SINGAPORE's National Development Minister Lawrence Wong said in Parliament on Thursday morning that his ministry is working out details on relaxing Central Provident Fund (CPF) loan rules on the purchase of older Housing Board resale flats, and will announce them soon for implementation in May this year.
One issue is CPF rules, specifically the restriction in CPF usage for flats with less than 60 years of lease remaining, Mr Wong said.
Some banks also take reference from these restrictions when assessing how much loan to extend. As a result, both CPF and loan quantums are reduced for the purchase of such older flats, he said.
"The CPF rule is intended to safeguard the retirement adequacy of buyers who purchase older flats, but its design has led to some unintended consequences. For example, a buyer of a 39-year-old flat can use full CPF; but just a year later, and the amount of CPF will be restricted.
"And there's no good reason why this should be so just because the flat became a year older," Mr Wong pointed out.