIVE OFFICER (FEEDBACK UNIT)
for CHAIRMAN, FEEDBACK SUPERVISORY PANEL
MINISTRY OF COMMUNITY DEVELOPMENT
==============================
6 August 1997
Mr Gregory Tan Thiam Heng
Executive Officer (Feedback Unit)
Ministry of Community Development
Dear Mr Tan
Ref: MCD 20-02-09 (FP 9707/92)
Thank you for your letter conveying HDB's negative response to my letter
requesting that HDB pay interest on the registration deposit of applicants
under the Fiance/Fiancee Scheme.
2 I find HDB's explanation that it needs to ësafeguard the interests of
eligible applicants' feeble. Is forfeiture of the registration deposit in
the event of withdrawal or failure to marry not sufficient deterrence to
ëfrivolous' applications? Interestingly, the HDB itself had said that the
withdrawal notices that it received before the deadline of July 12 showed
that the registration deposit had succeeded in weeding out frivolous
applications. That being the case, why should HDB refuse to pay the
interest that it will earn on the deposits to genuine applicants who get
married before they receive the flat? After all, the interest is earned on
the applicants' money.
3 In paragraph 3, HDB appears to be saying that the ëhead start' given to
applicants under the Fiance/Fiancee Scheme justifies an additional charge
equivalent to the interest foregone on the $5000 registration deposit. I
would like to confirm that HDB is, in effect, saying that applicants under
the Fiance/Fiancee Scheme must pay more for the ëprivilege' of being
allowed to apply before forming a family nucleus. If so, is HDB prepared to
make explicit the additional charge?
4 Does the characterisation of ëhead start' as a privilege mean that HDB
favours applicants who get married before they apply for a flat? Where
would HDB advise married applicants to live while they (and their children,
possibly) wait four-and-a-half years for their flat?
5 Finally, the amount of interest to be earned on the deposits is
substantial. From HDB's own figures, more than 10,000 applications under
the Fiance/Fiancee Scheme are received each year. That works out to
approximately $50 million received by HDB annually. Assuming a conservative
rate of return of 5%, the HDB stands to gain $2.5m a year. If the HDB does
not propose to return that money to the applicants, may I know what it
intends to do with its windfall?
Yours sincerely
_____________________
Chong Fu Shin Francis
====================================
MCD 20-02-09 (FP 9707/92)
26 Aug 97
Dear Mr Chong
SHOULDN'T INTEREST BE PAID ON HDB DEPOSIT
Thank you for your feedback dated 6 Aug 97 on the above.
2 The Housing and Development Board (HDB) replied that HDB does not profit
from the various registration deposits/monies collected from applicants.
Whatever proceeds HDB collects is not sufficient to cover the development
costs because of the large amount of subsidies involved. For example, in FY
95/96, HDB incurred an operating deficit of $995 million from the sale of
flats.
3 HDB commented that, compared to private properties, buyers of HDB flats
enjoy heavily subsidised housing from the Government. Furthermore, HDB only
requires 20% as downpayment at the time of selection. After paying the
downpayment, the buyer is not required to pay anymore until he has taken
possession of his flat. This is unlike private properties where the
developers require the buyers to pay advane/progress payments throughout
the construction period.
4 HDB added that it is not the intention of HDB to earn interest from the
registration fees/deposits collected from its applicants, but rather the
monies collected will help act as a deterrent against frivolous
applications. Hence, the same rationale was used with regard to the $5000
deposit under the Fiance/Fiancee (FF) Scheme. The interest on the $5000
registration deposit is insignificant compared to the amount of Government
subsidy. It is important to highlight that HDB has exercised flexibility in
accepting applicants under the FF Scheme who are still singles without a
proper family nucleus. They are thus required to pay the $5000 registration
deposit to show their commitment and that they are financially ready to buy
a flat. The $5000 deposit is not an additional charge as the amount will
subsequently form part of the 20% downpayment for the purchase of the new
flat.
5 With regards to the issue of accommodation for married applicants who are
waiting for their new flats under the Registration for Flats System (RFS),
HDB replied that married couples who are waiting for their flats under the
RFS can apply for interim housing under the Transitional Rental Housing
Scheme (TRHS). As announced recently, HDB will increase the supply of
rental flats for application for eligible families under the RFS who are
waiting for their new flats to be built. More details will be announced
when they are finalised.
6 Married couples can also choose to live with their parents/in-laws while
waiting for their RFS flats or they can rent a flat/room on their own.
