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CPF-HDB Scam by Pseudo-Intellectual Roy Ngerng
- Thread starter Isogallardo
- Start date
I probably have to sit out on this discussion, since a lot of points made appear new to me. Papsmearer, are you saying if you initially had 200k in cpf and subsequently sold your flat for 300k in 5 years time, former flatowners have to repay cpf 300k + 5 years interest? My understanding is different.
if the flat was sold at 200k instead, they have to pay 5 years interest on the said property as if the money never left cpf. Sounds fair to me and it instills fiscal discipline and individual responsibility on the flat buyers not to overpay in the open market. There are other finers points to consider but i do not have the details from personal experience.
Only point of contention i might have is that HDB controls the supply of flats hence influences housing prices to a large degree. HDB benefits from pricing high rather than pricing fairly, so in essence pensioneers are fleeced by being made to play a rigged game. Without ascertaining the facts, it's hard for me to make such an accusation. Its a more interesting angle though imho.
if the flat was sold at 200k instead, they have to pay 5 years interest on the said property as if the money never left cpf. Sounds fair to me and it instills fiscal discipline and individual responsibility on the flat buyers not to overpay in the open market. There are other finers points to consider but i do not have the details from personal experience.
Only point of contention i might have is that HDB controls the supply of flats hence influences housing prices to a large degree. HDB benefits from pricing high rather than pricing fairly, so in essence pensioneers are fleeced by being made to play a rigged game. Without ascertaining the facts, it's hard for me to make such an accusation. Its a more interesting angle though imho.
Yes, HDB loan interest should not be conflated with CPF savings interest. Apples & oranges.
Interest represents the cost of borrowing money from another party. The CPF funds you use to buy your flat are your own. Why should you pay interest on your own funds. You're just transferring your money from one mode of investment (earning CPF interest) to another (real estate capital appreciation).
Like I said, if you withdraw $100k from your bank account to buy property, you forego interest income but profit from capital gains after 3 years when you sell your property. If you put the $100k back in the bank again, do you have to pay the bank interest?
Absolutely. The government is the largest owner of property in Singapore, and HDB the largest owner of residential land. High BTO prices jack up resale market and indirectly affect private sector via HDB upgraders to private property. Further pegging BTO prices to 'market value' creates a vicious circle in which more and more paper money is churned out of land – a non-productive enterprise.
This is how a rentier economy is produced, where wealth is generated without products and services, essentially by collecting economic rents. It causes inflation, creates asset bubbles, prices property and other assets out of reach of the masses, and widens the rich-poor gap. This creates an small elite class while causing stagnant wages and low domestic purchasing power for the majority.
The high cost of real estate, both commercial and residential, is why Singapore is the most expensive city in the world. The home you live in, the rent you pay, the basic essentials you buy from shops and supermarts, the food you eat at food courts and restaurants, the business overheads you or your bosses pay – all trace back to land pricing, ultimately to the cost of new HDB flats because 80% of S'poreans live in 'public housing'.
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Because money that you didn't use to buy HDB is being used to by Olam, Brookstone, UBS and Merrill Lynch! If you use it elsewhere, Ho Ching may have to borrow it elsewhere in the economy! National governments cannot borrow money from the local economy indefinitely without paying interest else inflation will skyrocket.
In short, if i use 100 from your piggy bank as collateral to gamble and agree to pay you back 103 next year, when you use your piggy bank to buy an iPhone, suddenly my banker say the collateral i use is no good. I have to borrow some money, say 20, and i pay interest between 1- 5 per year. Not fair to expect me to pay you 103 right? So you pony up and pay the 3 yourself so i can make interest payment of 1 - 5 per year. Pretty logical to me though it could be more transparent.
Agree but i think you might have missed my point. I think we all agree affordable housing is important to Singaporeans. We all agree it is important to have enough for retirement so seniors do not experience undue hardship. I am suggesting we should 1) delink public housing from retirement funds, 2) build and sell public housing near cost and 3) establish controls for greater accountability of investments using public funds.
That would be a good start.
HDB wipes out all available monies in OA for down-payment irregardless of how much loan they approved to you. This so call effective interest rate of 0.1% is not applicable most of the time. Regardless whether the person makes a capital lost or gain at the end of the day, 2.6% of the loan amount goes to HDB per annum. Forget about whether one needs to top up CPF when he makes a capital lost or refund any interest to CPF when he makes a capital gain. The interest rate charged by HDB is 2.6% per annum. If you loan $300k for 25yrs, the interest HDB is going to collect from you in total is $108300.
