Gen-Z Muses: 99-Year HDB Lease

Thanks to comments by the Minister of National Development, Mr Lawrence Wong, in the past year, that one cannot assume their flat will be eligible for the Selective En-bloc Redevelopment Scheme (SERS), as well as news stories on the impending lease expiry of the HDB homes in Geylang, the traditional notion of a HDB flat being a constantly appreciating asset has been challenged. This sparked debates as to what the ramifications of running the lease out would be. Most Singaporeans previously assumed that they would be able to recoup a substantial portion of the market value of their flat, or at the very least, not be left homeless and “destitute” as a result of living in a HDB flat till its lease expired.

This notion in the population that HDB flats are a constantly appreciating asset was, at least in part, inculcated by the Government of the independence era. It led some to view their HDB flats as something which can eventually be utilized as a source of retirement funds. It could be argued that this approach by the Government was necessary at that time, to further highlight to the populace that as a result of home ownership, they had a stake in Singapore’s eventual success. This view was seen put forth by then Prime Minister Lee Kuan Yew, when he said: “My primary preoccupation was to give every citizen a stake in the country and its future. I wanted a home-owning society.”

Throwing aside concerns on who is responsible for this notion, there are certain things which most can, should and probably do understand, though some less than others.

First things first, the sheer length of the 99-year lease means that an individual practically owns the property, as he is highly likely to outlive it. This assumes that he gets his flat when he is 30 years old, the median marriage age for males in 2015. (unless his flat is a resale flat with a lease lesser than 60 years, which is currently not widespread).

However, even then, certain concerns surface. For example, if that individual is to bequeath the property to his offspring, there may not be much left on the lease for it to be of much financial use to them. As Singapore continues to mature, it encounters new sets of challenges which spark debates such as the current one over the 99-year lease we have currently, making this concern entirely legitimate. For this, there are a couple options at the moment, such as the Lease Buyback Scheme, which can be done before the aforementioned individual has passed on, whereby a certain portion of the lease is returned to the government in return for a lump sum. A newly introduced measure, the Voluntary En-bloc Redevelopment Scheme (VERS) , is also another avenue for homeowners to escape the disadvantages of living in the flat till the expiry of its lease. That being said, there definitely have to be more options, preferably creative, provided by the Government to deal with the rising concerns regarding the issue. The solutions proffered during the 2018 National Day Rally seem to be safe adaptations of pre-existing solutions (VERS being inspired by SERS)

Additionally, in cases of the lease expiring before the owner, the 99-year lease, does nudge the individual’s offspring to find new accommodation. Being young, it is likely that they will not mind moving to somewhere that is perhaps more suitable for their children to grow up. Then again, there comes the concern of whether they might even be able to afford new housing. This concern is somewhat allayed by the fact that the Government has recently put in place and strengthened cooling measures that help to regulate prices, at least in the private housing market. In the public housing domain, they have put in place certain schemes such as the Total Debt Servicing Ratio (TDSR) to better help prospective homeowners to manage the finances, especially in relation to items with large reoccurring bills. Thus, prospective homeowners do not need to worry as much.

All in all, while there remains much to be done to deal with the issue surrounding the 99-year lease and by extension, housing as a whole, the main challenge that has to be tackled here is the mindset change that needs to happen in the populace. With Singapore recently passing the 50-year mark, Singaporeans from all walks of life have to come to terms with new realities and circumstances. As long as we are able to do so, I believe that the housing issue, though perennial, is something that we as citizens, with the Government, can find solutions to deal with. A new normal just takes some getting used to.

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