National Development Minister Lawrence Wong said a 99-yr lease is an ownership, not a tenancy. ST FOTO: KUA CHEE SIONG
A Housing Board flat sold on a 99-year lease is an asset that will appreciate as the country prospers - a fundamental tenet of Singapore's home ownership policy, said National Development Minister Lawrence Wong on Tuesday (Aug 21).
Said Mr Wong: "There is a high likelihood that over a period of time, if the economy does well, if incomes rise, then property values will appreciate together with the fundamentals of the economy, & your stake in the nation - your home - can also appreciate in value."
Mr Wong was answering a question by a member of the public on the 99-yr leasehold for HDB flats at a forum organised by government feedback unit Reach on what people thought about Sunday's National Day Rally.
Ho Ching shares link for HDB flat rentals amidst nationwide debate on 99-year leases
Yesterday evening, the Chief Executive Officer of Temasek and Singapore Prime Minister Lee Hsien Loong’s wife shared a link on her Facebook page to Housing Development Board (HDB) flat rentals on propertyguru.com.sg.
While usually, this would hardly mean anything other than what it is, her post comes at a time after PM Lee’s National Day Rally which stirred up quite the nationwide debate on the depreciating 99-year old leases of HDB flats.
Former Nominated Member of Parliament Calvin Cheng suggested what one could do in a Facebook post.
HO Ching shared a link Yesterday at 04:43
HDB Flat For Rent in Singapore | PropertyGuru Singapore
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Calvin Cheng 24 August at 21:36
Look. It’s very simple. If you think that the Government is cheating you, that you are really a tenant, and it’s a lease, it’s a rental, then for goodness sake, don’t buy a HDB flat. Since it’s the same as renting to you, then please go rent. Plenty of these around.
In fact, here is a link for you to go rent one: https://www.propertyguru.com.sg/hdb-apartment-for-rent/1
You are welcome.
Comparison Between HDB Flats and Private Property
Said Prime Minister Lee Hsien Loong in a speech during a book launch on Friday (24 Aug): “Many private properties are held on 99-year leases too, yet nobody argues that they are merely being rented.” We’re assuming that PM Lee is referring to condominiums – most condominiums have a 99-year lease, just like HDB flats. But there’s very stark differences between the two.
Let’s take a look at how HDB flats work for their “owners”:
- HDB flat-dwellers do not own their flat unit
- they essentially buy the lease on the flat unit that allows them to stay for 99 years
- the flat unit is owned by the HDB, and the land is owned by the SLA
- the flat-dweller does not own the unit, or any part of the common areas
- when the flat-dweller sells his unit, he is really selling the lease on the unit
- at the end of 99 years, the government reclaims that land and the flats (since it owns both)
- flat-dwellers should receive ZERO dollars in compensation since they no longer own the lease
- if the government wants, it can buy out the remaining lease through SERS (so far 4% of HDB flats qualify for SERS)
And that’s the situation for HDB “flat-owners”. Now, what it’s like for condominium-dwellers:
- condo-owners own their condo unit
- they have a share of ownership of the land that the condo is built on, and the common spaces
- that’s why condo owners have a strata title, and they can mortgage their homes (you can’t mortgage HDB flats)
- when the lease on the land is running down, condo owners can collectively apply to the SLA to top the lease back up to 99 years and pay for the lease top-up
- if SLA approves (after making them pay a hefty premium), they can continue living there
- if SLA does not approve, then it’s just too bad and out they go after 99 years with zero compensation
- or, they can vote to collectively sell their units and their share of the land to a private developer (en-bloc sale), who then tops-up the lease, does what it wants with the condo and land
See the difference?
Government to reach out to Singaporeans as it works out newly announced housing policies
Minister for National Development Lawrence Wong (left) and Minister of State Sam Tan at a public forum on Tuesday (Aug 21). FOTO: LIN ZHAOWEI FOR THE STRAITS TIMES
While details of the newly announced housing polices are being worked out, the Government will reach out to Singaporeans to gather feedback & understand their concerns to fine-tune the policies, said National Development Minister Lawrence Wong on Tuesday evening (Aug 21).
Speaking to the media on the sidelines of a public forum at shopping mall Bugis+, Mr Wong said the Government understands that Singaporeans are worried and unsure about what to expect, & have raised questions about the future of public housing, particularly as the building stock gets older and approaches the end of their leases.