7 Please feel free to call or write to us should you have other comments or
suggestions regarding our national policies or issues.
Yours sincerely
TAN THIAM HENG GREGORY
EXECUTIVE OFFICER (FEEDBACK UNIT)
for CHAIRMAN, FEEDBACK SUPERVISORY PANEL
MINISTRY OF COMMUNITY DEVELOPMENT
====================================
30 Bridport Avenue
Singapore 559320
Tel: 280-5706
email: [email protected]
31 August 1997
Mr Gregory Tan Thiam Heng
Executive Officer (Feedback Unit)
Ministry of Community Development
Dear Mr Tan
Ref: MCD 20-02-09 (FP 9707/92)
SHOULDN'T INTEREST BE PAID ON HDB DEPOSIT
Thank you for your Aug 26 letter conveying HDB's reply on the above matter.
2 In para.2, HDB says that it does not make a profit from the various
monies it collects because it runs an overall deficit. HDB has
mis-construed my point, which was not that HDB makes an overall profit, but
that the interest it earns on the Fiance/Fiancee (FF) registration deposit
constitutes a windfall. HDB would not have realised that gain without the
$5000 registration deposit requirement. Hence, HDB's plea that it runs an
overall deficit is entirely irrelevant to the matter at hand.
3 In para. 3, HDB says that HDB flats are heavily subsidised and financed
differently from private properties. This comment is also totally
irrelevant to the matter at hand. How does it justify HDB keeping the
interest on the $5000 deposit?
4 In para. 4: "HDB added that it is not the intention of HDB to earn
interest from the registration fees/deposits collected from its applicants,
but rather the monies collected will help act as a deterrent against
frivolous applications." The two clauses in that sentence are logically
unconnected. HDB has simply re-hashed the justification for imposing the
$5000 deposit requirement, and tacked on a specious argument concerning the
interest. The $5000 barrier is the deterrent; the interest on that $5000 is
another matter altogether. I remind HDB once more that, in its own
estimation, the $5000 barrier had succeeded in weeding out frivolous
applications. It is logical to conclude that any effect of the interest on
that success must be minimal. Hence, HDB's retention of the interest cannot
be justified on the basis of the need to deter frivolous applications.
5 HDB also says that the $5000 deposit is not an additional charge. I
never said that it was. What I said, in para.3 of my previous letter, was
that, by keeping the interest on the deposit, HDB was, in effect, levying
an additional charge equivalent to the amount of interest on the deposit.
The additional charge is the amount of interest retained by HDB. As I
pointed out in para.2 of my previous letter and in para. 4 above, what
justifies the deposit requirement does not simultaneously justify keeping
the interest on the deposit.
6 Also in para. 4, HDB says that "it is important to highlight that HDB has
exercised flexibility in accepting applicants under the FF scheme who are
still singles without a proper family nucleus". This is absolutely
irrelevant. The FF scheme preceded the introduction of the $5000 deposit
requirement. When the requirement was introduced, it was not publicly
justified on the ground that HDB was doing a great favour to applicants in
the FF scheme. Moreover, there was no mention whatsoever of the interest to
be earned on the deposit. Why, then, is HDB now citing its flexibility as a
justification for keeping that interest?
7 HDB then argues that:
"The interest on the $5000 registration deposit is insignificant compared
to the amount of Government subsidy."
I am glad that HDB acknowledges that interest will be earned on the
deposit. The fact that the amount is relatively small in no way justifies
HDB keeping the interest. Secondly, that it is insignificant to HDB does
not mean that it is insignificant to the applicants, if newspaper reports
about some applicants' difficulty with raising $5000 are anything to go by.
Thirdly, if the amount is indeed so "insignificant" to HDB, why is HDB so
intent on keeping it? The amount would surely mean more to applicants than
to HDB.
8 Since HDB appears to be quite confused by the issues in this matter, let
me take the opportunity to re-state my case: a) I am not disputing here the
rationale for imposing the $5000 deposit; b) the only difference in the
situation before and after the imposition of the $5000 requirement is that
HDB gets a new source of revenue: the interest on the deposits; and c) HDB
must justify why it feels itself entitled to this new source of revenue.
9 I do not understand why HDB is so intransigent on this matter. As HDB
itself points out, the amount involved is really quite small. However, it
is a matter of principle that applicants should not be deprived of the
interest that is rightfully theirs without a proper explanation from HDB.
