HDB flats approaching end of lease (MND – COS)

If the Government does not have any specific plans for flats when their leases expire, I think it should make this clear to the public, so that buyers can factor this in when choosing a resale flat, and they don’t pay too high a premium for older flats.

This speech today was a follow up to a Parliamentary Question I asked in January, regarding the value of HDB flats at the end of their 99-year lease. I will post the Minister’s reply next week once it is out on the Hansard.

———–
Madam,

Government leaders have, over the years, frequently told Singaporeans that their HDB flats are an asset which they can monetise during retirement. However, less frequent are the reminders that, as a flat approaches the end of its 99-year lease, its asset value will depreciate to zero.

While most Singaporeans know that their flats are on a limited lease, many assume that HDB will not let their assets become worth nothing, or that their flats will eventually go through an “en bloc” before their leases expire.

The Minister told me in a reply to my PQ in January that the selection of sites and the pace of SERS (the Selective En Bloc Redevelopment Scheme) will depend on factors such as their redevelopment potential, and the availability of replacement sites for rehousing, and other resources.

Can the Minister confirm whether all old flats will eventually be replaced through SERS before they reach their end of lease? If not, what proportion will be not be replaced?

Other than SERS, what are the Government’s plans for HDB flats that approach their end-of-lease? For example, will their leases get topped up, and will the topping up cost be borne by HDB, or the lessees?

There are now over 31,000 flats which are more than 40 years into their lease. I’m sure many young couples are still buying these resale flats, which would mean that the leases may end within their lifetimes.

If the Government does not have any specific plans for flats when their leases expire, I think it should make this clear to the public, so that buyers can factor this in when choosing a resale flat, and they don’t pay too high a premium for older flats.

Value of HDB flats at end of 99-year lease

All HDB flats are sold to Singaporeans on a 99-year lease. We are technically not home owners, but lessees. I asked the Minister for National Development, during the 20 January 2014 Parliament sitting, what the value of HDB flats would be once their leases expire. I also asked whether the pace of SERS — the Selective En Bloc Redevelopment Scheme — will be fast enough to replace the flats reaching the end of their lease.

All HDB flats are sold to Singaporeans on a 99-year lease. We are technically not home owners, but lessees.

I asked the Minister for National Development, during the 20 January 2014 Parliament sitting, what the value of HDB flats would be once their leases expire. I also asked whether the pace of SERS — the Selective En Bloc Redevelopment Scheme — will be fast enough to replace the flats reaching the end of their lease.

The Minister confirmed that the value of the flats will be zero at the end of their 99-year lease. He also indicated that the selection of sites and pace of SERS depended on factors including the site’s redevelopment potential. Implicit in what he said was that SERS is not a scheme intended solely to replace old flats reaching the end of their lease.

He revealed that there are about 31,000 flats which are more than 40 years into their 99-year leases. This number will grow larger each year. It remains to be seen what the Government’s plans are for lessees whose flats approach the end of their lease.

The full transcript of the question and answer are below.

—————-

Mr Gerald Giam Yean Song asked the Minister for National Development (a) how many HDB blocks are more than 40 years into their 99-year lease; (b) what will be the value of an HDB flat once it reaches the end of its 99-year lease; (c) what is the average number of flats undergoing redevelopment under the Selective En Bloc Redevelopment Scheme (SERS) each year for the past 10 years; and (d) whether the pace of SERS is fast enough to redevelop all HDB blocks before they reach the end of their lease.

Mr Khaw Boon Wan (The Minister for National Development): The Selective En bloc Redevelopment Scheme (SERS) is part of the Government’s estate renewal strategy for older estates. It allows intensification of land use and revitalises such estates through new developments. At the same time, it offers an opportunity for flat owners to buy a new replacement flat with a fresh 99 year lease.

In the last 10 years, SERS has benefitted the owners of about 18,000 flats. As the name suggests, the identification of suitable precincts for SERS is selective. The selection of sites and pace of SERS will depend on factors such as their redevelopment potential, and the availability of replacement sites for rehousing and other resources.

Currently, there are about 300 HDB blocks with 31,000 flats which are more than 40 years into their 99-year flat leases.

Like all leasehold properties, HDB flats will revert to HDB, the landowner, upon expiry of their leases. HDB will in turn surrender the land to the State.

[Source: Singapore Parliament Reports]

Parenthood Priority Scheme

If the goal of the PPS is to raise birth rates, then it might be necessary to also include married couples without children, because many of these couples may be waiting to get their own home before having kids. Can the Minister provide an estimate of when this backlog married couples with children is expected to be cleared, and when married couples without children can start to benefit from PPS?

This is a ‘cut’ I delivered in Parliament on 7 March 2013 during the Committee of Supply debate for the Ministry of National Development.

