HDB F LATS : ARE WE OWN­ERS OR TEN­ANTS?

With 80 per cent of Sin­ga­pore­ans living in HDB flats, this ques­tion has hit un­com­for tably close to home, judg­ing from the heated de­bate on­line. We sur vey a spec­trum of home buy­ers for their views.

Home & Decor (Singapore) - - Property -

Spurred by a news re­port about the Govern­ment tak­ing back 191 pri­vate ter­race homes in Gey­lang af­ter their 60-year leases run out in 2030, The Strait­sTimes’ reader Larry Leong wrote a let­ter to its fo­rum page on June 24, 2017. He called for greater clar­ity on the is­sues re­gard­ing lease­hold prop­er­ties as – while he was ap­ply­ing to lease out his HDB flat – the Hous­ing Board re­ferred to him as “tenant”, and his po­ten­tial tenant as a “sub-tenant”. He thus ques­tioned: Are HDB dwellers ten­ants or real home­own­ers for 99 years?

A HDB spokesman replied: “Flat own­ers en­joy rights to ex­clu­sive pos­ses­sion of the flat dur­ing the ten­ure of the flat lease. They can sell, let out, and ren­o­vate their flats, within the guide­lines spec­i­fied in the Lease and Hous­ing and De­vel­op­ment Act.” In ad­di­tion, each HDB flat owner’s name is recorded in the ti­tle deed, with the orig­i­nal kept with the Sin­ga­pore Land Au­thor­ity, as part of the cen­tral and com­pre­hen­sive record for all prop­er­ties in Sin­ga­pore. This con­firms that the buyer is in­deed an owner, says the HDB, clar­i­fy­ing that the let­ter writer had mis­used the term “tenant”. On its web­site, home pur­chasers are “flat own­ers”; “ten­ants” re­fer to those who rent pub­lic rental flats from the HDB.

This ex­pla­na­tion did not go down well with many on­line denizens, who were al­ready feel­ing jit­tery about Min­is­ter for Na­tional De­vel­op­ment Lawrence Wong’s re­cent warn­ing against shelling out big money for very old flats in hope of strik­ing the Se­lec­tive En bloc Re­de­vel­op­ment Scheme (Sers) lottery.

To date, only 4 per cent have been iden­ti­fied for Sers to HDB blocks lo­cated in sites with high re­de­vel­op­ment po­ten­tial. Most flats will be re­turned to HDB when the leases run out, and the land even­tu­ally to the State.

The ac­cu­mu­lated “bad news” led many crit­ics to com­plain that de­spite pay­ing hun­dreds of thou­sands of dol­lars (or even a cool mil­lion) for their HDB flat, it doesn’t ac­tu­ally be­long to them. Some ra­tio­nalised that this is the norm for any type of lease­hold hous­ing, be it pub­lic hous­ing or pri­vate con­do­mini­ums on 99-year leases. Oth­ers vented their anger at the Govern­ment. As we know, a vo­cal on­line mi­nor­ity may not al­ways be rep­re­sen­ta­tive of most Sin­ga­pore­ans, so we hit the ground to poll some home pur­chasers. Doris Tan, 43, co- owner of a four- room re­sale flat in Cle­menti Do you think we’re flat own­ers or ten­ants? I think we are lease-own­ers, but I don’t see my­self as a tenant as I en­joy the right to sell my flat as I wish. The term “home­owner” is used in Sin­ga­pore as a re­sult of the Govern­ment’s con­stant re­minder that we are one of very few coun­tries with 80 to 90 per cent home­own­er­ship. That is tied to how a huge chunk of our monthly pay is un­touch­able, but that’s an­other story. Do you think your flat is a wor­thy as­set? Yes, be­cause it is the big­gest pur­chase I have and will ever make. I didn’t profit from my pre­vi­ous two flat sales as they were made dur­ing down­turns. But it was all right, be­cause I was also buy­ing dur­ing down­turns when prop­erty was cheaper. Thus, I took a smaller bank loan.

What do you do to “pro­tect” your in­vest­ment? I am re­al­is­tic about the fact that whether HDB or pri­vate, a 99-year lease will run out ul­ti­mately. But the Govern­ment will as­sist af­fected res­i­dents in en­sur­ing a roof over their heads. Al­ways buy­ing newer flats to safe­guard this sit­u­a­tion is not a good so­lu­tion. These may be flats in a worse-off lo­ca­tion, which will then bring day-to-day stresses like long trav­els to work and school. I feel that my cur­rent home is the best buy of my three flats so far, even though it is older than my pre­vi­ous home in Choa Chu Kang.

