When owners fight over new HDB flats

If owners of new HDB flats fight over their homes, they cannot estimate the profits they will pocket when the flats are eventually sold.

This is because new flats cannot be sold until the owners have satisfied the minimum occupancy period (MOP), which is five years for most flats and 10 years for flats in prime and choice locations around the island.

It is a given that owners will enjoy a windfall the moment they are selected to buy brand new HDB flats because such homes are sold at heavily subsidised prices when compared with the price of private homes in the same vicinity.

For instance, a couple recently fought over their prized Pinnacle@Duxton flat which they had the good fortune to buy for just over $300,000 some 20 years ago. Owners of similar flats there are now asking for selling prices that are four or five times more than their original purchase costs.

The appeals court had ruled that such a windfall yardstick cannot be used on new flats that were still under the MOP because it is premature to estimate the potential profits when these flats cannot be sold yet.

The ruling was made in an unusual case that saw a couple battling over a brand new HDB flat in Tampines that they had not even moved into when they broke up.

The split was so bitter that the husband even took the drastic step of wanting the Housing Board to repossess the flat, as he did not want his ex-wife to enjoy a windfall if she sold it in the future.

Fighting over a brand new flat

At the time of the split, the couple, who have two children, had paid only about $32,000 from their CPF accounts, or $16,000 each, for the flat.

The woman wanted her ex-husband to transfer his share of the flat to her so that she could live there with her two children. She lost her case in the Family Justice Court and the High Court, partly because she did not offer to refund her former husband’s $16,000 deposit.

The Appellate Court approved her request in the end so that she and her two kids could have their own home.

On the amount to refund to the husband, the court agreed with the valuation report from the woman that the new flat was worth $470,000, which was the purchase price from the HDB.

The husband argued that his valuation report priced the unit at $660,000, as a similar flat in the area could fetch that price in the resale market.

But the court rejected this valuation because there was no windfall to speak of then, due to the five-year sale prohibition.

As the flat’s value was the same as its purchase price, the woman only had to refund the $16,000 he had initially paid, plus the 2.5 per cent interest that had accrued.

Fighting over a ‘new’ resale flat

A young couple paid $370,000 for a resale HDB flat and spent $76,000 to renovate it shortly after they got married. The idea was to get their new home ready so they could move in after their formal wedding ceremony.

But the happy occasion did not happen because they broke up before that.

Their feud ended up in the High Court because they could not agree on how the flat should be split.

The man used about $63,000 of his CPF savings to pay for the flat, while his ex-wife used $91,000. In addition, she also paid $36,000 for the renovation.

Based on their contributions, the court found that the woman was entitled to a 67 per cent share while the man would get the remaining 33 per cent.

But they could get the sales proceeds based on this ratio only after settling the outstanding mortgage and renovation loans.

In this case, they might enjoy a small windfall if their newly renovated flat fetches more than their purchase price.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

What are the emerging regulations to rein in AI harms? Law firms are embracing AI: Governing it will be harder