HDB flats should not be used as a source of funds for business or for any other uses, said National Development Minister Mah Bow Tan a day after amendments to the Housing and Development Bill were made to prevent homeowners from using their HDB flats as collateral in settling their debts.
“The whole scheme was designed to provide affordable, good quality home for them, not to use that as collateral or sources of funds for other uses,” he said.
He noted that if homeowners were allowed to use their flats to raise funds, which was commonly used for business or for casino betting, then they would lose their money and then their flats.
“So we decided to be prudent, as far as HDB flats are concerned. If you want to raise funds for businesses, for other things, entrepreneurship, look for other sources for funds,” Mr. Mah said.
The changes in the Housing and Development Bill were passed under the "certificate of urgency" in Parliament on Monday. Any contract that utilises an HDB flat as collateral for any kind of debt other than as mortgage to finance the purchase of the flat will be null and void.
Mr. Mah explained that the issue must be solved immediately to prevent lenders from lodging future caveats against HDB flats.