Just a thought: When Min­is­ter Lawrence Wong spoke about high re­sale prices and 99-year leases, he was ap­par­ently try­ing to en­cour­age buy­ers to be pru­dent. But could it also be a way to move the BTO flats, or to jus­tify the high pric­ing of new HDB flats in ma­ture es­tates? Elaine Toh, 53, owner of a new three- room flat in Ghim Moh Do you think we’re flat own­ers or ten­ants? Com­pared to other coun­tries, we are not “home­own­ers” ac­cord­ing to the com­mon un­der­stand­ing of that term. I read an­other let­ter about how it is some­what mis­lead­ing to term HDB buy­ers as “home­own­ers” rather than “lease own­ers”, since home­own­ers own the land outright and never have to re­turn it or pay rent on it, while lease­own­ers ex­clu­sively pos­sess the flat for only a spec­i­fied time, af­ter which the flat re­turns to the State for free. It is the dif­fer­ence in the definition of “landowner” that seems to be the prob­lem. Do you think your flat is a wor­thy as­set? Yes. My pre­vi­ous two-room re­sale flat at Tan­glin Halt was cho­sen for Sers and was val­ued at nearly $300,000. I bought my new three-room flat at Ghim Moh through the Sale of Bal­ance Flats ex­er­cise for $320,000. With the $15,000 grant from the Govern­ment, the prices come close, although ren­o­va­tion was a large ad­di­tional cost. What do you do to “pro­tect” your in­vest­ment? I haven’t thought about this, but I do not see my­self af­ford­ing re­sale flats ever again – and def­i­nitely not free­hold prop­erty!

While the cost of HDB flats is much too high (mainly be­cause the qual­ity has de­te­ri­o­rated), we have to ac­knowl­edge that the Govern­ment’s ef­forts in hous­ing our pop­u­la­tion has been largely suc­cess­ful over the decades. How­ever, things change and we now face a prob­lem akin to the sit­u­a­tion in Hong Kong and Ja­pan. Com­pared to West­ern de­vel­oped na­tions, home own­er­ship here is much harder, or even unattain­able, if we go by the definition that home­own­ers never have to give up their land. The real issue is this: How will the next gen­er­a­tion re­alise their dream of own­ing their own homes, with these sky­rock­et­ing prices? It’s a valid con­cern and the Govern­ment hears it. Per­haps it will change some poli­cies. Oth­er­wise, the pop­u­la­tion will prob­a­bly shrink fur­ther. Tang SH, 52, shop­ping for an ex­ec­u­tive apart­ment in Bukit Pan­jang Do you think we’re flat own­ers or ten­ants? I have mixed feel­ings, like we are nei­ther here nor there. Do you think your flat is a wor­thy as­set? Yes. I paid $29,000 for my first three­room re­sale flat in 1989, and sold it 30 months later at $79,000. My next two homes, a four-room flat and a five-room room flat, were sold at a smaller profit, as I had spent a large sum on ren­o­va­tion. How­ever, I ben­e­fit­ted from a CPF grant of $50,000 be­cause my last flat was near my par­ents’. Af­ter mov­ing to and sell­ing three other pri­vate prop­er­ties, I’m now down­grad­ing to an Ex­ec­u­tive Apart­ment for my re­tire­ment.

