Observers welcome Govt's concern over ageing HDB leases

Remarks from National Development Minister Lawrence Wong that the Government is looking into the ageing Housing Board lease issue were mostly welcomed by observers yesterday, even as concerns remained over the fate of older flats.

ERA Realty key executive officer Eugene Lim welcomed the Government's move to "look seriously into more solutions to tackle the ageing lease issue". "The fact that we do not have a big problem now, does not mean we will not have a big problem in the future," he said.

OrangeTee head of research and consultancy Christine Sun said: "If HDB owners can no longer get the same kind of returns from selling their flat, they may consider the potential rental income it can fetch."

A three-room flat in Toa Payoh, for example, can be leased for $1,800 to $2,100 a month. If an owner rents out his whole flat for the remaining lease of, say, 50 years, the income could possibly cover the amount he paid for the flat, she said. This is provided that the home owner can find alternative accommodation elsewhere.

On Thursday in Parliament, Mr Wong tried to shed light on the issue. Noting that some have called for automatic lease extensions, or top-ups by private developers, he cautioned that both options will involve "serious trade-offs and ramifications". He said: "The Government must grapple with these difficult questions, study the matter and do the responsible thing."

National University of Singapore real estate professor Sing Tien Foo said yesterday that lease extensions without intensification of land use through redevelopment could have serious impacts on HDB flat supply in the long term.

"This could affect the housing prices and affordability of households of not just this generation, but also for younger residents in the future. Therefore, it would deserve more careful evaluation," he added.

The lease issue became a hot topic following a blog post by Mr Wong last year, when he warned that not all old flats will be eligible for the Selective En bloc Redevelopment Scheme. Those left out will be returned to the state when the 99-year lease matures.

He assured home owners on Thursday that there is still value in older flats, noting that "CPF can still be used but under certain conditions to safeguard home buyers' retirement adequacy".

The issue was raised this week in Parliament by several MPs, including Non-Constituency MP Leon Perera of the Workers' Party, who said on Thursday that his party is studying the matter "very seriously".

When asked yesterday, Mr Perera said that Mr Wong "reiterated the Government's traditional policy stance on the issue. The flat lease decay issue has been there for some time. We will share our ideas at a later stage."

Adapted from The Straits Times, May 19th, 2018.