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In a dialogue session with Singaporeans,Minister for National Development Mr Khaw Boon Wan said that the HDBlost “hundreds of millions” of dollars every year.$CUT$
This is counterintuitive toSingaporeans who pay hundreds of thousands of dollars for theirflats, many of whom take out huge housing loans which they spend 20to 30 years to pay off. Much of the mortgage payments are taken from ouir CPF which deplete our retirement funds.
So how is it possible that whileSingaporeans pay such large amounts for our flats, HDB reports suchlarge annual losses?
The reason, as Mr Khaw says, is thatHDB spends money on items such as “acquisition costs”. However, he doesn’t say how much these costs are.
The HDB buys itsland from the Government (see HDB statement here). The land is acquired by the Government at little or no cost. It thensets a price for this land and sells it to the HDB.
So this seems to be a case of the HDBlosing money paying the Government. In the end, it is still theGovernment making all the money.
Mr Wong Pak Shong remarked that when itcomes to the compulsory acquisition of land, the Government “isa terrific moneymaking machine”. Mr Wong is no ordinarySingaporean, he was a former top official at the Monetary Authorityof Singapore.
Profiting from Singaporeans through public housing is wrong.
This is why the SDP proposes theNon-Open Market (NOM) scheme for HDB flats in our housing policy paper Housing A Nation: Holistic Policies For Affordable Homes. Under this scheme,Singaporeans can choose to buy flats that are significantly cheaperranging from $70,000 for 2-room flats to $240,000 for 5-room flats.
Singaporeanswho purchase these flats will take an estimated 9 to 15 years to payoff their housing loans (based on an interest rate of 3 percent).
The prices reflect the true cost ofbuilding the flats: material, labour and administrative costs. Theydo not include the “cost” of the land.
In return, NOM flat owners cannot selltheir flats on the open market. They must sell it back to the HDB ata discounted price if they don’t want to continue living in it.
The advantage of the NOM scheme is thathomeowners do not have to spend all their retirement savings on theirflats or taking out huge loans that require a lifetime to pay back.They can use the savings for retirement or other investments such aseducation, healthcare or starting a business.
Under the SDP’s plan, current HDBowners who want to convert their flats to NOM ones can do so and theGovernment will return the difference of their purchase price and theNOM price to their CPF accounts.
Singaporeans who want to have theoption of selling their flats in the open market can continue underthe present system or purchase new BTO flats at the prevailing ratethat HDB offers which includes the “cost” of the land.
In other words, HDB buyers will have anadded NOM option under the SDP’s proposal.
Read also SDP proposes non-open market flats inhousing policy
The benefits of the SDP’s NOM scheme isobvious as they will make public housing for Singaporeans genuinelyaffordable and save homeowners much funds.
The HDB will also benefit from thescheme as it will not have to “purchase” land from the Government andreport losses of hundreds of millions of dollars every year.