Could you please educate us the difference between a lease and a leasehold? and how HDB is viewed as a lease rather than a leasehold?
This is what sinkie HDB says:
http://www.hdbspeaks.sg/fi10/fi10336p.nsf/cc/99YearLease?OpenDocument
Well, HDBSpeaks is full of shit and they don't even know their own policy. For the purposes of SIngapore, there are 3 main forms of property ownership (well, one of them is not really an ownership, its a rental)
1) 99 years HDB flat lease- This is no different than a 5 year lease on a car. At the end of the lease, you must return the object back to the owner. In the case of the car, back to the car leasing company, and in the case of the flat, to the HDB. Your value on the object is zero on the expiration of the lease. What is unusual about the HDB 99 year lease is that you are required to pay all your 99 years of rent UPFRONT!! Imagine that. That is why the HDB can require you to pay $500,000 for a flat. So, You are prepaying your rent for the next 99 years, and the amount is so big you need a bank loan. In the HDB documents, you are described as the tenant and HDB is the landlord. Common sense tells you that you cannot sell something that does not belong to you. Therefore, when you "sell" your flat, you are actually assigning your lease to someone else. The money they pay you is technically an assignment fee. Singaporeans don't understand that when they pay $800,000 for a resale flat, they are actually paying someone a fee to assign the flat with the balance of the lease to them. This $800K is compensation for the use of the flat by the new owner and the lost of use for the seller. That is why when you take a bank loan or a HDB loan to buy the flat, the paperwork always includes a Deed of Assignment. This Deed of Assignment is in the favour of the loan holder and in the event of a default/foreclosure, allows the loan holder to legally take over the lease and assign (sell) it to someone else to recover the loan. This lease is legally registered, but you are not on title. The title belongs to the HDB.
This HDB 99 year lease is a Have-Your-Cake-And-Eat-It lease. Its totally in favour of the landlord. If lets say you wanted to rent a private condo, (usually the rental lease is a 1 year period), would you agree to pay the conservancy/maintenance fee on the condo? What about the property taxes of the condo? What about any upgrading that needs to be done to the condo? You wouldn't do it, right? You are after all only the tenant and these are the responsibilities of the landlord and property owner. Not so with a HDB lease. That's why when people like Samleong say its a good value, you really have to do your own cost benefit analysis and question it.
The other thing to remember about a HDB 99 year lease is that both parties enter into the lease with good intentions, but HDB has from the outset no intention to honour the 99 years. How many blocks have you seen taken back for redevelopment or some other reason? Is there anything that remains of the original estates like Queenstown? No, they have all been demolished for higher rise and higher density flats. But wait, those people signed a 99 year lease too. Look at the quality and design and materials in a HDB block. Who here thinks the flats will last 99 years? The HDB fully expects to move you out to "newer" estate and give you a discount on your new "flat upgrade" 50-60 years into your lease, if not earlier. So, the HDB will break your lease, count on it.
2) Leasehold properties - A leasehold property means that the improvements on the land (i.e. the building itself) belongs to the owners of the flats. They have a title to their unit. This is actually a physical structure that the owners collectively own. However, the land on which their building sits belongs to someone else, and this person is lesing the land to them for 99 years. At the end of the 99 years, several things can happen dependent on how the lease is written up. The improvements might revert back to the owner of the land with no compensation or a negotiated compensation. The improvements might be required to be demolished and the land is reverted to the original bare land that the owners leased in the first place. Or there might be a clause to negotiate another lease. So, it really depends on the wording.
3) Freehold - Well, its self explanatory. You own the land and you own the improvement on it. This is the highest form of property ownership. However, all freehold condos have an economic life remaining, and there comes a time when structurally they are not sound or the cost of upkeep is too high. In this case, they have the option to sell out to a developer. You can use Horizon Towers as an example, if you want to enbloc. But the proceeds of the sale will be whatever the market is willing to pay them for it.
Hope this helps.
You can check this thread out if you wish.
http://sammyboy.com/showthread.php?50943-HDB-101-What-the-PAP-don-t-want-you-to-know