As a matter of fact, interest rates from bank have been floating about 1.x% for the past few years. Getting loan from the bank allows you to make minimum down-payment and keep the rest in CPF to make 2.5% interest.
Employees Provident Fund (Malaysia)?
Retirement age in the past is 55. Now going to raise to 70 liao leh.
http://mypaper.sg/top-stories/raise-retirement-age-70-says-boon-heng-20140117
Leasehold in any language or in any country means long term rent - thus the lease. Sometime it covers land and sometimes it covers both land and the building. Strata-titled refers to common property which can be long term rental thus leasehold or freehold and it common share and usage.
Chiam campaigned on the premise of HDB flats that was too expensive and did not bare resemblance to the cost of building plus the acquired land and he beat that gong repeatedly in Parliament over many years demanding an independent assessment of costs. Not once did he argue about the leasehold as he was Lawyer and knew full that it was found around the world and not something you raise as an argument against. It was cost of the flat that did not make sense.
Roy should have argued the ridiculous cost of a 99yr old leasehold.
As to the matter of the interest to be returned to CPF, it is not your personal bank savings account. It is your superannuation fund. It is your retirement fund or your Provident Fund. That is where the distinction and difference is. Most provident funds around the world would not even release funds for housing needs or play the stock market. It can only be placed in an approved investment vehicle. The PAP needed to fund Singapore's development and make themselves look good and decided to raise the British created CPF which was a pension fund. It has now turned into a escrow fund to cover their building and medical infrastructure. After all the interest belongs to you and does not go anywhere.
Roy probably is not aware of what the World does in this space and wrongly assumed that it is a Singapore practice or PAP specific practice. And they caught him out on this.
There are so many things that you can fault the PAP in regard to HDB and the CPF. These 2 are not. Note that Leong did not raise both of these and Roy was quoting his other comments and analysis.
Chiam campaigned on the premise of HDB flats that was too expensive and did not bare resemblance to the cost of building plus the acquired land and he beat that gong repeatedly in Parliament over many years demanding an independent assessment of costs. Not once did he argue about the leasehold as he was Lawyer and knew full that it was found around the world and not something you raise as an argument against. It was cost of the flat that did not make sense.
Roy should have argued the ridiculous cost of a 99yr old leasehold.
As to the matter of the interest to be returned to CPF, it is not your personal bank savings account. It is your superannuation fund. It is your retirement fund or your Provident Fund. That is where the distinction and difference is. Most provident funds around the world would not even release funds for housing needs or play the stock market. It can only be placed in an approved investment vehicle. The PAP needed to fund Singapore's development and make themselves look good and decided to raise the British created CPF which was a pension fund. It has now turned into a escrow fund to cover their building and medical infrastructure. After all the interest belongs to you and does not go anywhere.
Roy probably is not aware of what the World does in this space and wrongly assumed that it is a Singapore practice or PAP specific practice. And they caught him out on this.
There are so many things that you can fault the PAP in regard to HDB and the CPF. These 2 are not. Note that Leong did not raise both of these and Roy was quoting his other comments and analysis.
You raise several issues here. Capital gains happens only when the flat you bought can be sold for more money. In recent times, this has not always been guaranteed due to the high prices for new flats. Earning Capital gains is a function of timing. For example, if you "bought" a 4 room flat for $150,000 in the 80's, and sold it today, you will have capital gains, its not an issue of if you will get it, but an issue of how much capital gains you can get today. If you bought a new flat today for $500,000, and sold it 3 years from now, the odds of getting capital gains of any significant amount is greatly reduced. The ability to earn capital gains is therefore a function of when you bought it, and when you sell it.
Going back to your question of a capital loss, this situation to date has not been faced by many, not such a big loss of $150,000 as in your example. Mainly due to the much lower prices paid in the earlier generations. You did not mention what is the time line in your example. But you have to consider the following factors:
1) Let say that you held the flat for 20 years and you sold it for a loss of $150,000 as in your example above. Don't forget that there is a theoretical monthly housing savings component when you sign a prepaid 99 year lease with the HDB. Lets say that when you "bought" your $350,000 flat, the cost of ownership per month (mortgage payments, conservancy fees, property tax, etc.) was $1800. No an unrealistic number. The alternative to buying this unit would have been to rent a similar one. How much would this exact flat rent for? Could you have paid a rent less than $1800 a month? Not likely. The rent would probably be more. The spread between the rent and what you have to pay monthly for housing is an actual benefit. If you save $250 a month on average over the 20 years, using a discount rate of 2%, you would have saved $29,000 by "buying" this flat, thereby reducing your capital loss. In actual fact, you will be held to the whims of the landlord and have to renew every year, and I am sure the rent will increase. So, the savings could be much greater, But you see, there is an actual savings here.