A number of policies were announced early, said Mr Wong at the event organised by feedback unit Reach, to share the broad outline and roadmap of what people can expect about the future of housing.
‘It would be rash to rush into details now’: Lawrence Wong on new housing policy VERS
After the announcement of the new Voluntary Early Redevelopment Scheme (VERS) for HDB homes, some questions have emerged about it, including how much home owners might receive & whether all flats will be eligible for it.
“It would be rash to rush into details now when some of these things can only happen decades from now,” said National Development Minister Lawrence Wong on Tuesday (Aug 21) in an interview with Channel NewsAsia's Talking Point team.
“Let’s not get too excited about what is going to be in the VERS package or which flats will get VERS or speculate unnecessarily,” he said when asked about details of the scheme.
Minister Wong now says HDB flat an asset that will appreciate as Singapore prospers
It was reported in the media that at a public feedback forum organized by government feedback unit REACH yesterday (21 Aug), National Development Minister Lawrence Wong now said that a HDB flat sold on a 99-year lease is an asset that will appreciate as the country prospers.
This a fundamental tenet of Singapore's home ownership policy, he said.
"There is a high likelihood that over a period of time, if the economy does well, if incomes rise, then property values will appreciate together with the fundamentals of the economy, and your stake in the nation - your home - can also appreciate in value," he told the audience.
Many question arise with Minister Wong’s assertion that HDB flats are “good store of asset value”
HDB a ‘good store of asset value’ for those who plan ahead
I refer to the article “National Development Minister says HDB is “good store of value” – no mention of “asset enhancement”“.
The National Development Minister, Lawrence Wong, said in his post that “a 65-year-old elderly couple living in a 4-room flat with 55 years of lease remaining in Woodlands can sell their flat and right-size to a nearby 2-room Flexi flat with a 30-year lease. They can enjoy a Silver Housing Bonus of $20,000 in cash.” But according to HDB’s web site – those who have received a housing grant have to pay a resale levy of up to $55,000.
Moreover, according to Property Asia Direct, “you need to return the grants back into your CPF account when you sell the HDB flat, PLUS ACCRUED INTEREST over the duration of your occupation in the flat. This is on top of ALL the CPF monies used for your flat purchase (PLUS accrued interest). Hence, even if your HDB flat has appreciated in value, don’t be surprised when you are left with little or no cash proceeds when you sell your flat”.
Lawrence Wong explains how HDB flats is “good store of asset value”, netizens take issue with his explanation
Recently, National Development Minister Lawrence Wong blogged about how leasehold HDB flats would return to the state once its lease was up.
It’s not very surprising, because that’s the definition of leasehold.
The larger point Wong made was that not all flats would be guaranteed to be picked as part of the Selective En bloc Redevelopment Scheme (SERS) when the lease runs out.
Wong also revealed that only 4 per cent of HDB flats have been part of SERS since it was introduced in 1995.
Vers and HIP II – More snake oil from PAP: SDP
“PM Lee Hsien Loong’s suggestion of the Voluntary Early Redevelopment Scheme (VERS) and Home Improvement Programme (HIP) II is clearly a panicked response than a well-thought out policy.
It is plain that Mr Lee is reacting to National Development Minister Lawrence Wong’s bombshell admission that HDB flats will become worthless after their 99-year leases expire. Mr Lee said that under the HIP II, older flats reaching 60-70 years old will get a second round of upgrading. Singaporeans should remember that under the first round of HIP, the government made residents pay upwards of $10,000 for the upgrading.
These flats will have zero value in another 30-40 years when their leases expire. Why do HDB owners have to fork out more money just to see the value of their flats diminish?
99 year leasehold properties – Are HDB and condos one and the same?
Responding to PM Lee’s speech that 99 year leasehold applies to both HDB flats as well as private residential apartments, veteran architect Tay Kheng Soon pointed out that there was a key difference between the two types of properties. Writing in his Facebook, Mr Tay said:
- “Since the issue of redevelopment is topical it is necessary to differentiate condos and HDB flats since both are on 99 year leased land. In the case of private condos, many are on 99year leases but all the units have a strata title. A strata title defines the unit size and its undivided share of the land.
