The following is a letter sent by a TOC reader.
I’m writing in and I’m hoping that it would be posted so that people could discuss about this issues.
I applied for a HDB BTO (build-to-order) flat in july’s BTO exercise (income ceiling $8k) at the point of my application. And I received a queue number and I would be able to select a unit in October.
In august 2011, our Housing & Development minister revised the income ceiling cap for BTO eligibility as many couples are already exceeding the $8000 combined income cap.
As it took effect in Aug, I was elated as this means that I do not have to worry about not being eligible as my husband & my gross combined income is around $8900 (I’m a commissioned earner & my husband’s a fix pay earner).
In Oct, on our flat selection date, I was informed by the HDB officer assisting me that since my BTO application date is during the July’s exercise, the income ceiling would be the $8000.00 cap instead of the revised $10000.00, as a result, my application for a BTO flat was rejected and pending for appeal.
After spending around 1.5hrs discussing with the HDB officer, I realized how HDB calculates the gross combined income. There are some points which i do not fathom and I’m wondering how long has this rule stood.
For the income calculations,
HDB includes – monthly basic salary, commission, incentives.
HDB excludes – bonuses, allowances and some other miscellaneous income.
What I do not understand is why do HDB includes commissions/incentives, but excludes bonuses, and the reply I got was, it’s the law. There’s nothing they can do. & to be fair for commission earner, they use last 12 months average salary (but in my opinion, last 12 months isn’t fair too, because we do not pay our housing loans in just 12 months, we use decades, for some, their entire lifetime)
I’m not trying to say that this law doesn’t make sense, but my argument is such that (this is what I told the officer too) bonuses could be excluded, why not commission? And the officer told me that, bonuses are not fixed. But neither is commission fixed isn’t it?
Let’s take this analogy:
Scenario 1 -
A basic earner (let’s call her Angie) with a gross salary of $7000 per month, as per CPF’s contribution regulations, the CPF contribution Angie needs to deduct would be capped at $1000 per month. Meaning to say, every month, Angie would have a nett salary of $6000 after Lessing CPF deductions. And assuming by year end, Angie receives just a 13th month bonus, her annual nett income would Amount to $78000.00.
Scenario 2 -
A commission earner(let’s call her Amy), with an average last 12 months gross salary of $7000 per month ($2000 basic, $5000 commission) as well. For most commission earners in Singapore, there’s no CPF cap for their income, hence after deduction of CPF, Amy would only draw a nett salary of $5600. For most commission earners, there’s no bonuses payout as well.
Hence, the annual nett salary Amy receives would amount to $67200.
I understand from the officer’s point that, bonuses are not fixed, but neither is commission: when economy is good, sometimes people get more then 13th month for their bonuses. When economy is bad, say during recession period etc, there might be no bonus given.
For commission earner, how much they earn also varies depending on the economy, if the economy is good, people make bigger tickets purchases/takes up more bank loans for investments etc, commission payout would increase together with the sales, however when economy is bad, commission payout would declined because no lack in sales too.
Hence, from the 2 scenarios I mentioned above, even if Angie gets no bonuses at all, his nett income is still more then Amy.
And the most infuriating issue is that, if Angie is pregnant & took 4 months of maternity leave, the salary she receives is still $7000 because it is a fixed basic salary, on the other hand, if Amy is to be on maternity leaves, due to no commission (no sales when not working!) , what she will get is only the $2000 basic salary of hers.
I have been troubled by this question for the longest time, why does HDB excludes bonus but includes commission?
Furthermore, regardless of Amy/Angie, the nett salary they draw every month doesn’t mean that the full salary amount can be used as spare cash. After Lessing off many many many expenses, what’s left is meagre or even there might be nothing left altogether.
To add on: for some banks in Singapore, when u apply for a credit line/credit card, some banks calculate only 70-80% of commission earners annual salary to compute the credit limit they assign, but for basic earner, they take in 100%, including bonus.
