Written by: Benjienen Toledo
Are you aware that nearly 10% of today’s public housing will face lease expiry (SERs) within the next 50 years?
What is SERS?
Selective En bloc Redevelopment Scheme (SERS) is a Housing & Development Board (HDB) Scheme, which 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.
Are all Flats Eligible for SERS?
National Development Minister Lawrence Wong cautioned homebuyers not to assume that all old Housing Board flats will be automatically eligible for SERS. The government continues to maintain the strict selection criteria for blocks eligible for SERS. Wong noted that only 4% of HDB flats have been identified for SERS since it was launched in 1995.
SERS is offered only to HDB blocks located in sites with high redevelopment potential. These are typically sites where the land has not been well utilised. It is also subject to the availability of suitable replacement sites for residents and the Government’s financial resources.
Are you buying a SERS?
When buying a flat announced for SERS, you must also meet the eligibility conditions to buy a new flat on 99-year lease from HDB.
Your sellers can only grant you the Option to Purchase for the resale application 1-month after the SERS announcement has been made. Likewise, the HDB will also only accept resale applications for SERS flats 1 month after the SERS announcement is made.
Conditions when buying a SERS flat
- You cannot rent out or sell the SERS flat
- HDB will treat buying a replacement flat as 1 separate housing subsidy
- First-timer SC/ SPR households who take up the replacement flat have to pay a $10,000 premium on top of the purchase price
- Should you decide not to take up a replacement flat, you will receive SERS compensation and your SERS flat will be surrendered to the Collector of Land Revenue
- You may rent out the whole replacement flat after you have physically occupied it for at least 5 years from the date of key collection
What are the Compensation and Rehousing Benefits?
HDB will pay you the compensation based on the market value of your flat as at time of SERS announcement, and some reasonable expenses to help you move.
Here’s the formula to calculate your balance compensation:
SERS Compensation- Property Tax Payment- Discharge Outstanding Housing Loan- Refund of CPF Amount Used (with accrued interest)
Before signing the Option to Purchase to buy a SERS Flat, it is strongly recommended that you confirm the eligible rehousing benefits with the seller. You can ask the sellers to give you a copy of their certificate of eligibility for resale, it will indicate the rehousing benefits that are transferable to you.
Once you have bought your SERS flat, you will enjoy the same rehousing benefits the seller was entitled to.
Should you buy old flats in hopes for SERS?
According to Minister Lawrence Wong, SERS remains a highly selective scheme, with only 80 sites chosen since the scheme started in August 1995.
For home owners forking out high amounts for aging flats in hopes of
cashing in on SERS, Mr. Wong suggested that buyers need to do their due diligence and be realistic when buying flats with short leases. For young couples with plans for a much longer future, it is good to take note of Central Provident Fund (CPF) and HDB loans restrictions on purchase of flats with a remaining lease of less than 60 years. When an HDB flat remaining lease is less than 35 years, bank loan restrictions will kick in. Finally, when the flat reaches 69 years, CPF savings cannot be used to finance the mortgages.
but… Old flats are great!
Indeed. Despite all that restrictions, statistics have shown that old flats hold their value very well. This is correlated with the fact that many old flats are located in prime locations and mature estates. In fact, many old flats are also more spacious and have great configurations that would be amazingly refreshing for a family.
At Ohmyhome, we have seen couples who enjoyed a bigger space and better location with the same budget when they purchase old flats. So we say, since you have all the options here straight from direct owners and our very own exclusive listings, why not just browse, schedule a viewing and see for yourself what suits.
Afterall, home is not a place, but a feeling!
- Alternatives in Solving Expiring HDB Lease
- Changes in Buyer’s Stamp Duty Rates
- Residential Property Market Measures: TDSR, SSD and LTV
- Government Schemes for Seniors Trying to Sell Old Flats
- Ohmyhome Extends Help to Elderlies Facing Problems Selling Old Flats
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.