Moreover, the $5000 requirement has already succeeded in weeding out
frivolous applications. HDB does not have to pay out any cash to the
applicants: it only needs to increase the value of the deposit in line with
the rate of return and then apply the entire sum to the downpayment. I
invite HDB to re-consider taking this opportunity to obtain a reputation
for fair-mindedness and generosity at no cost ("no cost" because the
interest is a windfall for HDB).
10 Finally, I am astonished by the tone of HDB's letters. In para. 3 of the
first letter, HDB said: "HDB will not pay interest on the registration
deposit. Applicants under the Fiance/Fiancee Scheme _must realise_ (my
emphasis) that, unlike married couples, they do not have a family nucleus
at the time of application." Now, in its second letter, HDB further refers
to the advantages it offers over private housing finance and to the large
amount of Government subsidy. Clearly, I am invited to draw the inference
that: HDB is doing applicants a great big favour, so they should not complain.
11 I would like to remind HDB that, as a statutory board, its mission is to
serve the people of Singapore. The staff of HDB are public servants.
Government subsidies come from public monies belonging to the people of
Singapore, so HDB's crowing about _its_ generosity is simply chutzpah. It
is proper that we should be grateful to HDB for its tremendous efforts in
the field of public housing, but that does not free HDB from its obligation
to give proper, public, explanations for all its actions. I find the tone
of HDB's letters haughty and distressingly reminiscent of the tone that
colonial masters might take towards their subjects. It is utterly
inappropriate for an organisation created by the sovereign people of
Singapore to serve them.
Yours sincerely
___________________
Chong Fu Shin Francis
===========================================
Our ref : MCD 20-02-09 (FP 9707/92)
Dear Mr Chong ,
Thank you for your e-mail dated 1 Sep 97 on the above.
2. We have sent your comments to the Housing and Development Board (HDB) for
their information.
3. Please feel free to call or write to us if you have other comments or
suggestions on our national policies and issues.
4. Regards.
Yours sincerely,
TAN THIAM HENG, GREGORY
EXECUTIVE OFFICER
for CHAIRMAN,
FEEDBACK SUPERVISORY PANEL
MINISTRY OF COMMUNITY DEVELOPMENT
==============================================
4 Sep 97
Your ref: MCD 20-02-09 (FP 9707/92)
Dear Mr Tan
Thank you for the email dated 3 Sep 97.
In that email, you wrote that:
'We have sent your comments to the Housing and Development Board (HDB) for
their information'
I would like to confirm that the statement means that I should not expect
a reply from HDB.
Thank you.
Yours sincerely
Chong Fu Shin Francis
===========================================
From [email protected] Thu Sep 4 14:38:41 1997
From: [email protected]
To:
Subject: Re: Query on Feedback Unit's letter on HDB registration depo
Date: Thu, 4 Sep 1997 14:01:24 +0800
X-Status:
Dear Mr Chong,
Please refer to your e-mail dated 4 Sep 97.
2. It will be at the discretion of HDB whether they would like to
comment on your latest comments.
3. Please feel free to call or write to us should you have other
comments regarding our national policies and issues. Thank you.
Yours Sincerely,
TAN THIAM HENG, GREGORY
EXECUTIVE OFFICER
for CHAIRMAN, FEEDBACK SUPERVISORY PANEL
===========================================
From [email protected] Sat Sep 27 13:19:10 1997
X-Lotus-FromDomain: HDB
Return-Receipt-To: [email protected]
From: "Dilip ANAND"
To: [email protected]
cc: [email protected]
Date: Sat, 27 Sep 1997 13:15:41 +0800
Subject: INTEREST ON FIANCE/FIANCEE SCHEME REGISTRATION DEPOSIT
X-Status:
Dear Francis
We refer to our email dated 9 Sep 97 and our two ealier replies
dated 16 Aug 97 and 29 Jul 97 to the Feedback Unit which were subsequently
conveyed to you.
2. Our policy at present is not to grant interest on the $5000
deposit.
3. We thank you for your feedback on this matter.
Sincerely,
(signed using Lotus Notes)
Dilip ANAND
EXECUTIVE PUBLIC RELATIONS OFFICER
for QUALITY SERVICE MANAGER
HOUSING AND DEVELOPMENT BOARD
Copy to:
Feedback Unit
===========================================
30 Bridport Avenue
Singapore 559320
Email: [email protected]
Tel: 280-5706
10 October 1997
Mr Tan Guong Ching
Chief Executive Officer
Housing and Development Board
Dear Mr Tan
INTEREST PAYMENT ON FIANCE/FIANCEE SCHEME REGISTRATION DEPOSIT
I am writing to you directly because my three attempts to obtain an
explanation from HDB's public relations department have met with evasion,
obfuscation, specious arguments and, finally, a flat refusal to pay
interest on the registration deposit required of applicants under the
fiance/fiancee scheme.
