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Minister Lawrence Wong’s Comments: How the Story Unfolded

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Photos taken from Mr. Mah Bow Tan and Minister Lawrence Wong’s Facebook

It started before GE 2011 when then Minister of National Development Mah Bow Tan said that he was proud of HDB – an asset enhancement policy that grows in value over time. However today, aging 99-year lease flats seem to be a contentious topic, what has changed? Let’s take a look back on the history of how the story unfolded.

1990

Prime Minister Goh Chok Tong introduced the “Asset Enhancement” policy, which was supposed to help enhance the prices of HDB flats for Singaporeans.

1995

Selective En bloc Redevelopment Scheme (SERS), a Housing & Development Board (HDB) Scheme was launched. This renews our older housing estates. If you are a SERS resident, you will get the opportunity to move to a new home with a new 99-year lease and continue living close to your current neighbours. SERS flat owners will also be given a package comprising compensation and rehousing benefits.

2010

Prime Minister Lee Hsien Loong said, “Provided Singapore continues to do well, our flats will maintain their value, and Singaporeans can enjoy an appreciating asset.” This was pertaining to the continuation of the “Asset Enhancement” policy.

2011

National Development Minister Mah Bow Tan statement, “We’re proud of the asset enhancement policy. It has given almost all Singaporeans a home of their own… that grows in value over time.”

2017

15 March – Chinese daily Lianhe Zaobao report highlighted the high prices of several short-lease HDB flats in the resale market.

24 March – The new Minister for National Development Lawrence Wong’s public statement on a blog post in response to the 15 March report said, “Only 4% of HDB flats were redeveloped through SERS since 1995.” Minister Wong noted that the vast majority of flats, will be returned to HDB when their 99-year lease run out without any compensation.

Minister Wong’s subsequent post assured home owners that leasehold properties are still a good store of asset value, so long as one plans ahead and makes prudent housing decisions.

Minister Wong cautioned that no one should be under the illusion that the value of an HDB flat will increase ad infinitum. After all, Central Provident Fund usage and HDB loans are restricted to the purchase of flats with a remaining lease of less than 60 years.

20 June– The first time a residential plot of land has reached the end of its lease. Singapore Land Authority officers explained to the 191 homeowners along Geylang Lorong 3 the lease expiry process, which means that owners have to vacate their property – in this case, by Dec 31, 2020 – with no compensation.

2018

17 May – Minister Lawrence Wong said in Parliament, “There is still value in older HDB flats which can be unlocked for retirement.”

Minister Wong He added, “So the transacted price depends not just on length of remaining lease, clearly, but also many other attributes,” adding that factors like location, storey height, and the condition of the flat are all relevant.

Minister Wong concluded, “We will continue to monitor market trends closely and make use of various policy levers to ensure a stable and sustainable property market,” giving assurance that the Government will continue to provide affordable and quality homes for all Singaporeans, both now and in the future.

August 19 – During the National Day Rally, Prime Minister Lee Hsien Loong reiterated that SERS is one option, but it is a very limited scheme. He introduced Voluntary Early Redevelopment Scheme (VERS), a new scheme planned to redevelop more old HDB flats before leases end.

With VERS, the government can buy back flats that are 70 years old and or more, subject to residents’ votes. Residents will receive compensation, but terms will be less generous than SERS. The government will study the affordability of the plan which will not begin for another 20 years.

August 20 – Public responded that “at least now, owners who have old flats know that there is some future … You have options now instead of staying in your flat till the end.”

August 21 – Minister Wong said, “Let’s not get too excited about what is going to be in the VERS package or which flats will get VERS and that we should also avoid speculating in the market hoping for a big payout at the end of the day”, adding that the Government will try its best to manage expectations.

Part of the rationale for introducing VERS is to allow more HDB households to benefit from redevelopment before their 99-year leases run out. The issue of lease expiry has been a cause for concern among some home owners recently, and Mr Wong revealed that the Government has been looking into the matter for the past two years.

Fun Thought?

If 4% of HDB flats have been identified for SERS since it was launched in 1995, based on 1 million HDB flats, this equates to around 40,000 flats identified for SERS in 23 years. Interesting enough, currently, there are about 70,000 flats that are more than 40 years old, with remaining leases of 0-59 years.

If we base off the rate that 40,000 flats goes for SERS every 23 years, would this mean that all or most of the 70,000 flats would qualify for SERS or VERS over the next 46 years as well?

Sources: The Straits Times (2017 Mar), Ng Jun Sen (2017 Jun), Rachel Au-Yong (2017 Dec), Correspondent (2018 Apr), Wong Pei Ting (2018 Jun), Channel NewsAsia (2018 Aug), Channel NewsAsia (2018 Aug), Channel NewsAsia (2018 Aug), Channel NewsAsia (2018 Aug)

While the Information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact on the accuracy of the Information. The Information may change without notice and Ohmyhome is not in any way liable for the accuracy of any information printed and stored or in any way interpreted and used by a user.

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