National Day Rally’s ‘HDB’ joke?

hdbflat_rivervale

Is this arguably, the worse National Day Rally speech in the history of Singapore, from the perspective of addressing the mother of Singaporeans’ concerns and problems?

I refer to the article “National Day Rally 2018: Every HDB flat to be upgraded twice” (Straits Times headlines, 20 Aug).

It states that “Every Housing Board flat will be upgraded twice in its 99-year lifespan, as the Government extends an existing programme to cover more flats and unveils plans to roll out a new one in future.

Prime Minister Lee Hsien Loong yesterday announced that the Home Improvement Programme (HIP) will now cover housing blocks built up to 1997 that reach about 30 years of age. It is currently offered to flats built up to 1986.

This will benefit another 230,000 flats in Tampines, Pasir Ris, Yishun, Jurong and other housing towns.

A new multibillion-dollar programme – HIP II – will be launched in 10 years’ time, to cover all flats that are 60 to 70 years old and upgrade them a second time.

“HIP II will keep the flats safe and liveable, and also help them to retain their value as their leases run down,” said Mr Lee, who delivered his 15th National Day Rally at the Institute of Technical Education (ITE) College Central campus.”

As to “And it should see the flats through to the end of their leases” – I thought it was a joke when I heard this – because the flat’s lease will still remain unchanged at 99 years!

So, what are we saying?

Are Singaporeans being asked to pay even more for 2 more upgrades, such that in a sense, all their cash and CPF used to pay for the mortgage, renovations, etc – and now these 2 upgrades too – will be gone, when the 99-year lease ends?

With regard to “In the longer term, more residents in ageing HDB towns will have the option of selling their flats to the Government before the leases expire.

The Prime Minister unveiled the Voluntary Early Redevelopment Scheme (Vers), which will allow residents in selected precincts to vote on whether to take up the Government’s offer to buy back their flats.

Housing experts said the three initiatives – HIP, HIP II and Vers – could help address concerns over the hot topic of expiring leases, as the Government is taking steps to preserve the value of ageing flats.

Under Vers, the Government will progressively take back flats that reach about 70 years of age, and redevelop older towns over two to three decades” – I think the so called experts that the Straits Times has been talking too may arguably, not be so “expert” after all – because the issue of older flats starting to decline rapidly in value after about 40 years is not resolved, as the root of the problem, is arguably, the restrictions on housing loans and the use of CPF on older flats.

How does  “the Government will progressively take back flats that reach about 70 years of age” resolve this problem that is increasingly affecting older HDB flat owners now?

In respect of “Mr Lee said planning for Vers will begin now, but the scheme will start only 20 years down the road.

“We need time to work out how to select the precincts, how to pace the redevelopments out, the specific terms of the Government’s offer and so on,” Mr Lee said” – what does the Government expect the older flat owners, who are facing rapidly declining values to do now – wait for 20 years?

As to “Currently, the Government acquires certain older flats with high redevelopment value through the Selective En bloc Redevelopment Scheme (Sers). Only an estimated 5 per cent of flats are suitable for Sers, and there are only a few more of such projects left.

Vers will allow more households to benefit from redevelopment, but the terms will be less generous than Sers “because there will be less financial upside”, Mr Lee said” – does this mean that Singaporeans may have to pay even more, compared to the current SERS’s terms?

With regard to “On expiring leases, Mr Lee said 99 years is actually a very long time.

Those who buy a new flat in their early 30s will still have more than 60 years of lease left when they retire, he noted. “That is long enough for it to retain substantial value, and be a good retirement nest egg.”” – have we forgotten the fact that not all flat owners purchased new BTO flats?

What about those who purchased resale flats that were older than new BTO flats?

In respect of “He also gave the reassurance that the Government will help HDB residents whose leases expire to get another flat. This could be a new Build-To-Order flat, a resale flat or a two-room flexi flat.

They will have to pay for a new lease, regardless of which housing option is chosen, he added” – does this mean that Singaporeans may have to pay even more in the future – for an unknown amount in the future for an unknown type of flat type, that they may have to downgrade to?

What about the issue of the “zero value” when the lease ends?

As to “The Government’s various plans to improve public housing and healthcare will require large expenditures and span several generations, Mr Lee noted” – what’s the point of making billions of profits on the sale of HDB flats, and accumulating an estimated $1 trillion in the reserves – only to “kick down the road” the current looming problem of the declining value of HDB flats?

With regard to “”Very few countries can make such long-term plans, and anticipate needs and opportunities into the distant future. But in Singapore, we can, and we will,” he said.

“This Government believes it owes it to you to look ahead, share our thinking with you, pool our ideas, and work with you to make it happen”‘ – are there any countries in the world that makes money from public housing, and from a cashflow perspective – may not be spending any money on public housing by charging land costs at market rates?

Uniquely Singapore!

Leong Sze Hian

 

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.