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The HDB 99-lease time bomb

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Future of HDB flats: A delicate balancing act, says sociologist Chua Beng Huat​

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Sociologist Chua Beng Huat has written Public Subsidy/Private Accumulation: The Political Economy Of Singapore’s Public Housing. PHOTOS: NUS PRESS
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Clement Yong
Correspondent

Jul 13, 2024

SINGAPORE – Housing may be one of the most clamorous issues in Singapore, but despite recurring calls for the Government to curb runaway prices for young couples buying their first flat, it has arguably not intervened aggressively enough.
This is because it cannot, without affecting the nest eggs of the vast majority of older home owners, according to sociologist Chua Beng Huat’s new book. He argues that the contradiction of Housing Board (HDB) flats as both public good and financial asset lies at the heart of an increasingly intricate balancing act for the Government, which cannot afford to let the value of flats plummet after so much of its citizens’ savings have been sunk into their home purchase.
Help for new entrants is limited mostly to “temporary and mild” cooling measures and perpetual cash grants, “a strategy with no potential endpoint”, he writes in Public Subsidy/Private Accumulation: The Political Economy Of Singapore’s Public Housing, published in 2024.
The thrust of his book ties the HDB system with the political legitimacy it confers on the incumbent Government. Chua says this makes radical reform not only “practically impossible”, but also “conceptually inconceivable”.
Frustrations over housing have cost the People’s Action Party votes in the past, from the defeat at the 1981 Anson by-election to the losses it sustained in the 2011 General Election, when skyrocketing flat prices were attributed to an influx of new residents, he says.
“For the amount of subsidies that the Government has given, it has actually received a huge political return,” says Chua, 78, currently Professor Emeritus in the Department of Sociology and Anthropology, Faculty of Arts and Social Sciences, at the National University of Singapore (NUS), in an interview with The Straits Times.
“There’s quite a lot of gratitude about being able to own a flat. The HDB remains synonymous with the People’s Action Party-led Government.”

Might the record number of million-dollar flats resold recently mean housing will be politicised in the upcoming general election? He thinks not, though it would have been more touchy a year ago.
“It depends on whether the opposition parties could make it an issue, but the Government has done a lot to reduce waiting time since Covid-19 and there have been cooling measures.”
In general, “we actually have been able to maintain affordability really well”, he says. “If you’re buying within your income bracket, it’s about 25 to 30 per cent of your monthly income, which is practically global standard. At this point, I don’t think the opposition parties have much ammunition.”

Dressed in a nondescript T-shirt and slacks for the interview at a Novena foodcourt, Chua has been a lifelong maverick. After he is given a thumbs up by the cashier at the drink stall for ordering a cold drink, he mutters: “I don’t know why they do that – people think because you are old, you cannot drink cold drinks or something.”
One of the country’s foremost experts on public housing, he now teaches an undergraduate course on housing and social inequality in the urban studies programme at the Yale-NUS College. He once headed NUS’ Department of Sociology and was provost chair at its Faculty of Arts and Social Sciences. In the early 1980s, he spent three years as director of the social research unit at HDB.
The PhD graduate from York University in Toronto, Canada, joined the Department of Sociology at NUS in 1985, and has been venerated by his students for his acuity of thought and facility of expression. There is even a Facebook fan page dedicated to him, with a tongue-in-cheek name: “If I Weren’t Christian, Chua Beng Huat Would Be My God”.
In this analysis of housing in Singapore, he flags some structural problems of HDB flats that he says are growing more visible by the day.
Apart from the “endemic balancing act” between flats’ affordability and maintaining their value – enmeshed within a resale market that HDB cannot completely control – there is also the problem that housing could become one of the biggest factors that exacerbate wealth and generational inequality, he says.
Though profiting from the buy-sell-repurchase cycle is in theory open to all home owners, only a third of them have been able to capitalise on this, while two-thirds have not been able to – or have opted not to – trade in their one and only flat.
In addition, 5 to 6 per cent of the population cannot afford to own homes. They are subjected to strict government rental controls in small, overcrowded flats, due to the belief that this will encourage renters to work towards owning their own place, he adds.
Chua says: “The profit motive has become much more pronounced, particularly because of the million-dollar flats. The younger generation is more calculative about making profit from HDB, but in practice, only those with higher income among the residents are able to upgrade.”
Recent efforts to reduce the “lottery effect” of HDB flats – where those who can afford flats in more central and more connected estates will benefit disproportionately upon resale – through a reclassification of Build-To-Order flats from mature and non-mature estates to that for Standard, Plus and Prime might not be sufficient, he feels.
“I don’t think the inequality issue will ever be solved,” he says, though he remains sanguine. “The Government will keep watching and make sure it doesn’t become a serious social problem.”
Another issue is that public homeownership in Singapore comes with a 99-year lease, an important caveat that some gloss over.

