Your HDB ticking time-bomb lease – there is a solution

Singapore Democrats

HDB’s CEO Dr Cheong Koon Hean said in a forum last week that buyers of resale flats should pay less for older flats because these flats have a lease of 99 years.

This is bad news for Singaporeans who paid premium prices for the flats because we were promised that the value of our flats would appreciate over time. Moreover, many used our CPF savings to service the housing loans.

Because of the government’s asset enhancement promise, retirees are now hoping to monetise the flats to fund our retirement. But what is happening now is that as the flats age, their resale values drop putting retirees in a financial nightmare.

Such a development, however, does not have to end in disaster. There is a solution and it is found in the SDP’s alternative housing policy.

What is this alternative?

It is the Non-Open Market (NOM) flat scheme that the SDP proposed in 2012. Under our policy, the prices of new flats do not include land cost. That is, the price of each flat reflects only labour, administrative and material costs.

How does such a scheme help Singaporeans?

By excluding the cost of land in the prices, BTO flats will cost half of the current prices or even less. This means that our housing loans will be smaller which will free up capital for other uses. At the very least, we will not have to use all of our CPF savings for our flats.

Is this fair?

The land belongs to the people, the government pays nothing for it. Why should it charge Singaporeans so much money for something that it doesn’t pay for? Remember, the government is only the caretaker of our land, not the landlord or developer. It is not proper for it to make money from public housing at the expense of the people.

What protection does the NOM scheme offer?

As the name suggests, NOM flats will not be allowed to be re-sold in the open market. It can only be sold back to the HDB at the purchase price minus the value of the consumed lease. Home owners cannot make money from NOM flats but neither will they lose money as is the current situation.

But what about existing homeowners?

People who already own flats have a choice. They can:

1. Convert their flats to NOM status. If they choose this option, the government will return them the difference between the original price of their flats (as purchased from the HDB) and the price of an equivalent NOM flat, subject to a cap.

2. Choose the status quo and be able to resell their flats in the open market. This means that they are subject to the vagaries of the market. On this score, the future doesn’t look bright.

What’s the rationale behind the SDP’s policy?

Our homes are for bringing up our families and they provide a secure roof over our heads when we retire. They are not commodities for speculating and trading. If we treat public housing like a commodity, we end up spending our CPF savings on flats that we cannot later sell at a profit to fund our retirement.

Experts have spoke highly of our NOM proposal. You can read our full policy Housing A Nation here.

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