———–

In January 2013, the HDB introduced the Parenthood Priority Scheme (PPS) to give priority allocation for new flats to “first-timer” married couples with children. Under this scheme, 30% of BTO (Built-to-Order) flats and 50% of SBF (Sale of Balance Flats) flats will be set aside for this group.

I agree that Singaporean couples with children should get priority in flat allocation, because they not only have to house themselves, but also their children.

However, the proportion of flats set aside for all first-timers remains unchanged at 85% for BTO flats in non-mature estates . This means that other first timers, including married couples who do not have children yet, will effectively have a lower proportion of the flats set aside for them.

If the goal of the PPS is to raise birth rates, then it might be necessary to also include married couples without children, because many of these couples may be waiting to get their own home before having kids.

The Minister has said that once the HDB clears the backlog of first-timer married couples with children, the HDB can extend the PPS to married couples without children. Will this mean that all first-timer married couples—with or without children—will be allocated 30% of BTO flats and 50% of SBF flats, or will married couples without children have a separate allocation? I think more clarity on this will help prospective home buyers better plan their flat applications.

To get a sense of the size of the backlog, for the BTO launch in January 2013 during which PPS was first offered, what proportion of PPS applicants had unsuccessful applications for previous BTO launches?

Can the Minister provide an estimate of when this backlog married couples with children is expected to be cleared, and when married couples without children can start to benefit from PPS?

Lastly, will PPS be a permanent scheme or will it only be in place until the current backlog of flat applicants is cleared?

Pricing of HDB flats

Would HDB consider permanently delinking the price of new and resale flats, so new flat buyers are not at the mercy of resale flat prices? Could the Minister share with us what is the exact pricing formula used to string all these factors together to determine the selling price for new flats? More specifically, what is the formula used to calculate the discount or “market subsidy”?

This is a ‘cut’ I delivered in Parliament on 8 March 2013 during the Committee of Supply debate for the Ministry of National Development.

————–

The Minister said in February this year that the prices of new HDB flats have been “delinked” from resale flat prices by varying the quantum of discounts applied to the selling price. He said that HDB will continue with this pricing policy for as long as “property remains hot”.

What is the criteria he will use to determine if the housing market is cool enough, resulting in the prices of new and resale flats being “linked” once again?

Would HDB consider permanently delinking the price of new and resale flats, so new flat buyers are not at the mercy of resale flat prices, which the Minister has said he is not able to control?

I understand from the Minister’s earlier replies in this House are that the factors used to determine the selling price of new flats include the typical household income of the families who buy them, the market price of similar resale flats in the vicinity and the attributes of the flats including their size and location. He said that HDB applies a discount to this price and gives housing grants to eligible buyers.

Could the Minister share with us what is the exact pricing formula used to string all these factors together to determine the selling price for new flats?

More specifically, what is the formula used to calculate the discount or “market subsidy”?

For future launches, could HDB publish the price of each new flat before and after the discount, so that home buyers will have a clearer picture of the market price of the new flats, and discounts that they are receiving from HDB?

‘Underwhelmed’ by Town Council report

Residents are personally affected by their Town Councils’ performance. If they feel that their MPs are not performing, they would have voted them out long ago. But the two opposition MPs have been returned to office again and again for the last 18 to 25 years–longer than any other PAP MPs save one. Why does MND suddenly feel the urge to tell residents what they should think of their TCs?

It is hard to contain one’s scepticism when reading the news about the Town Council Management Report (TCMR).

The Straits Times reported on Friday:

The two best performers are Ang Mo Kio-Yio Chu Kang led by Prime Minister Lee Hsien Loong, and Tanjong Pagar headed by Minister Mentor Lee Kuan Yew, according to the government’s Town Council Management Report.

The two worst performers are run by the opposition: Hougang, by the Workers’ Party’s Low Thia Khiang, and Potong Pasir by the Singapore People’s Party’s Chiam See Tong.

Isn’t it interesting that the two Town Councils (TCs) that “top” the report are the ones “headed” by the PM Lee and MM Lee, and the two “worst performers” are those headed by opposition MPs? (Technically the two Lees do not head their Town Councils. They have delegated that less glamorous job to their backbencher MPs.)

Continue reading “‘Underwhelmed’ by Town Council report”

WP Forum Speech: We can make public housing affordable again

This is the speech I delivered at the Workers’ Party public forum, Youthquake, on 15 May 2010.

——————-

Youthquake speakers

The drastic increase in the cost of public housing over the past 20 years, and in particular the last two years, has caused a financial squeeze for many Singaporeans, particularly young couples who desire to own their own homes when they get married.