For older home owners, a shorter time left on their 99-year lease and ageing amenities result in a devaluing of their retirement savings. There is a time element to this, with flats bought around the 1970s drawing closer to the end of their 99-year-lease in 2069 and the 2070s.
Chua cites how, in 2022, four blocks in Ang Mo Kio with 56 years left on their lease that were picked for redevelopment had a professionally assessed compensation that fell below the price of equivalent new flats in the same neighbourhood. This meant that affected residents would have to cough up as much as $100,000 more for an equivalent flat, or downsize. They were later offered other options, such as buying a same-sized flat with a 50-year lease.
“When the lease gets shorter and shorter, of course the values decline. You can see the future. Since everybody is encouraged to invest his or her retirement money in the house, you have to figure out some way for people to recover the capital, especially for those in the lower-income group,” Chua says.
Over the years, policies have been implemented to tackle this, such as a lease buyback scheme and bonuses to encourage seniors to sell their flats and downsize. There is so far no solution, though, to the fundamental problem of the 99-year lease.
As the country develops, Chua anticipates there will also be increasing demand from those who face more restrictions in the current system, including single mothers, singles and people who are gay, to be better included. This is a political debate the Government must reckon with, and not a matter of supply, he adds.
There is nothing to do now, though, but to keep “patching” these problems as and when they surface. Chua compares it to a computer operating system. “You can develop a whole new one, and that will take a lot of time and will cost.”
Even introducing something like a shorter lease for purchase would change the market value of existing flats. And that is not to mention the unintended consequences that would result, such as creating an administrative headache for the HDB – it would have to buy back some 20,000 flats every year – while leaving much more money in people’s Central Provident Fund accounts, he says.
“I think we can keep patching, because what do you do with the existing system? You have to say it starts at year zero. It will take a very long time, and in the meantime, we don’t know what the market effect will be.”
  • Public Subsidy/Private Accumulation: The Political Economy Of Singapore’s Public Housing by Chua Beng Huat is published by NUS Press and available for $26.17 at Amazon SG (amzn.to/3W17GUB).
 

Forum: Don’t allow 99-year HDB lease issue to remain unresolved​


Jul 22, 2024

I agree with sociologist Chua Beng Huat that the Government has an increasingly intricate and difficult task of balancing the perception of HDB flats as both public good and financial asset (Future of HDB flats: A delicate balancing act, says sociologist Chua Beng Huat, July 13).
This is especially when many Singaporeans’ savings have gone into their home purchase.
A third of home owners have capitalised on profiting through a buy-sell-repurchase cycle. I believe the two-thirds who have not acted on this strategy intend to bequeath their home to their family members.
Political leaders and Singaporeans must recognise and accept the fundamental principle of the 99-year lease for most HDB flats. The HDB will not be able to conduct the Selective En bloc Redevelopment Scheme for every maturing flat in Singapore. It is both financially inconceivable and irresponsible.
National Development Minister Desmond Lee has reiterated in Parliament that HDB flats of 99-year leasehold strike a good balance between providing a home for life, asset appreciation, rejuvenating our city and building homes for the new generation.
Though the government of the day has reaped political returns, legitimacy and gratitude from past Singaporeans who have gained much from owning an HDB flat, we should not allow the 99-year lease issue to remain unresolved.

Foo Sing Kheng
 

Forum: Social changes a reason to look at extending HDB lease​


Jul 22, 2024

The 99-year lease on HDB flats continues to be a contentious issue for Singaporeans, especially given how expensive flats have become (Future of HDB flats: A delicate balancing act, says sociologist Chua Beng Huat, July 13; and Don’t allow 99-year HDB lease issue to remain unresolved, July 19).
This is not simply a matter of rising costs.
The Housing Board began its 99-year lease model for its public housing flats in the 1960s. This lease model means that the ownership of the flats will revert to the state after 99 years.
Addressing Parliament, National Development Minister Desmond Lee has said that HDB flats of 99-year leasehold strike a good balance between providing a home for life, asset appreciation, rejuvenating our city and building homes for the new generation.
However, it should be recalled that in the 1960s, the life expectancy of Singaporeans was just 60-plus years. Moreover, Singaporeans married and had children very early then, often in their 20s.
Taken together, the 99-year lease would have allowed the children of the original buyers to live in that HDB home for life if desired. Socially, this makes sense, and provides families with stability and the intimate memories of growing up in that home.
It also helps buyers whose children have a permanent disability or serious illness, giving families the peace of mind that, regardless of finances, the children can spend the rest of their lives in their parents’ home if need be.

