You need a PHD to understand CPF

From The Online Citizen

DB: Cannot withdraw cash profits anymore when you sell?

By Leong Sze Hian

I refer to the report “Govt to explore ways to increase use of CPF for buying HDB flats” (Channel News Asia, Mar 27).

One possible implication or policy change may be this: cash profits from the sale of HDB flats may have to be kept in one’s CPF account, and cannot be cashed out.

The possible implications of such a change may be as follows:-

- HDB prices may crash when people realise that no cash profits can be made

- Home buyers may prefer private property compared to HDB flats

- Those who subscribed to the asset enhancement policy may find that they have put all their eggs into one basket (HDB), and can no longer be monetised before retirement

Will HDB flat-owners only be able to monetise their HDB flat at age 55, 65?

What portion of the cash profits from the sale of HDB flats will be locked up in the CPF?  All? 50 per cent?  Will interest that would otherwise have been earned from the cash utilised be allowed to be cashed out?

At the current rate of increase of $15,500 per annum for the CPF Minimum Sum and Medisave Required Amount, the total at age 55 is projected to be $197,000, $352,000 and $507,000, in 2013, 2023 and 2033 respectively.

So, if you sell your HDB flat, but have less than $352,000 when you turn 55 in 2023, does it mean that you can only draw $5,000 at age 55 (unless you have property to pledge for up to half the Minimum Sum), with the balance payable as a monthly life annuity from age 65 under the CPF Life scheme?

Five things to note

With the recent CPF changes and the expected changes, there are 5 things that you may need to know before you turn 55.

ONE:

Upon reaching 55, if your CPF Special Account (SA) plus property pledge, is insufficient to meet your CPF Minimum Sum (MS), which is currently $117,000, your CPF Ordinary Account (OA) balance will be transferred to your CPF Retirement Account (RA) to make-up for the MS shortfall.

What this means is that you may no longer be able to use your OA balance to pay for your home mortgage.

So, if you are affected by this policy, use your entire OA balance to re-pay your mortgage before you turn 55.

TWO:

If you plan to downgrade to a smaller flat, the sales proceeds (CPF utilised and accrued interest) of your flat will also be transferred to your RA, if you have a MS shortfall.

What this means is that after setting aside the MS, you may have less available from your flat sale proceeds to pay for your smaller downgrade flat.

So, if you want to downgrade, do it before 55.

THREE:

Upon reaching 55, your OA and SA that is transferred to your RA to meet the MS, can no longer be invested.

So, if you want to invest your OA and SA, do it before 55. (note: first $20,000 of OA and $40,000 of SA cannot be invested.)

FOUR:

For those age 55 and younger from 2013 onwards, CPF Life will be compulsory.

So, if you plan to migrate, give up your Singapore citizenship, and want to withdraw your entire CPF as a lump sum, you should try to do so before 55.

Otherwise, only the surrender value of your CPF Life (depending on which of the 4 plans you choose) may be given to you. If you plan to migrate, choose the CPF Life Basic plan as it gives  the lowest monthly annuity payout with the highest residue value.

FIVE:

When the OA is transferred to the RA to meet the MS at age 55, the OA also can no longer be used to pay for one’s own or children’s tertiary education fees.
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Also from The Online Citizen

CPF – F1 or F9? Half also cannot withdraw anymore

Horizon Towers

Horizon Towers lawsuit set to go on

Market news

Pender Court up for sale again with $100m price tag

This is the estate whose en bloc fell through because the buyer pulled out of the deal - and the owners got to keep the deposit; a cool $250k each. Now they are relaunching at  much higher price.

Collective sales market stays cool

 According to HSR investment sales assistant executive director Jeffrey Goh, many home owners are not keen to reduce asking prices and are in no hurry to sell. They have seen how well new property launches have done and this has ‘given them a lot of excitement’, he said.

But Credo Real Estate managing director Karamjit Singh believes that Mayfair Gardens and Green Lodge are ‘not necessarily representative of the fate of en blocs to come’.

For properties where sufficient consent from owners was obtained some time back, asking prices may not be in line with market conditions, he said.

‘But we are about to see a new wave of en bloc launches by tender in the months ahead, and these will be projects that would have got started end of last year or early this year.’

