Pink in Singapore – finding a home together

1 July 2017 marks the ninth edition of Pink Dot. By now, everyone in Singapore knows what Pink Dot is and what it stands for – supporting the freedom to love. The outpouring of support by the public in terms of local sponsors for the event after the government changed the rules for sponsorship last year was heartening to see. No matter which side of the barricade you find yourself on, there’s no denying that same-sex couples have the same aspirations as every Singaporean son and daughter – which is to one day, own a home together in their homeland. The right to housing options (both public and private) for all Singaporeans, regardless of sexual orientation, should not be a tricky minefield one has to navigate with caution. However, this is not currently the case.

What it means to be pink in Singapore

The law in Singapore currently does not consider same-sex marriages valid, even if it is legal and recognised in the jurisdiction in which the couple got married or had a civil union ceremony.  So, a same-sex couple who studied in and got married in the United States, upon returning home to Singapore, will find that in the eyes of the law of their homeland, they are not married. This leads to difficulties when it comes to, among other things, housing.

While a married couple of the opposite sex below 35 is allowed to apply for new or resale HDB flats and get grants to boot, the same “privilege” is not accorded to a same-sex couple of the same age. This is because such couples with or without children are not recognised as a “family nucleus” under HDB rules.

Thus, same-sex couples essentially, will be forced to wait until they are 35 or above before they can apply for a new or resale HDB flat singly or jointly. Even then, if the single applicant wants a new HDB flat, he or she can only apply for a new 2-room Flexi BTO flat (read, one bed one bath) in a non-mature estate. He or she is not entitled apply for a bigger new flat even if he or she can afford it or even if he or she has a child.  The same rules apply to two single persons applying jointly.

This article looks at the various housing options open to two single persons or to a same-sex couple for public and private housing and the possible grants one can receive when buying public housing.

Looking to buy a home – things to establish from the get-go

Before taking the plunge to buy that dream home together, here are some issues you should sort out first:

• Do you already own an HDB flat, say with a family member? If so, some restrictions may apply. It is best to check the HDB website for more details.  
• On the flip side, do you already own a private property and wish to buy a new HDB flat? If so, do note that you can only do so after 30 months from the disposal of the private property. If you are buying a resale HDB flat, you do not need to wait out the 30 months, but you will not be eligible for any grants even if it is your first application(s).
• Do you already own a private property which is held singly or jointly? If so, the Total Debt Servicing Ratio (TDSR) may prevent you from getting a sufficient loan to buy the private property of your dreams. You should always talk to your banker before buying a property in order to know the limits of your budget.
• How are the two of you going to finance the property? Will one or both of you be using your CPF to pay for the property? Is one person paying in cash?

Buying private property homes – no restriction on age

If one or both of you are below 35 years of age, then your only option is to buy a private property as you do not qualify to buy an HDB flat, new or resale. There are no restrictions to a single person or two singles buying a private property.  Putting aside the higher quantum to buy a private property, the advantages of buying a private property as opposed an HDB flat or an EC are:

• you do not have to be a Singapore Citizen
• you do not have to be at least 35 years old
• there is no income ceiling, but there are loan limits due to TDSR
• there are no subsidies/grants from the government for the purchase
• there are no restrictions on when you can sell or rent out your private property. However, practically speaking, the Seller’s Stamp Duty (SSD) imposed on a private property may make you think twice about selling it within the first three years of purchase
• you can sell it to anyone, even a foreigner, unless it is vacant land, a landed property and an EC which has not reached its 10th year.

Exit clauses and a “pre-nup” agreement (applicable only to purchase of private property)

The exhilaration of finally owning a property or being madly love may result in your glossing over issues like, “What happens if we break up?”

Any good lawyer will tell you that it is essential to agree on exit clauses and formulas while things are going well. Because no one thinks that the break up will happen, the exit clauses and formulas will be fair and neutral. Ideally, you should see a lawyer and get a simple document drawn up and signed by both parties. It is always wise to prepare for the worst even when you believe in the best outcome. Think of it as a kind of pre-nup for same-sex couples.