Moving forward to the present, the life expectancy of Singaporeans has increased significantly to more than 80 years. Singaporeans are also marrying later and delaying having children, if they have any at all.
These seismic social changes in Singapore ought to be considered in determining anew the length of HDB flat leases. For instance, extending the leases of HDB flats to, say, 150 years may help allay some of these concerns.

Daniel Ng Peng Keat
 
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AN HDB TOWER AT NIGHT (PHOTO: DONGLI ZHANG VIA ACADEMIA.SG)

The growing contradictions of Singapore’s HDB scheme​

Singapore's lauded public housing scheme is more than a welfare program—it's a key political and economic institution. But its greatest irony is that whereas it was once meant to be socially distributive and level inequality it has in fact contributed to intensifying wealth inequality between rich, and poor and across generations. This essay draws from the author's new book "Public Subsidy, Private Accumulation: The Political Economy of Singapore’s Public Housing" (NUS Press, 2024).
Chua Beng Huat - 11 Apr, 2024

This piece is co-published with AcademiaSG, a scholarly site promoting scholarship of/by/for Singapore.

••••••••
Singapore’s public housing program is sui generis, un-replicable in its entirety anywhere.
During the 1959 election campaign for the first fully elected parliament for domestic self-government, the People’s Action Party (PAP) promised to improve the living conditions of Singaporeans. One year after being elected, it established the Housing and Development Board (HDB) to undertake a public housing program to fulfil its promise.
From the outset, the housing program was a political good and the HDB has been practically synonymous with the PAP government. For Singaporeans, HDB flats are ‘government housing’. Beginning with providing one-room rental flats in low-cost, low-rise walk-up blocks for the poor, the HDB began to develop larger flats—with two or three bedrooms, sitting-room, dining room, kitchen, and multiple toilet facilities—to let on a 99-year lease. By the mid-1980s, up to 85% of resident households were housed in HDB flats, with more than 80% holding a 99-year lease on their flats. This achievement is built on three essential elements.
First, the availability of land to the state. Combining the transfer of colonial Crown land, the aggressive compulsory land expropriation from private landlords in the 1960s and 70s, and extensive coastal land reclamation, the Singapore state owns approximately 90% of the land in the country. Land is thus effectively nationalised and readily available for all national development purposes, including public housing.
Second, the availability of financial loans to enable households to purchase the 99-year lease on HDB flats. Conventionally, mortgages from commercial financial institutions, such as banks, are available only for the creditworthy, leaving those with low and/or uncertain incomes out of homeownership. An inclusive solution that can provide all Singaporean households with at least one steadily employed member access to a mortgage was facilitated by allowing the leaseholders to make pre-retirement withdrawals from their compulsory social security savings; namely, the individual’s Central Provident Fund (CPF) savings, which is extracted at the source of employment.
The HDB holds the mortgage for the 99-year leaseholder, the CPF makes the monthly payment to the HDB from the latter’s monthly savings. The interest charged by the HDB on the loan is fixed at half a percentage point above the interest paid by the CPF to the individual’s savings; it is effectively interest-free. The entire transaction is contained within a closed circuit of financing, without incurring generally higher mortgage interest rates from commercial financial institutions. With the facility of CPF payment, introduced in 1968, the rate of 99-year leaseholdings on public housing flats rose rapidly, covering practically the entire nation, except for the top 10–15% of high-income households who reside in the expensive private housing sector and, the 5–6% of the poor who rent small HDB flats.
Third, as indicated above, the transaction is both legally and substantively long-term renting. Instead of paying monthly rent, the total rent for the 99 years is paid at one go when the flat is handed over to the leaseholder. A loan is thus required to enable the tenant to pay the cost of the lease. This loan is organised as a conventional mortgage, in which the leaseholder pays, monthly, the interest and a portion of the loan sum, until full payment is made at the end of the agreed loan period. Beyond that, the leaseholder lives rent free till the end of the 99-year lease. The mortgage-like financing makes the long-term leasing similar to conventional purchasing of property, hence the leased flat is re-labelled as a flat “sold” by the HDB. The size of the leased flat is dependent on households’ ability to pay rather than on spatial needs: a high-income small family can lease a five-room flat, while a low-income large family will have to make do with a smaller three-room flat.
In these ways, the leased flat is transformed into a market commodity, not a social welfare good. As commodity, the leaseholder has the right to transfer, or “sell”, the lease directly to a buyer in the market, as in any conventional property transaction. In this sense the leaseholder can act, and be addressed, as a “homeowner”. This is an ideological gloss that is advantageous to the government as it renders Singapore a “nation of homeowners”.
Ironically, the three critical features of nationalisation of land, use of CPF, and 99-year lease that explain the success of the public housing program are also the same features that have systemically generated tensions or contradictions in the program.
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Ghim Moh estate. HDB home ownership amounts to long-term renting. Instead of paying monthly rent, the total rent for the 99 years is paid upfront when the flat is handed over to the leaseholder. (Photo: Chen Si Yuan)