I believe banks do their calculations this way because they are fully aware that commission are not fixed, and once a credit limit is assigned, it could be for years before another revision is done. Therefore they take in only partial income of commission earners to ensure that the viarability of the commission would not affect the consumer’s defaulting in payment should they utilize the limit.
Buying a flat & taking a HDB/Bank Loan is not a matter of 1/2 yrs, it’s for decades, maybe HDB should start revising on their income ceiling inclusions & exclusions.
I believe in Singapore, alot of people are facing this dilemma, stuck at a stage where the income ceiling exceeds government cap, yet however couldn’t afford to buy DBSS/EC or private property (look at the exorbitant property prices now!!).
PS: I feels that the raise in the income ceiling is a good move by the minister, but I guess they should look into the inclusions & exclusions income tabulations too.
I really wish to know does my fellow Singaporeans also feels this way?
Thanks & regards
A Chan
What will happen to pap if lky step down , i mean, erm, for good as in like, erm …. real good?
certainly there is another lky in pap left?
That’s the bureaucracy for you….checklist for everything…less one tick disqualify, like driving test. When will they trust their assessors to look at the overall situation to qualify someone.If they don’t trust the ordinary worker then some Minister should be task to review such cases. With their multi-million salaries no inclusive of handsome benefits..power and prestige, they won’t be corrupt to take coffee money to qualify an applicant.
There is no issue here. If HDB say commission is to be included while bonus excluded, then it must be the case. We don’t have the right & the ability to question them, so we shouldn’t. Every country has its laws and we just follow. It is not the government responsiblity if a commissioned worker is disadvantage during maternity leave compared to basic salary worker.
The government sells land to private developers and the developers need buyers. An unwritten form of symbiotic relationship exists. HDB will try to disqualify as many buyers as possible and push those who can “afford” to buy private property. It is a well-known fact that private property developers are fully aware which side their bread is buttered on.
“Every country has its laws and we just follow.”
Its a free market system. You only have yourslef to blame if you cannot afford housing. Too poor? Live with the folks. Folks reject you? Too bad. You suck as an offspring
You must ask Mr Khaw to backdate the $10k income ceiling to May 7. He say it’s a very auspicious date to be elected.
He must show you how he come up with the magic figure of $10k and what should be included in the computation of salary. He must show the income levels rise in Singapore compared with property prices and HDB income ceiling requirement for the next 30 years. He is not building enough housing for the people. He should show HDB/URA Master Plan for the next 20 years.
Commission count in is not a law. It is just a guideline for the inflexible wooden blocked HDB officers to follow. So every officers follow blindly. There are many cases of appeals on commission being count brought up to MP and HDB. No officers want to take the trouble to surface such cases to the Minister or Policy makers. They just reply that it is the law. Such indifferent attitude, cannot be bothered, it is not their problem.
Does anyone wonder whether the Minister or PM know about this? It is too minor for them to bother. Perhap they can even afford to lose some of votes from the commission earners or may even help to jack up the price of resale flats, DBSS and EC so that the lands can be sold to developers at skyhigh prices.
I have similar encounter where our combined income exceeded the ceiling marginally.
We thought we should be able to qualify as i had calculated my 12 mth avg income and it fell below the ceiling.
However, to our surprise, HDB includes allowances such as transport and handphone allowances as part of the income for people who are commission-based.
With these inclusion, our income was deemed to have exceeded the ceiling and therefore we were not allowed to select a flat.
Their rationale is that if you are absent from work due whatever reasons, you will still be getting the allowances. I thought this is unfair as these allowances are usually required during the course of work. It’s hardly an income as i don’t think there’s any amount left, given the high petrol, parking costs.
If the company does not give the employees such allowances, employees are usually entitled to claim the taxi charges incurred during the course of work. Does HDB then include these claims as income? Surely not right?