Here are some important things to get out in the open and to agree on:

If things go south, what happens to his or her share of the property? To be fair, he or she cannot be forced to be co-owners of a property and co-payers of a loan when the two of you are no longer a couple, and may not be able to stand the sight of each other. Consider it a form of divorce, if you will. So, it is important that you agree on certain simple principles if there is a breakup, for example:

• Do you sell the property and split the profit or loss?
• Can one party buy out the other party?
• What is the formula to be applied in the event of a buyout? Do you take the average price of the last three sale transactions from the URA website or do you appoint a Valuer whose valuation will be final?  Who chooses the Valuer? Who pays the Valuer?
• If there is a sale, what is the agreed position on when to sell and what is the price to sell at?

How will the two of you treat payments towards items which are not applied towards the purchase price of the property or the bank loan? Contributions towards, say, renovations are not in law, contributions towards paying for the property. As the two of you are not married or not married under Singapore law, matrimonial laws on division of assets which do take into account non-monetary contributions do not apply to you.

If the property has to be sold and it is held as a tenancy-in-common (TIC), the courts will strictly follow the percentage indicated on the title deed (e.g. 60-40 or 50-50) when distributing the sale proceeds. The good news is that the law recognises that where payments made by one owner towards the mortgage are more than the percentage of ownership, the other owner may be asked to pay this person back the overpayments. This is called “equitable accounting”.

As an example, if the property is held as TIC in a 50-50 percentage, if Mr A and Mr B paid equal amounts for the 20% down payment but only Mr A serviced the monthly bank loan, then upon sale, Mr B must pay to Mr A the former’s 50% share of the bank loan which he should have paid.

Find out more about the difference between a tenancy-in-common and joint tenancy here.

Buying HDB homes – for those aged 35 and above

If you are single or single in the eyes of the law here, a Singapore Citizen and at least 35 years old, the cheapest option to home ownership is to buy an HDB flat. You can buy a new HDB flat or a resale one under the Single Singapore Citizen Scheme (SSCS). Alternatively, two to four unrelated singles can join together in an application to buy a new or resale HDB flat under the Joint Singles Scheme (JSS).  There is also the Orphan Scheme for a joint application by single orphans above 21 but below 35 years old (terms and conditions apply. Check the HDB website).

To buy a new or resale flat?

A single person who wishes to buy new HDB flats is only allowed to buy a 2-room Flexi BTO flat in a non-mature estate. Two singles who qualify can jointly buy a new 2-room Flexi BTO flat (with grant, if eligible) or an EC (no grants).  There are different income ceilings in deciding what kind of flat you can buy and/or what kind of grants you can get.

Alternatively, a single person or two single persons jointly may prefer to buy a resale flat. The advantages of a resale HDB flat are that there is no need to wait a few years while waiting for it to be built, there is no income ceiling, they are in better locations (mature estates), they are bigger in size and there is no risk that comes with buying a flat off a plan (“Oh, is that you peering into my bedroom, neighbour?”). However, resale flats, for all these reasons, are more expensive and older.

Buying under the SSCS

If only one of you is a Singapore citizen and/or 35 years old and above, you may want to apply using one name under the SSCS. Of course, since it is in one name, the HDB flat will only be owned by the person listed as the owner of the HDB flat. Under the SSCS:

• You can buy a new 2-room Flexi BTO flat in a non-mature estate. If you buy the flat with a 99-year lease, the income ceiling is $12,000 and if you buy the flat with a shorter lease of up to 45 years, the income ceiling is $6,000.
• You can buy a resale flat in any size with no income ceiling.

Buying under the JSS

Under the JSS, you can buy:

• a new 2-room Flexi BTO flat in a non-mature estate. If you buy the flat with a 99 year lease, the income ceiling is $12,000 and if you buy the flat with a shorter lease of up to 45 years, the income ceiling is $6,000
• resale flats in any size, with no income ceiling
• a new Executive condominium (EC)

Buying under the Orphan Scheme

Two singles under the Orphan Scheme can jointly buy the same HDB flats that two persons under the JSS can buy except that they are not restricted to new 2-room Flexi BTO flats. To be eligible:

• you and your sibling(s) applying with you must be are orphans and single (unmarried, divorced, or widowed)
• all the siblings are single and must be listed in the same application
• at least one of the your deceased parents was a Singapore Citizen or Singapore Permanent Resident (PR).

