The current balloting system for Build-To-Order (BTO) Housing Board flats in prime locations has created a lottery effect, where a handful of lucky applicants benefit from huge windfalls when they sell their flat after the minimum occupation period.
The windfall is at the expense of the public and will drive up the price of resale flats in prime locations, making such locations less affordable to most people.
One suggestion is for the HDB to adopt a market-based subsidy scheme.
All BTO flats can be priced at a benchmark equal to the median selling price of comparable resale HDB flats nearby.
A subsidy will be given to each BTO applicant, with higher subsidies for mature estates and lower ones for non-mature estates. When the HDB flat is sold, a resale levy tied to the subsidy given when buying the flat will be applied.
The resale levy of the mature-estate flat can be equal to the same percentage as the subsidy given when the flat was bought, and for non-mature estate flats, the resale levy can be set at 75 per cent of the initial percentage subsidy.
If a BTO applicant does not want to pay a levy later when he sells the flat, he can choose not to take the subsidy at the point of purchase and pay the median market price.
The subsidy scheme can be applied to all BTO flat buyers, not just first-time buyers.
Since BTO units are sold at market price, those who exceed the HDB income ceiling should also be allowed to apply for BTO flats, but without the subsidy and usual grants.
This subsidy suggestion will take away the lottery effect, keep prime-location HDB flats affordable for most people and give applicants less incentive to try their luck at balloting for a prime-location flat with the aim of getting a huge windfall when selling it.
HDB can continue to give one-time proximity housing grants and grants for very low-income buyers.
This subsidy proposal also reinforces the original intention of public housing, namely that the state will provide you with a high-quality, affordable home to live in.