Unfortunately, as highlighted by the previous comment, the HDB officers seem to follow these guideline blindly.
HDB does not excluded allowances. A check with this link will show you that they do. http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatIncomeGuideline?OpenDocument
things like public low-cost housing are in truth very simple matters.
SIMPLY let HDB flats BECOME low-cost hosuing FOR THE COMMON CITIZENS again and the BIG ‘problem’ will resolve by itself.
why allow FTs/prS WHO vehemently REFUSE to accept the ‘desperate’ govt’s offers of SINGAPORE CITIZENSHIPS to buy SINGAPORE’S PUBLIC HOUSING at all?
to be fair,these ftS/prS should only compete only in the priavte sector market,
in any case, i would EXPECT ‘talents’ to be decently well-paid to be ale to afford priavte housing like the PMETs they replace?
in fact,they should be BETTER PAID,if not how could they be called ‘TALENTS’?
first make sure publicly ‘subsidised’ public low-cost housing be allocated to the citizens – like jobs ought to be – before we allocate the ‘EXCESS’ to those who refuae to accept to become SINGAPOREANS????
But I dun understand why are you applying for the flat when your combined income is more than 8k and you know the maximum income ceiling at that time is 8 K.
I would rather questioned why HDB fail to disqualified you and still gives you a queue number.
The S$10 that you pay can be put to better use like helping the poor.
Commission or bonus,fix income or not,we have to ask ourselves honestly whether we are getting a new flat because of needs or speculation.
We should give way to those who are earning lesser than us and who need the flat more.
This only tell me that your income is 8.9K and minister making a good move of raising the ceiling income.
But I will agree with you on other HDB rules that need to be revise.Those CLB only works for a good salary,cannot think out of the box .Dun expect too much from them.
The civil service gets paid bonuses ranging from 0.5 months – 3-6 months. If bonuses were included, a key percentage of civil servants will feel the pinch of the skewed HDB policies in Singapore.
A Chan,
Well generally those who earns through commission tends to be earning quite well and within the upper strata of society. For example, those that earn the highest in the finance sector generally derived their income from commissions, with low fix salary. Simliar too for many financial planners. And the commission amount they earned is substantially higher than bonueses. On the other hand, the lower income owners often does not have a large chunk of their salary derived from commission. Therefore to some extent, the scheme is skewed towards lower income earner who again generally do not have commission as part of their salary.
Hope this esxplanation helps. In any case there is the EC option for you. It maybe good too for you to apply for an EC unit.
As for Tommy’s claim that a key percentage of civil servants earned a lot from bonuses, I am wondering if he could provide the figure and facts. What does he means by “key percentage”? is it 1%, 10% or 20%? Sweeping statements do not help but gives in to confusions.
Shouldn’t the criteria be based on your income at the point of application? Then again, even though there is no cap on CPF for commissions, the money that goes into your CPF can be used to service your mortgage loan? Well, maybe not all of it since some goes into accounts other than OA but I doubt the government would make it so complicated for initial applications.
That’s why there is an appeals option. Back when I was applying for mine, you could type in more than $8000 (up to a max of $8300) and what you can do after that is just appeal and appeal. Thats what I did and got through even though our household income was close to $10K. Before you guys start whacking me for getting a “subsidised” flat, i should state that everyone’s situation is different and I got a overpriced DBSS flat.
Some of the reasons I included was the number of dependents I had to support, that I wouldnt take the housing grant, HDB housing loan and I don’t mind taking the last queue number, etc. You could seriously try appealing. I’m very anti-establishment and I don’t have a great impression of civil servants in general but these customer service guys are just doing their jobs.. Their bosses actually do have the discretion. It just took me 3 rounds of appeal and 2 months of waiting though. Typical efficiency.
now,let’s puy it simply.
be it housing ,healthcare,education,JOBS,etc,WHY SHOULD ANY FT/PR has ‘MORE RIGHTS’ than a SINGAPORE CITIZEN ?
it makes no sense to be citizens of any goiven country if citizens get discriminated in whatsoever manner vis-a-vis a NON-CITIZEN guest-worker,talent or not.
now,the FT POLICY n other such polcies have cause discriminatory practices against our very SINGAPOREANS,IS THIS RIGHT?
