Gary Yeo: Align exec condo framework with Prime flats for fairness

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<Straits times forum>Align exec condo framework with Prime flats for fairness​

https://www.straitstimes.com/opinio...condo-framework-with-prime-flats-for-fairness

I appreciate the Government’s introduction of the Prime Location Public Housing (PLH) model to reduce speculative gains and ensure subsidised housing is used for long-term occupation. Measures such as a 10-year minimum occupation period (MOP) and subsidy clawback are designed to curb the “lottery effect” and maintain fairness. However, when compared with executive condominiums (ECs), a clear inconsistency emerges.

ECs are also a form of subsidised housing, with a pathway to full privatisation, targeted at middle-income to upper middle-income Singaporeans who do not qualify for Build-To-Order (BTO) flats. Yet, EC buyers can sell their flats after just five years, with no subsidy clawback, even though these units benefit from subsidised land.

In contrast, buyers of PLH flats face stricter rules. They must hold their homes for 10 years and return part of their sales gains.

ECs are also not confined to fringe locations. Many recent EC developments are situated in attractive areas, including sites near MRT stations and established amenities, features associated with Prime BTO projects.

The resulting gains can be substantial. At Hundred Palms Residences EC, multiple resale transactions recorded profits of around $1 million or more, shortly after meeting the five-year MOP.

Other ECs have also seen gains ranging from $300,000 to over $500,000 within five to eight years. These examples suggest that significant windfall gains are not uncommon within the EC framework.

This raises a question of fairness. If the objective is to reduce windfall gains from subsidised housing, should policies not be applied more consistently across income groups – especially when both segments benefit from subsidies and, in some cases, similarly attractive locations?

A review of the EC framework – such as aligning its MOP more closely with PLH flats or introducing some form of subsidy recovery – could help restore consistency and reinforce fairness.

Any potential increase in the EC income ceiling, without addressing these underlying inconsistencies, may further reinforce this imbalance where those with less face tighter rules, while those with more enjoy greater flexibility and earlier gains.

Gary Yeo