From welfare good to wealth building asset

The PAP government’s intention of selling rather than renting public housing flats was already scripted into the 1959 Housing and Development Act. Financially, proceeds from the sale of flats would enable the government to maintain public subsidies to the national public housing program within tolerable limits of the national budget. The practical rationale behind permitting the sale of leases is to allow households to upgrade their housing as demand for space grows in tandem with the growth of the family. Ideally, a household is expected to sell its first subsidised HDB flat, known as “resale” flat, at market value and, with the profit finance the upgrade to the second, larger subsidised flat to meet increased spatial needs. Coincidentally, this would also improve its housing wealth. The financial benefit from the buy–sell–repurchase cycle is so obvious that it is commonly known as “two bites of the cherry”.
A resale flat tends to fetch a higher price than a new subsidised flat because it tends to be in “mature” estates. These are closer to the city and offer better access to social amenities such as schools, polyclinics, shopping malls, and public transportation infrastructure. Most significantly, buyers of resale flats can avoid the long years of queuing for new flats from the HDB. With the exception of brief periods of economic recession, prices of resale flats have risen persistently since the early 1970s, when households were first allowed to sell their flats in the resale market.
Anticipation of profit from buying and selling the first subsidised flat has become so taken for granted that even young professionals who, with financial assistance from their high-income parents would be able to buy in the private condominium sector, are queuing up for relatively high-cost new HDB flats in highly desirable locations, with full intention to sell them after the minimum five-year residency period. This could reap significant profit to finance subsequent private sector purchases. The glaring example is the iconic 50-story development, “The Pinnacle” in Tanjong Pagar. Prices of these flats have effectively doubled from their original cost and leaseholders have made outsized profits when their flats were sold in breakthrough resale prices exceeding one million dollars.

Subsidised public housing has become a vehicle for private accumulation of wealth. In principle, this is an opportunity open to all Singaporeans who are eligible to buy a flat from the HDB. In practice, however, the households who are able to capitalise on the opportunity are those in the higher-income groups who purchase four or five-room flats or executive condominiums. Even if a household in the lower-middle class is able to benefit from the sale of its three-room flat, the rate and quantum of profit would be much less than that derived from the sale of larger flats. Profit from the sale of the flat can be reinvested in private sector property or other assets for further capital accumulation. Additionally, given that the buyers of resale flats tend to be the younger generation who are fresh entrants into the housing market, the gains of the older generation sellers are effectively passed on as financial burdens of the young; as in my uncle makes money from your nephew and your uncle makes money from mine.

Profit taking from the buying and selling of public housing flats is widely known to both the public and the government. Indeed, the government encourages it by explicitly touting the 99-year lease ownership as the most valuable asset it could give to citizens. As discussed in the next section, the government has to allow existing public housing flats to increase in monetary value because most existing leaseholders depend on recovering cash from the flat to fund future retirement needs. However, when outsized profits offend the public’s sense of fairness or social justice, the government is compelled to intervene by erecting some obstacles to such gains. These include differentiated pricing of flats in differently preferred locations, extending the minimum residency period from five to ten years, and a claw back of 6% of the profits gained from resale flats. However, these are only tweaks to the system, not a solution to the in-built profit logic of the HDB flat as commodity.
The greatest irony of the national public housing program then: public subsidies that are meant to be socially distributive and level inequality have in fact contributed to intensifying wealth inequality across generations, and between the haves and have-nots in society.
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Sin Ming. Subsidized public housing has become a vehicle for the private accumulation of wealth. (Photo: Wzhkevin)