@Yeoman
I agree with all your postings above.
It is time that we citizens are being treated as citizens in our country.
This is the very old basis of accounting which is still is used today. secondly, if they take in bonuses which they give a lot to civil servants, many of them will not be able to buy HDB.
so considering the fact that they need to protect their own “kind”, the rules are bend to facilitate this.
remember that government and related agencies hired a lot of FTs which have big fat bonuses. if calculate as income, they will pay higher income tax and not able to get a HDB. HDB is always part of a package to attract FTs. Get subsidy housing and cheap loans from the sg govt.
This is the truth as what my FT colleagues are telling me. no much better place to buy a house compare elsewhere in the world where the government subsidize so much for FTs
You are earning quite a lot so u should get out of the hdb q and move to the private residential market. Leave the hdb q to your poorer fellow citizen
You will get a good reply from HDB,You can appeal using some case study above,Wish u fulfill u dream house soon. It a good feedback & discussion.unlike other topic only no actual fact but just want to blame the government.
Hope to see more such discussion & not talk down on our country.
Walau 7 November 2011
You are earning quite a lot so u should get out of the hdb q and move to the private residential market. Leave the hdb q to your poorer fellow citizen.
ya reasonable comment except you have to add leave hdbs for lesser mortal citizens first.
why should PRs get similar treatment with citizens.
pRS are not committed citizens,they are just transitioning here because of work n the money;they are like those guys who are ‘TWO-TIMING’?
WHERE IS THEIR LOYALTY that they deserve to be treated even betetr then faithful citizens?
Reading all the comments above, I didn’t know that PRs are also allowed to purchase HDB? Initially I tot that they are only renting it!!!!
If PRs are allowed to buy HDB, n treated like a Singapore citizen, why are they spared from the 2 yrs NS for men? Hmmm
Kampong boy
citizenship is not a ONE WAY TRAFFIC.
IT WORKS BOTHWAYS- citizens serve the country,the nation – like via NS ,TAXES ETC – and the ‘country’/govt is to serve the citizens.
those leaders who do otherwise are missing tn epoint and are not worthy to serve the country- singaporeans.
…inless this LITTLE RED DOT IS THE UNITED NATIONS???
HDB frontline staff not well trained. They simply follow law & regulations blindly without knowing the fundamental reason.
HDB (and banks also) don’t like to consider variable pay such as bonuses and commissions as these are not so consistent, and more risky for them to lend you money based on these. That’s why banks usually only take 70% or 80% of your commissions as salary consideration. Long time ago, HDB also take only 80% of your commissions.
But becoz HDB is last resort property provider, and becoz many people in S’pore in the old days earn large part of their salaries thru commissions, and also in the 1980s economy was good and people earn good commissions, HDB eventually change the rules to consider 100% commissions. But they still keep the rule to block out bonuses.
PRs cannot buy direct from HDB — they need to buy resale. This applies to both PR + Citizen as well as PR + PR.
When buying resale, PR + Citizen can still get CPF subsidies, but less than Citizen + Citizen. PR + PR don’t get subsidies.
Problem is that many PRs in Singapore are high-income earners or businessmen. They may even be running successful businesses back in their home countries which they won’t tell Singapore govt or HDB. These cash-rich PRs have no problems offering high COVs to buy resale. All these high COVs keep on increasing the resale price index and the HDB valuations. And HDB based their BTO prices on the high valuations of resale flats. E.g. 80% of the transaction prices of nearby resale flats — give you 20% “market subsidy”.