Are En bloc owners finally becoming shrewder after gaining some common sense? If big and small developers require their land banks to be replenished, they won't always be satisfied with Government plots in out-of-way locations. The owners should hold out and wait for buyers to come a-begging .
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En bloc owners should take a leaf out of the Government's book when it comes to assessing tender bids.  Owners are amateurs at the game and have been told that -"The true value of your property is what the market is willing to pay". It is not necessarily so. The true value of your home  is measured by calculable facts and figures, not by opportunists hoping to get it on the cheap. I say watch out for opportunistic bidding and developers pushing en bloc owners to the wall. Be careful of property agents; their long term interest lies with the buyer rather than the owners  (and who knows what juicy  bonus they get from the Big Boys if they manage to hook the estate and deliver it on a plate to them). 
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There have been two successful  government land sales (GLS) recently in Tampines and in Ten Mile Junction. The Gov did not sell at the first tender, the price offered simply was too low for their liking. They can wait. Owners can wait, too. An interesting little tussle in the media ensued between the Government and the president of the Real Estate Developers’ Association of Singapore (Redas) Simon Cheong, about setting the property market free (from gov intervention) and about who is to blame for rising prices. Really, as if it were that simple. Speculation, kiasuism, government charges, land prices,  building costs, developer greed, money laundering (I suspect) - all play their part. 
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Tampines site gets top bid of $302m

Govt rebuts Cheong’s ‘free market’ theory

A single bid for a Tampines site was rejected in June 2008 for being too low, but was awarded in March at $421 per sq ft per plot ratio (psf ppr) – some 3.6 times higher.
A Ten Mile Junction mixed-use site also had a failed bid of $162 psf ppr in April 2008, but went for $437 psf ppr in February – 2.7 times higher.

"the Government was not convinced that the bids represented fair market value rather than opportunistic bids, as there were very few bids for the sites, and the bids were exceptionally low".

It was the "Government's duty as the custodian of state land to ensure it obtains a fair market price for a site", it added. 

Gung-ho resident

I am NOT THE AUTHOR of the above flyer!  I do not need the expense of printing out 560 flyers nor do I have the time to drop them onto 560 doorsteps! That's what my blog is for; free and easy.

The author doesn't sound like an agent - and believes owners should be more gung-ho about selling their units at comparable HUDC prices. He's right, but we are getting there very slowly. I predict $800k will be breached by mid year. $900k by year end if prices continue to rise. 

Our units are worth $800 psf at least ($1.36m).

Why? Because that is what a similar replacement unit would cost in the area.

Don't forget, any developer will take the present strata title area to (ie present gross floor area of 1million sqft ) - and double it to approx. 2 million sqft (potential gross floor area). And after that they will sell for $800 - 1000 psf. 

At the very least, an enbloc price should realise the full potential of your stake in TC. After all, that is what RELEASING THE VALUE is about - releasing it for YOU and NOT  to the developer only. 1700 sqft enbloc price is $1.36 to $1.7 million.The developer is still left with 1 million sqft to sell. 

So, at $419 psf we are still way, way below our true value. 

Don't get me wrong, I am not advocating another en bloc - I would quite happily live here for the rest of my days. The estate's repainting and repair works are nearing their end (mid-April) and the MC will be proposing and presenting other works to increase the value of the estate and for owner's enjoyment at the next AGM.

Market news

Sim Lian’s $302m bid is tops for Tampines site

Tampines site gets top bid of $302m

Heartland Condos at S1k psf or more?

‘The psf price is one thing, the quantum is another. As long as the total quantum is at $1 million or less, buyers can still afford to buy.’

Units will thus become smaller to keep the quantum affordable, he added.

Snuffboxes with million dollar price tags! Nutcase buyers happy with postage stamp properties and greedy developers pushing the limits to maximise profit.

The Pariah

The Pariah's 'must read' new post (requires reading stamina with attention to details)

http://www.singaporeenbloc.blogspot.com/

Pronounced  par-I -ah and not PAR-iah
 

CULFORD GARDEN

Credo Real Estate launches collective sale of Culford Garden at Siglap
ChannelNewsAsia - 17 Mar 2010
Siglap Condo makes en bloc pitch
Straits Times-18 Mar 2010
Two East Coast en bloc sites on market
Business Times-18 Mar 2010

Culford Gardens is a freehold condominium development located at 175A, Upper East Coast Road (S)455277 in District 15 near Bedok MRT station. Completed in 1983, it comprises 24 units. It is located in the vicinity of Emmanuel Assembly of God and Singtel Power House.

Condo Amenities near Culford Gardens

Culford Gardens is located just minutes drive away from Parkway Parade Shopping Centre, where a host of amenities are readily available, such as retail outlets, supermarkets, restaurants and eating establishments, banks, cinemas and other entertainment facilities.
There are schools located in the vicinity, such as Temasek Junior College and Chai Chee Secondary. Recreational facilities nearby include the Telok Kurau Park and East Coast Park which is just a short drive away.
For vehicle owners, travelling to the business hub from Culford Gardens takes just above 15 minutes, via Upper East Coast Road.

Development Name:	Culford Garden
Property Type:	Condominium
Developer:	CULFORD DEVELOPMENT PTE LTD
Tenure:	Freehold
Construction Year:	1983
# of Floors:	4
# of Units:	24