Hot Take: Will slashing BTO downpayments lead to more divorces and debt? Surely youths can decide for themselves

For most couples across the world, a romantic gesture consists of flowers or chocolates. Here, the ultimate romantic gesture for young couples is applying for a Build-To-Order (BTO) flat — and Singaporeans' infatuation means the Housing and Development Board (HDB) can rarely catch a break.

Once again, another move by the housing authority has ruffled some feathers: An adjustment to the deferred income assessment scheme in a move to make housing more accessible to young couples.

From June, eligible young couples for the scheme will have their initial downpayment slashed to 2.5 per cent.

The move, announced by National Development Minister Desmond Lee last Tuesday (March 5), would mean eligible couples will pay 2.5 per cent of their BTO flat's price during the signing of the sale agreement.

This is down from the 5 per cent downpayment for those taking a HDB loan, and 10 per cent for those taking a loan from banks.

Should an eligible couple take a HDB loan with a loan-to-value limit of 80 per cent, the new move means they have to pay the remaining downpayment of 17.5 per cent of their BTO flat's price when they collect their keys.

"These couples will pay the balance downpayment at key collection when they are in a better position to do so," said Mr Lee, adding the move would alleviate the financial burden for young couples.

"For couples who are ready to purchase a flat and have been saving up to afford the downpayment, I hope this enhancement will help you to settle down and start your families earlier."

FOR RICHER OR POORER?

Some Singaporeans praised the new scheme as young couples will be able to start their home-ownership dreams earlier, noting this addresses concerns from young couples about being unable to obtain a BTO flat.

However, such positive reactions were rare, if online comments are anything to go by, with most taking to online platforms to voice their scepticism.

To be eligible for the reduced downpayment, couples must be full-time students or National Servicemen (NSFs). Those who have completed full-time studies or National Service (NS) within the last 12 months before applying for HDB flat eligibility letter will also be eligible.

At least one party must be aged 30 and below, and they must be married or applying for a flat under the Fiance-Fiancee Scheme.

Considering most eligible for this scheme would be in their early 20s, netizens questioned how ready these couples are to tie the knot. BTO flats are, after all, the uniquely Singapore engagement ring.

One Reddit user opined: "Relationships are prone to change at that stage of your life, when you experiencing huge changes like getting a new job and doing NS. Those teenage years should be the time where people go out, discover themselves (and) experience different things, instead of deciding whether to buy a BTO (flat)."

The move, several claimed, would just result in higher divorce rates as young couples rush into marriage to obtain a BTO flat, only to later realise they are not compatible.

Others also expressed reservations about whether the move is a financially prudent one for young couples.

Some expect that young couples will be stuck with larger loans and will have higher interest accrued.

However, it is a misperception that the lowered downpayment means young couples will need a larger loan. 

This is because they will still need to pay up the full downpayment of at least 20 per cent when they collect their keys.

Nevertheless, these concerns of financial liability do hold some weight.

Say a young couple have a successful BTO application in their first year of university, and they are set to collect their keys shortly after graduation.

Do they have enough savings to pay the at least 17.5 per cent downpayment by the time they collect the keys? What sacrifices would they need to make to ensure they have earned the sum while studying?

If they are unable to find a job straight out of university, what's next for them and their loan payments?

THE KIDS ARE ALL RIGHT

Buying a home is not an easy decision, and the financial consequences can be large.

However, sceptics about the new move forget one thing: Young adults can, and should, make their own life decisions.

With proper planning and perhaps some luck in scoring a BTO flat, young couples can stand to benefit from this move, especially if they want to start their own family early.

True, when it comes to popping The Big Question — "Shall we apply for BTO?" — it's hard to know for sure if one's partner is really the right person for such an undertaking. 

But the "right time" is subjective for each individual and each couple. Couples, regardless of what age they tie the knot, can and do get divorced.

There are risks involved in any big life decision such as marriage and home ownership. But as long as Singaporeans, no matter their age, do their research and feel they are ready, it is a decision for them to make.

So perhaps we ought to not act like nosy relatives during festive family gatherings, and let youths make their own decisions — be it for better or worse.

ABOUT THE AUTHOR:

Loraine Lee is a journalist at TODAY covering politics and people.