- “For example, lets say there are 100 units in the condo, therefore each unit strata owner has a 1/100 share of the land should the condo be sold en bloc to a new developer. Say there are 50 years left of the lease. The new developer pays to Singapore Land Authority (SLA) a top-up sum based on a formula to bring the lease back up to its original 99 year tenure status.
- Usually developers do en bloc purchases because Urban Redevelopment Authority (URA) has assigned increased plot ratio. This enhanced plot ratio is a privilege that has to be purchased. It is not an entitlement.
- The simple difference is one is a strata title and the other is only a lease even though both lands are 99 year leases. It will be interesting how the compensation will be computed in VERS.”
Time-Bomb or Nest Egg: Government Continues to Flip-Flop on the Value of Public Housing
Is your HDB flat a ticking time-bomb or a nest egg? Sorry, we aren’t sure either as the government continues to flip-flop on the value of public housing.
Common knowledge indicates that once a housing unit reaches the end of its lease, it gets re-acquired by the state. But Singapore’s late, esteemed former prime minister, Lee Kuan Yew, promised Singaporeans that the value of HDB flats will never fall – he even propagated it on live television.
So what are we to believe?
The ticking time bomb of the 99-year-leasehold HDB flats
A letter published in the Straits Times claimed recently that the promise of owning a 99-year-leasehold HDB (Housing & Development Board) flat as an investment for old age is no longer valid today. The letter writer, Ronnie Lim Ah Bee, pointed to the announcements by National Development Minister Lawrence Wong to bolster his claims.
Writing for his Ministry’s blog in March last year, Mr Wong asked HDB flat owners to not assume that all old HDB flats will become eligible for Sers (Selective En bloc Redevelopment Scheme). He said that “only 4% of HDB flats have been identified for SERS since it was launched in 1995”, and that “it is only offered to HDB blocks located in sites with high redevelopment potential”. About 70,000 flats (of the 1-million HDB flats) are more than 40 years old, and almost 10 percent of flats will face lease expiry in 50 years. The Minister’s announcement essentially means that such flats they will have zero value once it reaches 99 years and owners will have to vacate their homes. Most owners will see the land their flat was on being returned to the State at the end of the 99-year-leasehold.
The letter writer said that “many seniors who want to downgrade to Built-To-Order studio apartments for the elderly are in a fix as they are unable to sell their old flats”, and that many such seniors “stand to lose their deposits on their new flat if they cannot sell their old flat.”
The 99-year time bomb some Singaporeans are sitting on
Some 17 out of every 20 Singaporeans you see on the streets are likely to live in HDB flats. These public housing flats have a 99-year lease. If you got the drift, you will stay away from old flats, right?
If you bought the argument that no one in their right minds should be paying for premium prices for flats which are 40-year-old, you’d go for BTOs right? That’s all fine and well – until you have to retire yourself. Much of your CPF has been locked in paying the mortgage on your BTO flat. You will have to sell it if you want to ensure sufficient funds in your CPF.
So the question is – will you be able to sell your 40-year-old flat in the future to fund your retirement?
The value of HDB flats will be $0 at the end of the 99-year leasehold period
Most older owners of HDB flats have now come to accept that the value of their 99-year-leasehold property is not going to keep on increasing forever and ever
There are several government policy restrictions which suppresses the attractiveness of older HDB flats for buyers.
These are some restrictions:
- From 1 July 2013, CPF (Central Provident Fund) usage and HDB loan was restricted for purchase of flats with remaining lease less than 60 years.
- For flats that are 64 years old, banks are unwilling to extend loans to finance the purchase of these flats.
- For flats which are 69 years old (or less than 30 years of lease remaining), CPF money cannot be used for down payment or to service the monthly mortgage.
- From the 79th year onwards, the property has to be paid for in cash.
SINGAPORE’S HOMEOWNERS HAVE 99 PROBLEMS (AND THE LEASE IS NO 1)
As the oldest public housing flats near the halfway mark of their 99-year leases, owners grapple with the fear that what once seemed an astute investment now seems doomed to depreciation
Photographer Jeff Chouw, 41, lives in a public housing flat in Singapore that is as old as he is. But while that may sound quaint, the problem for Chouw is that with every passing year his lease is running out – along with the value of his property.
Singapore has long taken pride in its high home-ownership rates – of around 90 per cent – and its public housing scheme is so successful that flats can sell for more than S$1 million (US$720,000). But with the oldest flats nearing the halfway mark of their 99-year leases, many Singaporeans have been left fearing their investments will be for nothing when the homes return to the state.