Everybody is self-centred and aim to maximise personal benefits for oneself and own family. No seller is going to reject high COVs from PRs just to maintain “affordable” price for other Sinkies. That’s why the only way is for govt to step in. Either impose price controls (which PAP won’t do becoz they believe in ‘free market’) or to ban PRs from buying resale HDB (which will make many Sinkie HDB lessees very angry). PAP must also think about getting votes from HDB lessees (which are 80% of Sinkie population).
Are the ministers, senior policy makers etc themselves heavily invested into the property markets? I am very curious about this
indeed sad..me kaki whose combined incomes just merely xceed a little more than $8,000 celin is affected as well
nang boti nang kwee boti kwee
@ yeoman
I sensed your hatred through your sweeping statements on FTs and PRs, as though they are a good punching bag. They are human beings too and some contribute to Sg. Do you think all of them earn a lot of money and living in penthouses? Some comes here earning just enough to support the family back home, and also to contribute to Sg.
Do you think hating and baning foreigners will automatically solve our problems? If we follow your proposition against the foreigners, what will be the consequences?
Secondly, just because someone earn a lot does not mean he is living comfortably. Would you take someone to task who earn $5000, have 4 dependencies and sick parents, or a single bachelor with no worries who earn $2500?
The world is not black or white but a lot of grey. While I could share your frustration, I must condemn your passing a sweeping and demeaning statements on our fellow human beings be they locals of foreigns alike, which is a reflection of lack of morality and respect.
To Andy- you will make a very good HDB officer or civil servant. They are all blind follower of regulations – basically those who belong to the hare brain category. Yeah, many of the existing regulations don’t make sense and the best part, or rather the worst is these regulators cannot explain it us. They typical answer is ‘this is how it has or it is the regulation’. Be caution- check the regulation, sometimes it is NOT the regulation but how these folks have be misinterpreting it for so long it becomes their ‘regulation’.
Do Not Buy Properties When The Price Is Ridiculously High! It Signals PEAK PRICE!
Moreover, I Believe The World Is Heading To A Financial Meltdown! It’s Happening Right In-front Of Our Eyes…But In Slow Motion!
Be Wise And Don’t Follow What Others Are Doing!
“Mr lee tells mr lim, dn’t sell the price will go up” ????
Sure go up lah ? $380,000 forsers 5 rm .
But,dn’t sell ,how to “recv’d cash”?
Paper value for what ? Just keep dreaming that you are a Millionaire ?
But if all starts to “cash out” , what will happen ? do the gov’t has enuff $$$ inside to pay “hard Cash” to all who sell?
When the whole world is coughing, can SG not be affected ? I say, prices will drop …and this is the best excuse for Gov’t to find ,to make a “big adjustment”…blaming it all on World health .
If I am wrong, then I am sure if price keeps going up ,sure 2016 we will see another Big watershed.
Either way, I will be right !
Commission is income, period. Your total package can be Fixed 20%, Commission 80%, which makes up total income.
Bonus should also be taken into consideration.
Before crybabies come in and turn the discussion to jihad calls, let me say something on topic here.
If you knew that commission can be “manipulated” to qualify for the grant, why don’t you do it? If you are for counting both bonus and commission in the name of fairness, it won’t help your case here.
Lastly, if you want commission not to be counted, I don’t know if the “fairness” police here will cry foul because most SGers are on salary and people making commissions, including many of the filthy rich, get a free ride.
I think this tells you that you should not buy a HDB flat but go private. Your combined income will only grow from here. Taking a subsidy would mean you cannot buy any property in Singapore for the next 5 years. We are at peak of the property market cycle and there will definitely be opportunities for you to pick up a good property in down cycle. Singaporeans know that property is a good way to grow wealth. Why tie yourself up to 5 years of not being able to invest in property?
In other words, the subsidy is meant for those who need it. I am not against the increase in the ceiling, but people have to consider whether this increase is a benefit or a curse. Too many just rushed to take the subsidy because the think that it’s “free money” but the option value of being able to invest outweighs whatever subsidy you can get.