Public housing as an asset-based welfare system

Allowing the use of CPF savings to pay for 99-year leases on HDB flats has two long term consequences. First, for most households, most of their savings would have gone to paying for their flats. In principle, after the full cost of the lease is paid, subsequent savings from not having to make payment should accumulate, over time, to fund the leaseholder’s retirement years. In reality, leaseholders seldom have the luxury to be so farsighted, given the financial pressures of everyday life. It is more likely that they would end up “asset rich but cash poor”. Having encouraged the entire nation to invest in public housing “ownership”, the HDB/government is thus responsible to assist the leaseholders to monetise the flat/asset to fund their retirement.
Indeed, the HDB has developed several schemes to enable senior leaseholders to “cash out”. These include incentivising empty-nest leaseholders to sell their existing flats and repurchase a new two-room flat with flexible length of lease of up to when one of the spouses reach 95 years of age; a lease-buy-back scheme in which the unused tail-end of the 99-year lease is sold to the HDB for an annuity payment and, more radically, under the Selective Enbloc Redevelopment Scheme, old estates in high land value locations are repossessed by the HDB. Affected households are compensated for their flats at prevailing market value. They are in turn resettled in new flats close to the demolished estates, with varying length of fresh leases.
The second consequence concerns the pricing of existing resale flats. If the flat were to meet the retirement needs of the leaseholder, its price cannot be allowed to fall precipitously. Yet with the wear and tear of use and a shortening lease, the leaseholder could potentially end up in negative equity, i.e. the flat would be worth less than its original price. This would jeopardise the leaseholder’s retirement life. To avoid this, new flats must be priced relatively to maintain prices of existing flats. This sets up a vicious spiral in which the two prices play catch-up in an ever upward spin, making public housing increasingly unaffordable to the new entrants into the market for their first home. The HDB/government is thus compelled to provide increasingly higher cash grants to enable the new entrants to make their first purchase. But cash grants do not reduce prices of resale or new flats. Instead, they are likely to push up the prevailing high prices. The HDB/government is thus engaged, unendingly, in a balancing act of ensuring existing flats keep their value and the affordability of flats to new entrants into the market. It is constantly reacting to market pressure rather than being in control of determining the prices of public housing flats.
Beyond the extensive programs to assist leaseholders to monetise their flats, there remains the problem of the inexorable shortening leases on all existing flats and their progressive devaluation. This is where the ideological gloss of “homeownership” is exposed. Legally, at the end of the 99-year lease, the flat would have zero value and should be returned to the HDB and the land to the state. However, leaseholders are unlikely to accept this with equanimity. Should the incumbent government forcefully repossess the flats, the political cost would definitely be very substantial. As the oldest HDB flats pass the halfway point in the 99-year lease, the need to resolve this issue will become increasingly urgent — financially and politically.
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Viewing an election rally from HDB blocks. Singaporeans’ dependency on public housing has become a political threat that cuts both ways. (Photo: Cherian George)

Politics of monopolising provision

With land effectively nationalised, there is no space for alternative housing, as in the kampong of the past. All Singaporeans, from the middle class downwards, are dependent on the HDB for housing. This dependency gives the government, via the HDB, very significant control over the lives of Singaporeans. Unpopular social policies, such as restrictions on singles and the ethnic integration policy, can piggy-back as part of the eligibility criteria for access to HDB flats. The most egregious was the attempt to extract votes in general elections by threatening to withhold estate upgrading programs and other services in public housing estates where the residents have voted for a non-PAP candidate. Upgrading programs are important because they contribute to the maintenance of an estate’s environment and the values of existing flats. In the 1997 general election, Prime Minister Goh Chok Tong could not be more blunt: “Your estate through your own choice will be left behind. They will become slums.”
Significantly, neither Potong Pasir nor Hougang constituencies succumbed to the threat. Residents continued to vote for then Singapore Democratic Party leader, Chiam See Tong and Worker’s Party, Low Thia Kiang, respectively. The threat seems to have outlived its usefulness when the Worker’s Party won the Aljunied Group Representation Constituency in the 2011 general election, as it was not mentioned again during elections since.
Significantly, the politics of threat cuts both ways. The HDB and the PAP government being synonymous, any slippage or failure of the HDB has an impact on the PAP. The first indication of this was in 1981, in Anson constituency. The appointment of then incumbent MP, Devan Nair, as the president of Singapore resulted in the need for a by-election. Within the constituency was Blair Plain, a rental housing estate owned by the Port of Singapore Authority (PSA) for its workers. The PSA had to repossess the land to expand its containerisation facilities. Unlike the usual practice when it acquires land, the Ministry of National Development refused to provide priority of public housing allocation to resettle the families affected by the PSA’s plan. The affected households emphatically vented their anger through the ballot box in the by-election. The PAP lost the seat to veteran Worker’s Party leader, J.B. Jeyaratnam, by a large margin. It ended more than a decade of PAP’s total monopoly of parliamentary seats.
Prime Minister Lee Kuan Yew immediately promised housing to the affected families. In the subsequent election, Anson constituency was absorbed into the Tanjong Pagar GRC. Another illustrative instance was the 2011 general election. Faced with rapidly rising public housing prices, the opposition parties made affordability an electioneering issue, among others. The result was that the PAP garnered 60% of the national vote and lost seven seats, the lowest percentage received and the highest number of seats lost in its electoral history. In response, a new Minister of National Development was put in place. He immediately introduced a slew of new housing policies to improve the affordability and availability of flats. These instances clearly demonstrate that Singaporeans’ total dependency on the HDB/government for their housing needs has also evolved into an instrument through which the citizenry can exert pressure, and receive immediate response from, the PAP government, as it should be in an electoral democracy.
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The PAP Government told Potong Pasir voters that their estate would suffer under an opposition MP but they voted for Chiam See Tong anyway. (Photo: Cherian George)