2) Also consider what will happen to your CPF if you had left it in your account without taking it out to buy a flat. If 20 years ago, you did not withdraw say $100,000 to buy your $350,000 flat. In some years, CPF paid you as low as 1%, now its 2.5%. But the real rate of inflation was much higher. In some years, we had double digit inflation. Therefore, you would have suffered an actual purchasing power loss equal to the rate of inflation minus the rate you received from CPF. This spread is in my estimation about 4% a year. If your $100,000 suffered a 4% loss over 20 years, it will be worth only around $70,000 in real purchasing power after that. If you take it all out to use on a flat "purchase", you have a fighting chance to make some capital gains versus a guaranteed loss if you left it in CPF. This is the reason why the PAP sets the CPF rate so low. Even though they take your CPF and make double digit returns, they pay you only 2.5% so as to encourage you to pull it out and use it to buy their over valued flats. If CPF paid everyone 10% for their money, who would want to take it out to buy flats? People will leave the money in their CPF and try and use other funds for down payment. This would defeat the govt. goal of bleeding the CPF.
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I am sorry, I did not see where it says that. The interest paid to HDB is a loan interest. Its just like borrowing from a bank. You have borrowed money from them to "buy" your flat and you must pay an interest to HDB. The interest paid to CPF is because you have borrowed the down payment money from CPF to "buy" your flat. No bank will lend you the money for your down payment. So, the PAP has deviced that you can go to the CPF for this. But this is your own money, in your name, so he is asking why should I pay myself interest?You can also note here that for many sinkies, they are "buying" their flats with NO money down. They are using HDB loan for 80% and their CPF for 20%. So, zero down from their own pockets. And you wonder why there is rampant speculation in real estate in singapore.
The reason that the HDB rates are tied to the CPF rates is because HDB is not a bank, and they have to use CPF money to build their flats. The CPF's cost of funds is what it pays you, the account holder. So, CPF cannot lend the money to HDB any lower than 2.5% or they will suffer a loss. Therefore, they lend the money to HDB at cost, and HDB adds a small premuim (0.1%) to cover their admin. That's why they are tied. Its interesting to note that CPF is not a profit making arm for the govt. What happens is CPF money is also blended with sources of funds from other govt. stat boards and agencies and than channeled to Temasek and GIC through the MOF. These 2 end users Temasek and GIC are than the profit making operations using CPF money to indirectly do this. If you look at it in another way, HDB could be more justified to charge higher than 2.3% for their loan as they actually finance buyers who are a higher risk, and who would not have qualified for a conventional bank loan.
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I am sorry I was not clear. When you sell your flat, you repay back the CPF you took out to "buy" it and also all the accrued interest that you would have earned if you had left the downpayment in the CPF account.
Your comment of fiscal discipline and individual responsibility so as not to overpay, really holds no water. Look around. If people had the fiscal discipline, would the PAP have to enact "cooling measures"? In fact, the whole system is set up for you to be fiscally irresponsible, people who are not educated in this will fall for the trap. In the first place, to be fiscally prudent, you should never pay for your current expenses with your retirement funds. But that is what is happening. You are paying for 99 year HDB rent with your retirement CPF money. All prudent financial advisors will tell you that you have to pay for your current expenses with your after tax dollars.
Regarding the HDB and the supply of flats, you are right. People claim there is a real estate market here. I have always say there is no market. When one entity controls 90% of the residences, and 80% of the residential and commercial land, they are the sole market maker. Next week, the HDB can easily cause the prices to plummet 50%, and you have already seen how they can sharply raise the price by severely underbuilding in an era of rapidly increasing population.
If you know how the game is played and how its rigged, you can avoid being fleeced. Whether you want to or not, its your own business. But the vast majority of sinkies do not know how the game is played, and hence they don't even know they are getting fleeced.