Buying an EC – for two singles aged 35 and above who are Singapore citizens

Under the HDB rules, two single persons who are Singapore Citizens and above 35 years old are also eligible under the JSS to buy a new EC. It is a hybrid of a high end public housing and a private property. An EC can only be sold to a Singapore Citizen or Singapore PR between the 6th to 10th years, but can be sold to a foreigner from the 11th year onwards.   

To buy a new EC:

• your average gross monthly household income must not be more than $14,000
• you do not own other property overseas or locally, or have not disposed of any within the last 30 months
• you have not bought a new HDB / DBSS flat / EC, or received a CPF Housing Grant before; or have only bought one of these properties / received one CPF Housing Grant before

An overview of grants

What are the different types of grants you may be eligible for?

• For first-time single(s) buying a resale flat under the SSCS, JSS and Orphan Scheme:

Resale Flat Grant Amount for CPF Housing Grant

Flat Buyers	2 - 4 Room Resale Flat	5 - Room Resale Flat
SSCS	$25,000	$20,000
JSS and Orphan Scheme (max 2 single grants)	$25,000 x 2	$20,000 x 2
Resale Flat Grant Amount under the Additional CPF Housing Grant (AHG)
Depending on your household income, you can receive up to $40,000 in grants. Your average monthly income for the 12 months before the application must not exceed $2,500
Proximity Housing Grant (only for resale flats)
If you buy a resale flat near your parents (or children), you can get a grant of up to $10,000

• For first-time single(s) buying a new HDB flat or EC:

New 2-room Flexi BTO Flat Grant Amount

Flat Buyers	Average Monthly Household Income over 12 months prior to application	AHG	Special CPF Housing Grant (SHG)
SSCS	Up to $750 - $2,500	$20,000 - $2,500
	Up to $750 - $4,250		$40,000 - $2,500
JSS and Orphan Scheme (max 2 single grants)	Up to $1,500 - $5,000	$40,000 - $5,000
	Up to $1,500 - $8,500		$80,000 - $5,000
New EC Grant Amount
There are no grants for applicants under JSS and Orphan Scheme. A sole single applicant under SSCS is not eligible to buy a new EC.
The 30 Month Wait
You must wait 30 months from the date of sale of your private property (locally or overseas) before putting in your application: - For a new HDB flat or for an EC in order to be eligible to buy the new flat or EC - For a resale HDB flat in order to be eligible for the grant(s) if you are a first time applicant. But if you have to pay rent during the 30 months wait, and the rent comes up to about the same amount as the grant(s), it may make sense to forgo the grant(s) and go ahead and buy the resale flat immediately.

For a detailed calculation of the grant amount, please refer to the HDB website.

Tips to maximise the amount of grant you can receive for a first time buyer of a resale HDB flat:

 

Tips to maximise the Grant(s)

1	Buy a 5-room flat or smaller. There is no CPF Housing Grant for bigger resale flats like an executive flat or an EC.
2	If you earn $2,500 or less a month for the last 12 months preceding your application, you will get the AHG. If you earn $750 or less a month, you will get the most amount of grant(s) under the AHG and the SHG.
3	To be eligible for the grant(s), you must have been in continuous employment in the 12 months before the flat application and must be employed at the time of the application. Thus, if you work part-time or from home, you may want to declare this income in order to be eligible for the grant(s).

For more information on other considerations a same-sex couple should keep in mind before buying an HDB flat together, please refer to our article here.

In conclusion…

With proper planning, finding and owning a home together is within reach for most pink couples. Armed with information and a greater awareness of how things work, it is our hope that all segments of society, regardless of race, language, religion and orientation, build meaningful lives in this little red dot we call Singapore, and most importantly, home.