Conclusion

Singaporeans are undoubtably among the best housed in the world. They are the envy and aspiration of citizens of developing countries and of those in the developed West where neoliberal regimes retreat from extensive and generous welfare provisions, including social housing. The HDB is a well visited government agency and its system of provision much studied by foreign delegations but neither have been seriously emulated, let alone replicated. After more than 60 years of successfully operating with a small set of interlocking policy factors—nationalisation of land, CPF funding and 99-year lease—tensions and contradictions in an increasingly complex and complicated network of administrative regulations, each developed contingently to deal with an emergent issue, become unavoidable and publicly exposed.
To the extent that these tensions and contradictions interfere in the operating system of the national public housing program, the HDB/government can only develop patches to emergent problems whenever they arise, as in a computer operating system. As the national public housing program is critical to its legitimacy to govern, the PAP government is compelled to maintain the system without an end in sight, ironically precisely because of the success of the housing program.

The author’s new book, Public Subsidy/Private Accumulation: The Political Economy of Singapore’s Public Housing, is published by NUS Press.
 
Quote: " If the children do not need to live in the flat, they should be able to cash out a significant proportion of what their parents have invested. The limit of a 99-year lease would likely affect those who purchase resale flats. They should be aware that such flats would provide less wealth preservation and they are paying a premium for location and convenience. They should pay a rational amount for the flat so that the market prices the flat reasonably in relation to the remaining lease."

Questions:
1. How many will buy? Are there enough buyers of the hundreds of thousands of flats coming to the end of their 99-lease?
2. What will be the transacted price? If the remaining years on the lease is factored into the pricing, these flats should only sell for a few thousand or a few tens of thousands.

Forum: 99-year HDB lease helps to recycle a scarce resource​


Jul 30, 2024

I refer to the recent Forum letters on HDB flat leases (Don’t allow 99-year HDB lease issue to remain unresolved, July 19; Social changes a reason to look at extending HDB lease, July 22; and Buyers are aware of HDB lease length when purchase is made, July 23).
Given Singaporeans’ life expectancy of about 84 years and average age of marriage at about 30, the HDB flat lease of 99 years is more than adequate for a first-generation flat owner. It is also sufficient for their children to spend the rest of their lives in their parents’ home if need be.
The length of HDB flat leases is an issue of inter-generational allocation of scarce resources. A longer lease benefits the family as wealth would be better preserved for descendants of the first-generation flat owner.
But this is sub-optimal for society as scarce resources are not recycled back to society.
For the Government to continue providing affordable housing to citizens in land-scarce Singapore, it would either need new land through reclamation, for instance, or buy back flats from existing owners.
The cost would be higher and the Government would need to provide more subsidies to new flat owners.
This would not be sustainable and if the Government can no longer provide adequate subsidies to new flat owners, it would lead to a divisive society between those who can inherit HDB flats and those who cannot.