They are related, see my post #32
This is exactly what I have been saying. You and I are pretty much the only 2 people on Sammyboy that really sees the picture. Now, I will throw in a twist to this.
As you know, the HDB flat is basically a prepaid 99 year rental. You and the HDB enter into a 99 year lease on good faith. But guess what? HDB has abosolutely no intention to honour their 99 year lease. Just look at the construction, design and materials used in their flats, especially those build circa 70s, 80s, 90s, does anyone here really think they will last 99 years? I have yet to see an engineering report where the economic life on one of these buildings is 99 years. Also, as the estates get older and the underlying land becomes more valuable, HDB will do a relocation exercise by terminating the leases of those buildings and moving them to a new flat in a newer estate for a "discounted" price. Than they will build higher density on the land vacated by these tenants.
So, when you look at it in a family perspective, you will not see the end of the 99 year lease, but neither will your sucessor to the flat, lets say your children, see it. He/She will be kicked out to make way for a new development way before the 99 year lease is up. Compare this with a true freehold property. You and successive generations can live in the same property until it crumbles. So, as a family, the cost of housing for the owners of a freehold property is much cheaper, and conversely very expensive for a HDB flat dweller.
I believe that Roy did not say that. I think he understands the 99 year HDB is a Lease and not a Leashold. There is a significant difference. A leashold has an underlying ownership element (not the land), but usually the improvements on it, like the physical building itself. A lease has no ownership element, its just a rent, like when u lease a car, u have no ownership in it whatsoever.
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except most working class citizens and even some pr dont qualify for such bank loans, so hdb/cpf are effectively screwing the poor with double interest(compared to banks)!!!!!!!!!!!!!!!!!!!!!!!~~~~~~~~~~~~~
This FUCKER either has no logi or he is a paid man,most likely to be the later!
SDP supporter Kirsten Han: "Foreigner in a foreign country where innocents get no second chance" - a reaction
<She quoted speculation by academic Christopher Balding, alleging that Singapore's CPF retirement fund is being used to fund sovereign wealth investments. If that were true, we'd expect speculators to be attacking the Singapore dollar like George Soros did to the British Pound in 1997. This hasn't happened. In fact Singapore is one of the few countries still having AAA credit rating, ahead of the USA and France>
Interest rates for 2013 is 6.35% http://www.kwsp.gov.my/portal/about-epf/investment-highlights/dividend-rates/dividend-rates these porlumpars buggers think people do not google or read the internet??
In any country leasehold refers to land lease, where land is sold by the govt to the developer or house-owner on a specified tenure. There is thus land ownership, whether strata or otherwise.
When we talk about lease, whether in S'pore, US or elsewhere, it refers to contractual agreement between lessee (tenant) and lessor (landlord) for use of an asset or property, i.e. it is a rental agreement. The lessee does not own the property nor the land on which it sits. The lessee pays a monthly or annual rent.
That's why in 1st World countries, public housing is almost always a rental lease, because no land or property is sold or bought. The lessee pays a monthly rent to the govt to live in the place. The lease is also under legislated rent control to make rentals affordable for the lower-income folk public housing is meant to serve.
On the other hand, HDB tenancy is a long-term rental agreement, disguised as land lease, with the 99-year rent paid upfront. This is a breach of natural justice because (1) a rental tenancy is one in which rents are paid on a regular basis until the tenant moves out or assigns the lease to someone else – if there's a prepaid component it's a deposit against default but never covering the whole tenure; (2) no HDB building lasts 99 years! – which means the HDB is not only collecting prepaid rent, it is collecting it for a fictitious tenure, a tenure that HDB has neither the intention nor means to honour. Which means the HDB in addition to collecting prepaid rent is effectively borrowing additional funds at no cost from the tenant beyond the realistic tenure (say 50 years) – a hefty opportunity cost for the tenant. If this is not usury, what is?
Absolutely. The govt has opened a can of worms by giving lower than market returns on your retirement funds and allowing you to speculate on property with your retirement money, thus depleting your retirement funds. Then they tell you to repay interest on your own money when you sell your property. Make sense? How does paying 2.5% interest on your own money (a ridiculous concept) help replenish your 'coffin money' when most people are living in the very property they use their CPF money to buy and are technically are unable to release those funds without risking homelessness?
Delink superannuation funds from property 'ownership' or tenancy, and give decent returns, if the govt is serious about building up a nest egg for retirees.
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