What do you do to “pro­tect” your in­vest­ment? Hon­estly, ameni­ties and prox­im­ity to my fam­ily are more im­por­tant than the flat’s age. The unit I’m in­ter­ested in is 28 years old and mar­keted at $650,000. I viewed a newer 18 year-old unit, but didn’t like that it is smaller and much more ex­pen­sive. But I do won­der, will I get back even 70 per cent of what I paid if I were to sell the flat in 20 years? If the cur­rent pol­icy con­tin­ues, my chil­dren sug­gest that I sell within the next 10 to 15 years while the flat still holds its value, and stay with them. Diana Daisy Lau, 27, shop­ping for her first four- room re­sale flat in Bukit Pan­jang with her fi­ance Do you think we’re flat own­ers or ten­ants? It’s more like leas­ing. What we are buy­ing is the 99-year lease of the flat, which may not even be a full 99 years, be­cause the Govern­ment has the right to en bloc the build­ing. The land deed still isn’t ours. Do you think your flat is a wor­thy as­set? It is a wor­thy in­vest­ment rather than an as­set, pro­vided we have the ca­pac­ity to buy and sell af­ter five years to profit from it. What do you do to “pro­tect” your in­vest­ment? I be­lieve most Sin­ga­pore­ans would like to own free­hold land some­day, but the soar­ing prices make it im­pos­si­ble for the ma­jor­ity of us. I don’t think the Govern­ment should sim­ply ex­tend the lease of HDB flats; this is to en­sure that the old build­ings are safe to live in, and also for pro­gres­sion and de­vel­op­ment’s sake. But they could try ad­just­ing the hous­ing poli­cies or own­er­ship poli­cies. Jes­sica Sim, 39, owner of her first five- room flat in Jurong East Do you think we’re flat own­ers or ten­ants? We’re lessees. The Govern­ment has drilled the idea of home own­er­ship in Sin­ga­pore­ans and it was a very suc­cess­ful na­tion-build­ing no­tion. My par­ents’ gen­er­a­tion ben­e­fit­ted from it when they bought cheap and sold high. Do you think your flat is a wor­thy as­set? I thought it was when I bought my now 34-year-old flat for $568,000 in 2013. I saw how oth­ers around me en­joyed gains on their ear­lier in­vest­ments. I’d felt as­sured about buy­ing an older flat as the Govern­ment had sold us the no­tion of our flat as an as­set. But now that Min­is­ter Lawrence Wong has said that not all old flats will be se­lected for Sers, what will hap­pen to the ma­jor­ity of us who bought flats that are over 30 years old? The Govern­ment needs to even­tu­ally ad­dress this or it will be a grow­ing prob­lem. It will worsen if the econ­omy is not grow­ing and your as­set be­comes a loss. What do you do to “pro­tect” your in­vest­ment? No plans yet. I just know it’s a tick­ing bomb. I feel stuck. I was sin­gle when I’d bought my flat and thus didn’t qual­ify to buy a two-room Build-to-Or­der (BTO) flat even if I wanted to, as I would have busted the in­come ceil­ing. The newer re­sale ones were priced out of my bud­get. I don’t ex­pect to make much profit the way the ear­lier buy­ers did. Per­haps I can rent it out to cover my bank loan. It’s no use for me to aim for a free­hold house ei­ther, even I can af­ford it. In Sin­ga­pore, if the Govern­ment wants to ac­quire your prop­erty, it re­ally doesn’t mat­ter if it’s free­hold or not. Pauline Wee, 40, owner of her first four- room re­sale flat in Boon Keng Do you think we’re flat own­ers or ten­ants? Most days, I think I own it, at least for the fore­see­able lease­hold pe­riod. But when I re­flect on it, it’s clearly a lease. Do you think your flat is a wor­thy as­set? Yes. Lease­hold is the pre­dom­i­nant struc­ture of our prop­erty mar­ket even for pri­vate prop­er­ties, so the risk of own­ing lease­hold prop­er­ties is nor­malised. I paid $640,000; I’m con­sid­er­ing sell­ing it af­ter hit­ting my Min­i­mum Oc­cu­pa­tion Pe­riod soon. Whaty­our in­vest­ment?do you do to “pro­tect” Noth­ing spe­cial, ex­cept not to buy a prop­erty that was too old due to po­ten­tial loan re­stric­tions, es­pe­cially if I want to re­sell. Even then, it was ad­mit­tedly not a key con­sid­er­a­tion. Thus far, de­vel­op­ers have been able to top up leases and re­ju­ve­nate projects. As a young 52-yearold na­tion, no­body has seen a case where a lease is ac­tu­ally ful­filled. I be­lieve that in time, pro­vi­sions on how to re­ju­ve­nate leases to pro­tect the val­u­a­tion of very old prop­er­ties may need to be in­tro­duced. Oth­er­wise, in 10 to 20 years, there will be a batch of flats that can­not be flipped any­more.

( A FLAT) IS A WOR­THY IN­VEST­MENT RATHER THAN AN AS­SET, PRO­VIDED WE HAVE THE CA­PAC­ITY TO BUY AND SELL AF­TER FIVE YEARS TO PROFIT FROM IT.

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