While I agree that it is important for HDB flats to provide some wealth preservation as many Singaporeans’ savings have gone into their home purchase, the objective of the Government’s housing policy should weigh more towards providing affordable housing for current and future generations of Singaporeans.
There is still some wealth preservation for flat owners as when the first-generation flat owner dies, the flat would have a remaining lease of about 50 years. If the children do not need to live in the flat, they should be able to cash out a significant proportion of what their parents have invested.
The limit of a 99-year lease would likely affect those who purchase resale flats. They should be aware that such flats would provide less wealth preservation and they are paying a premium for location and convenience.
They should pay a rational amount for the flat so that the market prices the flat reasonably in relation to the remaining lease. The Government should not be asked to use public resources to help these buyers.

Chong Lee Ming
 
It is like a ponzi scheme supported by CPF.

ponzi schemes are like that, still can make money, so u cannot be the last one holding the ball. Therefore if you want to play HDB, you need to recycle-capital by selling the HDB when they are less than 20 years old, and if possible only buy BTOs (I know it is not easy).
 

Future of HDB flats: A delicate balancing act, says sociologist Chua Beng Huat​

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Sociologist Chua Beng Huat has written Public Subsidy/Private Accumulation: The Political Economy Of Singapore’s Public Housing. PHOTOS: NUS PRESS
clementyong.png

Clement Yong
Correspondent

Jul 13, 2024

SINGAPORE – Housing may be one of the most clamorous issues in Singapore, but despite recurring calls for the Government to curb runaway prices for young couples buying their first flat, it has arguably not intervened aggressively enough.
This is because it cannot, without affecting the nest eggs of the vast majority of older home owners, according to sociologist Chua Beng Huat’s new book. He argues that the contradiction of Housing Board (HDB) flats as both public good and financial asset lies at the heart of an increasingly intricate balancing act for the Government, which cannot afford to let the value of flats plummet after so much of its citizens’ savings have been sunk into their home purchase.
Help for new entrants is limited mostly to “temporary and mild” cooling measures and perpetual cash grants, “a strategy with no potential endpoint”, he writes in Public Subsidy/Private Accumulation: The Political Economy Of Singapore’s Public Housing, published in 2024.
The thrust of his book ties the HDB system with the political legitimacy it confers on the incumbent Government. Chua says this makes radical reform not only “practically impossible”, but also “conceptually inconceivable”.
Frustrations over housing have cost the People’s Action Party votes in the past, from the defeat at the 1981 Anson by-election to the losses it sustained in the 2011 General Election, when skyrocketing flat prices were attributed to an influx of new residents, he says.
“For the amount of subsidies that the Government has given, it has actually received a huge political return,” says Chua, 78, currently Professor Emeritus in the Department of Sociology and Anthropology, Faculty of Arts and Social Sciences, at the National University of Singapore (NUS), in an interview with The Straits Times.
“There’s quite a lot of gratitude about being able to own a flat. The HDB remains synonymous with the People’s Action Party-led Government.”

Might the record number of million-dollar flats resold recently mean housing will be politicised in the upcoming general election? He thinks not, though it would have been more touchy a year ago.
“It depends on whether the opposition parties could make it an issue, but the Government has done a lot to reduce waiting time since Covid-19 and there have been cooling measures.”
In general, “we actually have been able to maintain affordability really well”, he says. “If you’re buying within your income bracket, it’s about 25 to 30 per cent of your monthly income, which is practically global standard. At this point, I don’t think the opposition parties have much ammunition.”

Dressed in a nondescript T-shirt and slacks for the interview at a Novena foodcourt, Chua has been a lifelong maverick. After he is given a thumbs up by the cashier at the drink stall for ordering a cold drink, he mutters: “I don’t know why they do that – people think because you are old, you cannot drink cold drinks or something.”
One of the country’s foremost experts on public housing, he now teaches an undergraduate course on housing and social inequality in the urban studies programme at the Yale-NUS College. He once headed NUS’ Department of Sociology and was provost chair at its Faculty of Arts and Social Sciences. In the early 1980s, he spent three years as director of the social research unit at HDB.
The PhD graduate from York University in Toronto, Canada, joined the Department of Sociology at NUS in 1985, and has been venerated by his students for his acuity of thought and facility of expression. There is even a Facebook fan page dedicated to him, with a tongue-in-cheek name: “If I Weren’t Christian, Chua Beng Huat Would Be My God”.
In this analysis of housing in Singapore, he flags some structural problems of HDB flats that he says are growing more visible by the day.
Apart from the “endemic balancing act” between flats’ affordability and maintaining their value – enmeshed within a resale market that HDB cannot completely control – there is also the problem that housing could become one of the biggest factors that exacerbate wealth and generational inequality, he says.
Though profiting from the buy-sell-repurchase cycle is in theory open to all home owners, only a third of them have been able to capitalise on this, while two-thirds have not been able to – or have opted not to – trade in their one and only flat.
In addition, 5 to 6 per cent of the population cannot afford to own homes. They are subjected to strict government rental controls in small, overcrowded flats, due to the belief that this will encourage renters to work towards owning their own place, he adds.
Chua says: “The profit motive has become much more pronounced, particularly because of the million-dollar flats. The younger generation is more calculative about making profit from HDB, but in practice, only those with higher income among the residents are able to upgrade.”
Recent efforts to reduce the “lottery effect” of HDB flats – where those who can afford flats in more central and more connected estates will benefit disproportionately upon resale – through a reclassification of Build-To-Order flats from mature and non-mature estates to that for Standard, Plus and Prime might not be sufficient, he feels.
“I don’t think the inequality issue will ever be solved,” he says, though he remains sanguine. “The Government will keep watching and make sure it doesn’t become a serious social problem.”
Another issue is that public homeownership in Singapore comes with a 99-year lease, an important caveat that some gloss over.

