SINGAPORE - Some MPs have suggested tweaking the existing Build-To-Order (BTO) flat ballot system further, to help young families with children and first-time buyers own a home.

In his Budget speech last week, Deputy Prime Minister and Finance Minister Lawrence Wong said families with children and married couples aged 40 and below who are buying their first home will be given an additional BTO flat ballot chance.

During the Budget debate on Thursday, Mr Gan Thiam Poh (Ang Mo Kio GRC) asked if families with two or more children could get an extra chance on top of that.

Mr Zhulkarnain Abdul Rahim (Chua Chu Kang GRC) had on Wednesday proposed further refining the BTO ballot system based on needs and the types of applicants, as some young couples are concerned that they are still competing with applicants from other groups.

Citing the Primary 1 school registration exercise as an example, he said the BTO ballot system could take a multi-level approach with phases with fixed quotas for groups such as young couples, the elderly and families with children. The last phase could be an open category, he added.

“This will ensure at least a diverse mix of residents in an estate and give young couples a fair opportunity,” he said.

Ms Tin Pei Ling (MacPherson) asked if more help could be given to young couples who want to live near their parents in mature estates, by setting aside a higher proportion of flats under the Housing Board’s Married Child Priority Scheme.

Currently, up to 30 per cent of BTO flats are set aside for first-timer families under the scheme, which helps married couples live with or close to their parents.

Another option is to give first-timers who have repeatedly applied for a BTO flat under the scheme an additional ballot chance, she said.

“Young couples or families who favour speed and affordability would have already chosen non-mature estates, and so those who continuously choose mature estates must therefore have good reasons to do so,” said Ms Tin.

Several MPs brought up the revised CPF Housing Grant, which has been increased by between $5,000 and $30,000 for eligible first-timer families and singles buying HDB resale flats.

Some MPs, like Workers’ Party MP Gerald Giam (Aljunied GRC), were concerned that the increased grant might lead to higher HDB resale prices.

He asked if the Government has projected any resale price increases due to the increased grant by modelling housing transaction data available to HDB. He noted that since only first-timers will benefit from the increased grant, those who do not get it may end up having to pay even more for HDB resale flats.

“More fundamentally, is increasing housing grants going to continue to be the Government’s main approach to making resale flats affordable?” he asked.

Progress Singapore Party Non-Constituency MP Hazel Poa questioned whether it was sustainable to keep increasing the grant for HDB resale flats in order to make them more affordable for first-time buyers.

“The resale grant will push up demand for resale flats and therefore increase resale prices, which would later necessitate a further increase in resale grants, feeding into a continuous price spiral. More tax revenue would also be needed to fund the additional grants,” she said.

Land costs, which take reference from resale transactions, would rise as a result, thereby increasing the cost of new flats, Ms Poa added.

“This would mean that either new flat buyers have to pay more, or subsidies and grants for new flats must be increased to make the new flats affordable... Such a cycle of more and more tax revenue being needed to be paid into reserves in the form of land price is unsustainable,” she said.

Ms Hany Soh (Marsiling-Yew Tee GRC) said that while the increased grant will help reduce monthly mortgage payments for young couples, it does not address the issue of rising cash over valuation (COV) – the difference between the sale price of a resale flat and its actual HDB valuation, which can be paid for only in cash.

She asked if HDB would take steps to curb the rising COV, or amend current rules to allow home buyers to use housing grants or the Central Provident Fund (CPF) to pay off the COV component.

Separately, Mr Ang Wei Neng (West Coast GRC) urged HDB to consider building 50 per cent of new flats in advance so that more buyers can get their keys within two years of a successful ballot.

This will not lead to many empty and unwanted units, as demand for HDB flats is unlikely to drop by 50 per cent overnight, he said. “It will allow HDB sufficient leeway to adjust the pace of building BTO flats according to changing demand. And this will go a long way to help young families to get the flats earlier.”

Mr Ang also suggested increasing the Silver Housing Bonus to improve the take-up rate among seniors.

For instance, the cash bonus for downsizing to a three-room or smaller flat – which is currently up to $30,000 for seniors aged 55 years and above – could be doubled, while the resale levy, if any, could be halved, he said.

Mr Gan, meanwhile, suggested reviewing the marginal buyer’s stamp duty to have a different set of rates for HDB flats, private residential and non-residential property. The rates should be progressively tiered based on square footage instead of purchase value, and applied to both sellers and buyers.

“This may help cool down the market, especially the HDB resale prices, and tax more equitably,” he said.