CPF-HDB Scam by Pseudo-Intellectual Roy Ngerng

[yellowarse]

In theory, it sounds good, but in reality, its probably too late now. And to do it would be political suicide. the PAP has started on this slippery slope without realizing there is no turning back. ... They neither have the political will, nor the financial incentive to do so.

True, difficult to put the genie back in the bottle. LHL alone owns 3 other GCB apart from Rochalie Dr in his name, all in districts 9 & 10. The Lees/Kwas, the Pappy leadership and their cronies are so heavily vested in real estate that they will never cut the Gordian knot.

Actually the situation is not so bleak. Problem is high public housing prices. Using CPF funds for public housing – though it runs counter to the principle of superannuation – need not deplete funds if prices are kept low and leases short. After all we're agreed that there is no ownership here. It's purely a long-term rental for shelter.

In an overheated inflationary market, devaluation is not so bad. Main problem is negative equity and possible foreclosure, but there's a 10% buffer because of the 90% valuation limit for loan quantum (1st loan). That means prices can actually fall by 10% without owners going into negative equity.

I think a two-stage process is doable:

(1) Freeze new HDB flat prices for 10 years

This stabilizes prices in the secondary market, allows wages to catch up, makes flats more affordable for young people, and CPF funds to be replenished, without drastic dislocation to both equity and the private housing sector

(2) Sequester HDB flats from the open market, shorten lease and reduce prices

– no more resale of HDB flats on open market; all new flats to be sold back to HDB and remaining portion of lease redeemed

– shorten lease to 60 years: the average HDB flat can last only 50–60 years at most; why burden owners with ownership costs of maintenance and upgrading with long leases? Moreover, given our av. life expectancy of 82 years, most people will not live in their flats for more than 60 years.

– prices of new flats should be reduced and delinked from market pricing and land costs. Use prevailing rental rates and factor in state subsidy to price 60-year lease.

– allow remaining resale flats to continue to be traded on the open market until lease is up. If owners choose to sell resale flats back to HDB, then they will be compensated for the remaining lease based on market value. That way land is gradually freed up for new BTO flats.

End result: Flats become much more affordable, returns HDB to original aim of public housing, doesn't deplete CPF funds. Freeing up funds increases private enterprise, grows SME sector, increases purchasing power. Achieving soft landing for property prices lowers inflation and cost of living, prevents asset bubbles, increases wages as rent forms a smaller portion of business overheads.

The above can be done, if the political will can be summoned. But I don't see it happening as long as the Pappies are in power.

 

[Papsmearer]

It is not fruitful to insist on ascribing the value of a HDB flat to either the physical property or to the lease. The flat serves the utilitarian purpose of providing shelter and security. A 99-year lease is longer than the (remaining) lifespan of anyone who purchases the flat in early adulthood.

You may argue that for such a short lease, the depreciation becomes exponentially rapid after 40 or 45 years, but again, the person is already in old age and has no use for whatever value the lease has. All he needs is the shelter and security of the physical apartment. The flat may be worth $100 for all he cares.

This premise is wrong. The 99 year term is significant (even though it exceeds the lifespan of the flat dweller) because there is right of survivorship in the lease. So, even if you and your spouse dies (couples are the ones that are permitted to "buy" a flat) and there is still 50 years left on the lease, it goes to your surviving children. They have the opportunity to enjoy the use of the flat until the lease is up. This is how the lease is written up.

In some cases, I do know individuals who have lost both their parents and they end up having the flat in their name because of this survivorship clause. Where it gets interesting is whether:

a) the flats will last 99 years. I doubt they will. So, in actuality the lease will be less than 99 years. How long it is, no one will know.

b) At what point will HDB take the flat back and relocate you to another new estate? And than demolish your old block to build higher density on it. A good example is the original Queenstown HDB estate. They were demolished and the residents relocated even though all of them have a 99 year lease. Queenstown is now a much newer higher density estate. the old estate had many 4 storey walk up blocks. HDB wants to do this because the original flats were purchased at a low price from them, and relocating flat dwellers to a new estate enables them to charge a "fee" for the newer flat, get some money that way, and tag a new 99 year lease on them.

 

[Poomer]

CPF is starting to resemble a ponzi scheme. And the way HDB been acting recently, it seems like a method to redistribute capital, from your retirement fund, to Ho Ching's Wall Street raider warchest.

 

[scroobal]

To me there are 2 key points that comes out of this issue which the Govt has to be accountable for.

1) HDB inability to provide affordable housing for Singapore citizens especially to young couples. The constant harping of providing grants, claims of high subsidy etc and making the buyer feel that he is being given hand-out despite the large sums of money that is actually given to HDB.

2) CPF is no longer a pension or retirement fund since the 1980s. It has become (1) a govt escrow to ensure that HDB loan is repaid and (2) money available to pay medical bills incurred in Govt hospitals. Pension, retirement or safety net is now secondary issue. (3) Has become a cheap supply of investment funds for Temasek, MAS and GIC. They should make a genuine attempt to build a fair mechanism that determines a fair return for the use of an individual's money held by HDB.

Arguing about leasehold, no value after expiry of lease tenure, interest to be returned are not at all anomalies and very much found around the world.

 

[kingrant]

Allowing the CPF to be used for property buying was a good idea and started ok and had been very helpful in the early days of the scheme. What became wrong was the govt allowing property prices to inflate and escalated so rapidly that it became a runaway train, when the employers' CPF contribution rate itsefl was cut by the govt due to the recession years. Until today, the govt had failed to manage the runaway prices which have outpaced the earning capacities of the younger generation.

Those who were able to afford properties be it HDB or private condos or apartments with their CPF are actually sitting on a small hill of monetisable asset, while still having enough to retire, build a family and provide for themselves and their parents as well. This is the lucky sandwiched generation.

The monkey is in the runaway property prices and the govt's way of running this country like a corporation. Until their mindsets correct, the problem will remain unsolved.

Restoring or even increasing the employer's CPF rate will help but does the govt have the balls to set this in motion? Sure, it will mean better returns to us savers when that happens.

 

[mojito]

There could have been more subsidies to offset the rise. But the profit motive prevailed. Just like healthcare for PRs and foreigners. Had they view housing and healthcare as a social cost, policy makers would not have taken in as many residents of foreign origins as we do today. A realignment of priorities. That is all it takes.