As Singapore matures as a republic, the issues that arise from an ageing population become more apparent.
The ages and remaining lease periods of HDB flats have been much debated of late, especially following recent mentions by the authorities about the future of HDB flats with less than 60 years left on their leases.
Teck Whye Crescent. Picture: iProperty
The government says there is still value in older HDB flats
Last year, the Minister of National Development Lawrence Wong warned against paying exorbitant prices for resale HDB flats with fewer years left on their leases.
These older flats were often in districts popular with young couples who would often fork out high prices for a unit and also spend considerable amounts for renovation works. Some buyers were also paying high prices in hope that the units purchased would be selected for the Selective En bloc Redevelopment Scheme (SERS).
Should a unit be selected, the HDB will offer owners new units. The latter are often in a different designated location though compensation to help with the move would be provided.
The announcements stirred up some concerns that older HDB flats have decreasing to no future value. In Parliament last week, Mr. Wong reiterated the government’s traditional policy stance on the issue but also says that there is still value in older HDB flats.
Buyers can still use CPF to pay for the flat but with certain restrictions. These safeguards are in place to help citizens manage their retirement funds.
Related: FAQs on The Use of Central Provident Fund (CPF) For Home Purchase
The issue needs further evaluation to ensure affordability of housing for the future generation
HDB flats have a lease period of 99 years. The Republic of Singapore is just about to celebrate it’s 53rd birthday and the first HDB blocks, completed in November 1960, were located at Blocks 134 and 135 at Clarence Lane in Queenstown.
This means some of the oldest would be 58 years old if their leases had not be refreshed. That would leave these earliest flats with 41 years on their lease. Should a young couple in their 30s have bought these flats, and with the average age of Singaporeans reaching almost 85 years, they would almost certainly outlive the lease of their flat. What then?
While there are rental possibilities for owners of older flats, which could possibly cover the payments made on them, this would be largely dependent on immigration and workforce policies. It would also mean the owners will need to have alternative accommodation.
How then does the government suggest to tackle this ageing-lease issue? Their concern is however not unfounded. Without intensification of land through redevelopment, future public housing prices could become unaffordable for the younger residents.
