New rules on buying homes have been introduced suddenly and will go into effect on May 10, 2019.

The new rules involve using Central Provident Fund or Housing & Development Board housing loans for home purchases.

The changes apply to the purchase of

- HDB flats,

- private properties and

- executive condominiums.

Age of 95 rule

The focus is on whether the remaining lease of the property can cover the buyer until at least age 95.

This was announced on May 9 by the Ministry of National Development (MND) and Ministry of Manpower (MOM).

Such a requirement is new.

What are the rules that will be done away with?

The amount of CPF allowed to be used is dependent on the remaining lease of the property.

This will be a thing of the past.

What is an example under the rules to be done away with?

If there is at least 60 years left in the lease, a buyer can use the maximum CPF allowed to pay for the property.

If the property has less than 60 years left on its lease, a buyer is eligible to use CPF if his age plus the remaining lease is at least 80 years.

What are the changes?

The above arrangement will be done away with.

With the new rule, the total amount of CPF that can be used will depend on the remaining lease.

This means the lease should ideally cover the youngest buyer until age 95.

A buyer can then use CPF to pay for a property up to its valuation limit if the criteria is met.

If not, the use of CPF will be pro-rated.

No CPF can be used if the remaining lease is less than 20 years.

This has been lowered from 30 years.

Flat lease less important than combined age + lease years

If the remaining lease can cover the youngest buyer to the age of 95: Buyers taking a HDB housing loan will be eligible to take the full 90 percent Loan-to-Value limit.

If the remaining lease cannot cover the buyer until age 95: Loan will be offered on a pro-rated basis.

This is even if the flat has less than 60 years left on its lease.

CPF withdrawal changes

Changes to the CPF withdrawal rules after age 55 are also kicking in.

CPF members need to have a property with a remaining lease to cover them until at least age 95 to be eligible to withdraw their CPF savings above the Basic Retirement Sum.

This is to encourage CPF members to have “a home for life” and to secure a basic level of retirement income.

Currently, CPF members eligible to withdraw their CPF savings above the Basic Retirement Sum if they own a property with a remaining lease of at least 30 years.

Most not affected

About 98 per cent of HDB households and 99 per cent of private property families have a home which lasts them to 95 years and older.

When will new rules apply?

The updated rules will apply to applications signed and/ or received on or after May 10, 2019.

Buyers who purchased properties before May 10 and are still servicing their housing loans will not be affected by these changes, according to the ministries.

Members who bought their property and turned 55 years old before May 10 can continue to apply to the CPF Board to withdraw their CPF savings above their Basic Retirement Sum under the previous rules.