Arcachon
28-10-18, 21:13
http://investmentmoats.com/uncategorized/hdb-lease-does-expire-win-with-your-hdb-flats/#comments
A portion of Singaporeans got a jolt these few weeks when National Development Minister Lawrence Wong said that not all the old HDB flats are eligible for Selective En bloc Redevelopment Scheme (Sers).
Under SERS, the HDB acquires ageing blocks for redevelopment, compensates residents at market rates for their old flats and lets them buy new units nearby at subsidized rates.
What shocked many Singaporeans is that they never grasp this concept of leasehold versus freehold. Leasehold assets are essentially assets lease to you for x years and when that time comes the value of your assets is $0. Freehold in comparison gives you ownership of the land or things on it.
They always have an idea that when they put money down on a property, they own that property.
Not just that, the property can be handed to the next generation as a bequest. The advantage in Singapore versus other countries such as USA and UK is that there are no estate duty or death tax. For example if you own assets worth $500,000 in USA, sans $60,000 that are exempted from taxes, you will be taxed ($500,000 – $60,000) x 50% = $220,000.
This is a great advantage to have.
When this concept gets challenged, there is uncertainty. When there is uncertainty, there is fear. People have a lot of vested interests and now there is a fear that this could unravel.
Progression of Leasehold Value DepreciationIf we take residential properties out of the equation, and focus on commercial and industrial real estate, there is a conversion table to aid those who are redeveloping their properties:
Extending their leasehold
Converting their leasehold to freehold
In the conversion table, it illustrate that depending on the current amount of lease left, what is the corresponding value versus if it is freehold. That goes into the mathematics of how much the developer or owner needs to top up.
A portion of Singaporeans got a jolt these few weeks when National Development Minister Lawrence Wong said that not all the old HDB flats are eligible for Selective En bloc Redevelopment Scheme (Sers).
Under SERS, the HDB acquires ageing blocks for redevelopment, compensates residents at market rates for their old flats and lets them buy new units nearby at subsidized rates.
What shocked many Singaporeans is that they never grasp this concept of leasehold versus freehold. Leasehold assets are essentially assets lease to you for x years and when that time comes the value of your assets is $0. Freehold in comparison gives you ownership of the land or things on it.
They always have an idea that when they put money down on a property, they own that property.
Not just that, the property can be handed to the next generation as a bequest. The advantage in Singapore versus other countries such as USA and UK is that there are no estate duty or death tax. For example if you own assets worth $500,000 in USA, sans $60,000 that are exempted from taxes, you will be taxed ($500,000 – $60,000) x 50% = $220,000.
This is a great advantage to have.
When this concept gets challenged, there is uncertainty. When there is uncertainty, there is fear. People have a lot of vested interests and now there is a fear that this could unravel.
Progression of Leasehold Value DepreciationIf we take residential properties out of the equation, and focus on commercial and industrial real estate, there is a conversion table to aid those who are redeveloping their properties:
Extending their leasehold
Converting their leasehold to freehold
In the conversion table, it illustrate that depending on the current amount of lease left, what is the corresponding value versus if it is freehold. That goes into the mathematics of how much the developer or owner needs to top up.