In a country where 80 per cent of the population lives in public housing, such worries are hot-button issues with deep implications. Units similar to the flat Chouw bought in 2015 for S$376,000 – a 700 sq ft unit upgraded with an additional utility room 11 years ago, when it turned 30 – now sell for between S$250,000 and S$308,000. If this depreciation continues, Chouw plans to “go to the ballot box and put in a vote for the other party”.
Flat owners: What you must do before your 99-year HDB lease runs down
Don’t let your HDB lease reach its twilight without a plan. Credit: Kyle Leung
So, for those who hold on to their flats too long, finding a buyer in the resale market will be a huge problem. Banks seldom give out home loans once the remaining lease is 35 years or less, and there is restricted usage of CPF funds to buy units with less than 60 years of lease remaining.
Once the remaining lease hits 20 years, you basically have a dead flat walking. From then on, it’s not even possible to use the Lease Buyback Scheme. This means that if the owner of that flat is a retiree with no cash savings, he’s pretty much left to rely on measly room rental income, provided that someone would actually want to rent a place that old.
So what can you do about it? Besides ranting on Facebook and internet forums, here are some solutions that may actually help:
- Don’t rely on just your flat as a retirement asset
- Sacrifice unlimited choice of housing for a BTO flat
- Plan to move to a newer home, while there’s still more than 60 years on the HDB lease
- If you can afford it, and a 99-year lease worries you, just buy freehold
- Ultimately, awareness and pre-planning can make the 99-year HDB lease a minor problem
THIS ARTICLE BY RENOWNED SG ARCHITECT TAY KHENG SOON CLARIFIES THE FUNDAMENTAL DIFFERENCE BETWEEN A PRIVATE CONDO AND HDB FLATS. UNLIKE PRIVATE CONDOS, HDB LESSEES DO NOT HAVE ANY STRATA TITLES BECAUSE THEY DO NOT OWN OR HAVE ANY INTEREST IN THE LAND ON WHICH THE PROPERTY STANDS. IT THEREFORE SEEMS WRONG THAT HDB SHD ADD IN THE LAND COST WHEN CALCULATING THE PRICE OF ITS FLATS, SINCE HDB STILL FULLY OWNS ALL THE LAND AROUND THE PROPERTY. READ THE ARTICLE BELOW FOR CLEARER EXPLANATION:
Since the issue of redevelopment is topical it is necessary to differentiate condos and hdb flats since both are on 99year leased land. In the case of private condos, many are on 99year leases but all the units have a strata title. A strata title defines the unit size and its undivided share of the land. For example, lets say there are 100 units in the condo, therefore each unit strata owner has a 1/100 share of the land should the condo be enblocked to a new developer. Say there are 50 years left of the lease. The new developer pays to SLA a top-up sum based on a formular to bring the lease back up to its original 99year tanure status. Usually developers do enblock purchases because URA has assigned increased plot ratio. This enhanced plot ratio is a previlege that has to be purchased. It is not an entitlement. In the case of HDB flats 'owners' have only purchased a 99year lease. They have no share of the land unlike private condos sold under strata title. The simple difference is one is a strata title and the other is only a lease even though both lands are 99year leases. It will be interesting how the compensation will be computed in VERS.
by Tay Kheng Soon
An architect & NUS lecturer
> 3）开了几十年的气车，如今年纪大了，走路又一拐一瘸，搭公车有问题，车要报废了，入口税150%？再粗加号COE, 那有能力去买？再说买了车子还担心日常费用，最不服气的就是进出市区的收费，当年说是为了缓解塞车而设的ERP,如今“进出”市区，甚至离市区好远的“出”市区也收费，而且入市区的费用-可能高达每天每次6-9元，这已经和前一代的政府设ECP的原意不同了吧？
Cost of Housing in Global Cities
“Over the course of the last five years, house prices in major cities have increased by 35 percent on average," UBS Group AG said in a report on prospects for property bubbles in 20 territories, and ranked Hong Kong, Toronto, Munich and Vancouver most at-risk.
“Even for highly skilled workers, property ownership is now out of reach" in Hong Kong, where prices have risen about 10 percent annually in the period, according to the report.
New York, London, Geneva and Singapore rounded out the Top 6 in total costs, though there was minimal movement from a year ago in the top tier.
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