I am not disputing here HDB's reasons for imposing the $5000 registration
deposit requirement. However, it is a matter of principle that HDB should
return to the applicants the accumulated interest on their $5000 in the
period between putting down the deposit and making the downpayment.
I am not so unreasonable as to insist that HDB adopts every suggestion
from the public. However, a public agency like HDB should be prepared to
give full explanations for its policies. If a policy were unjust, it should
be changed. Likewise, if inaction were to lead to injustice, then HDB
should act.
In this case, it is unjust of HDB to profit from the interest on the
registration deposit when that money belongs to the depositors. I am not
accusing HDB of deviously trying to skim off the interest: the amount is
mere pocket-change for HDB. Perhaps the complexity of public-policy-making
led to an oversight. If so, then HDB should correct the oversight forthwith.
Perhaps HDB feels that it is too much trouble administratively to keep
track of tens of thousands of accounts. If that is the case, I would like
to offer a suggestion. Instead of requiring applicants to pay a $5000
deposit, would it not be better for HDB to impose a $5000 penalty on those
who withdraw their applications? The latter would serve equally well to
deter 'frivolous applications' and has the additional advantage of
relieving HDB of extra administrative work.
For your reference, I have attached copies of my correspondence with HDB,
some of which were conducted through the Feedback Unit.
Thank you, and I look forward to your reply.
Yours sincerely
___________________
Chong Fu Shin Francis
======================================
Our Ref: 100-02-24-0038
Date: 28 Oct 1997
Dear Mr Chong
INTEREST PAYMENT ON FIANCE/FIANCEE SCHEME REGISTRATION DEPOSIT
We refer to your letter of 10 Oct 97 to our Chief Executive Officer. Our previous replies which were conveyed through the Feedback Unit dated 4 Aug 97 and 26 Aug 97 also refer. I had also replied to you directly on 27 Sep 97.
2. Our position on this issue still stands. As mentioned previously, the $5000 deposit forms part of the schedule of payment for applicants under the Fiance/Fiancee Scheme on which no interest is payable.
3. We thank you for your feedback.
Yours sincerely
(signed)
Dilip ANAND
EXECUTIVE PUBLIC RELATIONS OFFICER
for SECRETARY
HOUSING AND DEVELOPMENT BOARD
======================================
30 Bridport Avenue
Singapore 559320
Email: [email protected]
Tel: 280-5706
21 July 1998
The Forum Editor
The Straits Times
Dear Editor
Is HDB entitled to interest on registration deposit?
When the Auditor-General discovered that the Telecoms Authority of
Singapore (TAS) had retained the interest earned on the money that the
Finance Ministry had given it to compensate Singapore Telecom, TAS
returned the interest to the Government. The principle seems to be that
public agencies are not entitled to the interest earned on money that is
deposited with them.
According to the Housing and Development Board's (HDB) rules, applicants
under the fiance/fiancee scheme must place a $5,000 registration
deposit. The $5,000 is then used as part of the downpayment on the flat,
which is paid typically two years later. The HDB does not pay interest
on the deposit.
I request the Auditor-General to state whether the HDB should return to
applicants the interest earned on the $5,000 that they deposit with it.
Yours sincerely
__________________
Chong Fu Shin Francis
To: Feedback Unit
Subject: Retention by governmental agencies of interest on deposits
Dear Sir/Madam
When the Auditor-General discovered that the Telecoms Authority of
Singapore (TAS) had retained the interest earned on the money that the
Finance Ministry had given it to compensate Singapore Telecom, TAS
returned the interest to the Government. The principle seems to be that
public agencies are not entitled to the interest earned on money that is
deposited with them. If so, then the HDB is not adhering to the
principle.
According to the Housing and Development Board's (HDB) rules, applicants
under the fiance/fiancee scheme must place a $5,000 registration
deposit. The $5,000 is then used as part of the downpayment on the flat,
which is paid typically two years later. The HDB does not pay interest
on the deposit.
I request the Auditor-General to state, giving his reasons, whether the
HDB should return to applicants the interest earned on the $5,000 that
they deposit with it.
Thank you.
Yours sincerely
Francis Chong
Updated on 29 July 1998 by Tan Chong Kee.
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