For older home owners, a shorter time left on their 99-year lease and ageing amenities result in a devaluing of their retirement savings. There is a time element to this, with flats bought around the 1970s drawing closer to the end of their 99-year-lease in 2069 and the 2070s.
Chua cites how, in 2022, four blocks in Ang Mo Kio with 56 years left on their lease that were picked for redevelopment had a professionally assessed compensation that fell below the price of equivalent new flats in the same neighbourhood. This meant that affected residents would have to cough up as much as $100,000 more for an equivalent flat, or downsize. They were later offered other options, such as buying a same-sized flat with a 50-year lease.
“When the lease gets shorter and shorter, of course the values decline. You can see the future. Since everybody is encouraged to invest his or her retirement money in the house, you have to figure out some way for people to recover the capital, especially for those in the lower-income group,” Chua says.
Over the years, policies have been implemented to tackle this, such as a lease buyback scheme and bonuses to encourage seniors to sell their flats and downsize. There is so far no solution, though, to the fundamental problem of the 99-year lease.
As the country develops, Chua anticipates there will also be increasing demand from those who face more restrictions in the current system, including single mothers, singles and people who are gay, to be better included. This is a political debate the Government must reckon with, and not a matter of supply, he adds.
There is nothing to do now, though, but to keep “patching” these problems as and when they surface. Chua compares it to a computer operating system. “You can develop a whole new one, and that will take a lot of time and will cost.”
Even introducing something like a shorter lease for purchase would change the market value of existing flats. And that is not to mention the unintended consequences that would result, such as creating an administrative headache for the HDB – it would have to buy back some 20,000 flats every year – while leaving much more money in people’s Central Provident Fund accounts, he says.
“I think we can keep patching, because what do you do with the existing system? You have to say it starts at year zero. It will take a very long time, and in the meantime, we don’t know what the market effect will be.”
  • Public Subsidy/Private Accumulation: The Political Economy Of Singapore’s Public Housing by Chua Beng Huat is published by NUS Press and available for $26.17 at Amazon SG (amzn.to/3W17GUB).

Sinkies buy HDB flats for $100k sell for $500k. Or in recent times, buy BTO for 500k sell for $1 million.

That's what the oppies claim by 'ticking time bomb'.
 
Just extend the leases by 20-30 years and kick the can down the road for the Government of that era to solve
 
It is like a ponzi scheme supported by CPF.

ponzi schemes are like that, still can make money, so u cannot be the last one holding the ball. Therefore if you want to play HDB, you need to recycle-capital by selling the HDB when they are less than 20 years old, and if possible only buy BTOs (I know it is not easy).
In Ponzi scheme, the unlucky bastards will grab the last musical chair and the music stop
 
Stupid fucks still believe the 99 years lease fear nonsense. 1.7 millions HDB, still can't see the trend. Gongkias.. lol
 
I can’t stop laughing at those who went jabs because they wanted to safeguard this 99 years leasehold
 
99 years lease should not exist in the first place. It frightened newly wed couple to own their desired home in a more matured estates where BTO flats are lacking. It is stupid for laulan Wong wanting to be scapegoat when announcing zero value flat, and he probably didn't know he will become a miraculous Pee AM. Now, the voters remember him for the zero value flat, not so much about the long gone pandemic he headed, unless there is another pandemic circuit breaker.
 
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