In just the last two years since 2007, the median price of resale flats has risen almost 44 per cent.[1] This has far outpaced inflation and wage increases. The resale flat cash-over-valuation (COV) has shot through the roof. In the fourth quarter of last year, the median COV was $24,000[2].

Continue reading “WP Forum Speech: We can make public housing affordable again”

Low Thia Khiang urges Govt to “seriously look” into housing options for homeless

How can we aspire to be a First World country with a world class public housing programme if we have homeless citizens camped out in public parks? The HDB’s proposition for those who are unable to purchase a HDB flat or to qualify for a HDB rental flat is to seek help for accommodation from family members. The HDB should know well that with the size of HDB flats, most families do not have a spare room to accommodate another distressed close family member’s family. The end result would be strained relationships between family members which could adversely impact the family structure as a basic unit of our society. Is the creation of more strained family relationships desirable?

This was a cut delivered in Parliament on 5 March 2010 by Workers’ Party Secretary-General Low Thia Khiang during the Committee of Supply debate, on the budget for the Ministry for National Development (MND).

————–

It was reported by the Straits Times that the number of homeless people has doubled. When I read the report, I was thinking whether this is more a social problem or a housing problem?

My own experience from Meet-the-People sessions is that it may be less a social problem and more of a housing problem. This is because while many of these cases of residents who lost their homes do involve dysfunctional families, quite a number are still financially viable and could afford to stay together as a family if they could afford the rental of a house. Many ended up without a home because of strict HDB rules on rental housing and obtaining HDB subsidised housing loans.

Continue reading “Low Thia Khiang urges Govt to “seriously look” into housing options for homeless”

Grassroots advisers are not accountable either

While opposition MPs have no legal obligation to carry out national programmes on the Government’s behalf, neither do the grassroots advisers, since they are just volunteers, and not paid officers of the Government. On the other hand, elected MPs are accountable to their constituents.

This was a letter I sent to the Straits Times on 28 October, which the paper declined to publish.

———-

I refer to the letter, “Advisers and MPs have different roles” (Straits Times, Oct 27), by Mr Lim Yuin Chien, press secretary to the Minister for National Development.

Mr Lim stated that “Opposition MPs cannot be appointed advisers, because they do not answer to the ruling party”.

The adviser to grassroots organisations is appointed by the People’s Association (PA), a statutory board under the Ministry of Community Development, Youth and Sports. The adviser therefore does not answer to the ruling party but to PA. It appears Mr Lim has confused a political party with a non-partisan statutory board.

Continue reading “Grassroots advisers are not accountable either”

Reducing cost of public housing: Some policy suggestions

The drastic increase in the cost of public housing over the past 30 years has caused a financial squeeze for many Singaporeans, particularly young couples who desire to own their own homes, and families forced to downgrade because of financial difficulties.

The drastic increase in the cost of public housing over the past 30 years has caused a financial squeeze for many Singaporeans, particularly young couples who desire to own their own homes, and families forced to downgrade because of financial difficulties.

A three-room resale flat in the prime area of Tiong Bahru used to cost just $6,000 back in 1975. Now three room flats in that area are selling for as much as $322,000! This 5,266% price increase is simply mind-boggling! It has far outpaced inflation and increases in salaries over the past 30 years.

The cash over valuation (COV) that buyers are now having to pay is also shooting through the roof, and threatens to get even higher when the casino resorts open next year.

National development minister Mah Bow Tan claimed that one third of resale flats are “transacted at or below” COV. This claim is almost laughable if you ask any home buyer or real estate agent.

Continue reading “Reducing cost of public housing: Some policy suggestions”

Govt concedes argument with WP and Singaporeans

The opposition MPs in Hougang and Potong Pasir, who have been serving their residents for 18 years and 25 years respectively, have a far more distinguished track record of “concrete actions” serving their residents than the Johnny-come-lately PAP challengers, who are very good at plastering their faces all over the ward and claiming credit for things they never did.

Since the ill-advised announcement by the so-called PAP “grassroots advisers” of Hougang and Potong Pasir about the Lift Upgrading Programme (LUP) in the two opposition-held wards, the Minister for National Development has had to answer three letters to the Straits Times to justify their stand on the issue. Two of those letters were in response to Workers’ Party leaders Low Thia Khiang and Sylvia Lim, and one was to a public-spirited Singaporean, Muhammad Yusuf Osman.

In his latest letter (copied below), the spokesman of National Development Minister Mah Bow Tan wrote: “We do not expect the Workers’ Party to accept these basic facts, and we will agree to disagree.”

In saying this, the Minister is basically conceding that his argument holds no water, and he has no more points to add that could better justify the PAP’s politically-motivated stand.

Continue reading “Govt concedes argument with WP and Singaporeans”