In recent years, HDB resale volume has been declining in the aftermath of various government cooling measures like the Mortgage Servicing Ratio (MSR) and capping of the loan term for HDB loans. Arising from these policies, there have been cases of negative HDB sales.
What is exactly negative HDB sales? It means that after you sold your HDB flat, the resale price is sufficient to pay off the outstanding HDB or bank loan but not enough to repay fully the CPF refund with accrued interests. In this situation, besides having no cash proceeds from the transaction, you may even require to top up the shortfall in cash to your CPF account if your property is sold below market value.
According to CPF rule, there is also a difference for those owners who bought HDB flats with HDB loans and bank loans.
For HDB flats bought with HDB loans
The sale proceeds (including the option monies) will be used to pay off the following, in this order:
1) Outstanding HDB loan
2) HDB resale levy (if any)
3) Required CPF refund
If the sales proceeds after paying (1) and (2) is not enough to make the required CPF refund, you do not need to top up the shortfall in cash, provided the flat is sold at market value.
For HDB flats bought with bank loans
The sales proceeds (including the option monies) will be used to pay off the following, in this order:
1) Outstanding bank loan
2) Required CPF refund
3) HDB resale levy (if any)
If the sales proceeds after paying (1) is not enough to make the required CPF refund, you do not need to top up the shortfall in cash, provided the flat is sold at market value.
So how do sellers determine the market value of their HDB flats to avoid negative HDB sales? With this question in mind, I called the CPF Board but the officer [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
Read my other articles on HDB:
- Wealth destruction from CPF Accrued Interest
- Devastating HDB Loan and CPF Accrued Interest
- CPF’s Home Protection Scheme (HPS)
- The Dark Side of CPF Housing Withdrawal Limit
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