I’m a commissioned earner myself but I too can’t afford private property due to the fact that my monthly salary has to b used to pay for expenses, allowances and bills etc.
I understand why most of the people would think that earning $10000 per month would means we can afford private, yes, we could because of our income would be enough to pay for the monthly bank loans , however the upfront cash for the downpayments etc is the biggest problem.
Buying a private property, say a condo priced at $800k, without an upfront ‘spare’ cash of $80 – $100k at least, it would be really difficult to purchase one.
If everybody is complying to the rules, just follow. I think this is the fairest for commission earners.. If they revise, it will affect another 20,000 people (who are commission based). FYI, there are people who purposely dun work or get commission for 1 year to get by the $8k Cap. Bank only want immediate $$ whereas HDB wants ur $$ back in CPF. If everyone is being assess this way ..then HDB should not accept your appeal. If your appeal is successful, let me know.. i’ll pen for those who did not appeal to go HDB . maybe i can gather another 10000 ppl.. lol
Change the rule for PR ie PR purchased HDB from SG owner wnd when he sells it must br sg citizen and not another PR.
In this way the HDB resale price will not go up. Many countries hv adopt this approach.
BTO flat income ceiling rules: why include commissions but exclude bonuses?
…………
in YOUR annual IRA80 1.1b form
failured to submit both bonuses/commissions is a capital offence punishable by nail removin or 6 months in queenstown chalet
and yes its TAXABLE for both….
ow come when dealin with hdb another different rules applied?
Why include commission but exclude bonus.
I think the reason is that for many people who earn commisions, the comm itself constitude the main part of the income. If we take the example of people in insurance or property, who are solely commission based, and if we exclude commission, than their nett income would be zero!! )(which in fact they could be earning $200k to $300k for some). Therefore they take comm into consideration. However, it is fair to take bonus out of the equation, as it is really not fixed.. Just my 5cent worth..
Laws and regulations change every now and then.
Civil servants, esp frontliners, get overly confused and dare not commit to explain rationally, let alone discretions, for fear of disseminating wrong info or vital secrets. So just follow law. We are into an age of stupidity vouched by robotic mercennary. No hearts in place. Xian..
Actually, the exclusion list is providing a exploitable hole, especially for top executives of a company.
Imagine if the CEO of a company draws a salary of 8k, but having allowances for housing, medical, transportation and entertainment up to 10k, and in the end of the year got a bonus payout of 6 months. Even though this CEO take back 17K monthly and having 48k bonus, he still qualifies for the HDB new flats in this case…
While a family with working parents drawing a combined monthly salary of 11K, gets no allowances and 1 month bonus will be disqualified…
For many of my friends, either wife or husband takes a break to study/volunteer to stay within the income bracket. Not easy, but involves some sacrifices. No pain, no gain. Simple fact of life.
HDB is a Government Body which is not flexible and does not see case to case basis. They do not review your issues but instead just use whatever regulations that has been set. There are many cases in which applications got rejected just because the regulation does not suit the application. They do not listen to the needs of the people. I think that an overhaul is needed in the way the Government runs HDB. Housing is a sensitive issue thus sensitivity is needed in handling housing needs of the people.
to A Chan:
how will anyone in hdb know how much commission you are getting? so why are you so honest?
to Private Property:
10k a month & you say you cant afford the downpayment? stop spending so much & save more.
The HDB system is a bad system. There are a lot of systemic risk built into it.
Hi A Chan,
I have the same problem as you. I have paid $2k and selected the flat in Feb BTO. The appeal was recently turned down. My girlfriend is a sales executive and she is paid a sales incentive what I thought is a “bonus” but the HDB officers thought otherwise. I am caught at wit’s end also have actually requested my MP to support the appeal letter but it was still turned down.
We were disappointed with the decision as we have selected the flat already!!