reporter2
19-04-22, 11:03
With Sers and Vers, HDB homes can trump private leasehold homes
Through these two schemes, land lease decay can be better mitigated for owners of HDB flats than owners of private homes, which sit on initial land leases of 99 years
Apr 19, 2022
https://i.imgur.com/Sos0zjV.png
MANY HDB flats, private homes and commercial buildings in Singapore are built on land parcels with initial lease tenures of 99 years. Having properties sit on leasehold land allows the government to recover land upon lease expiry to reallocate it to meet fast changing socio-economic needs.
However, amid rising demand for homes and new economic needs, some leasehold land parcels are redeveloped for more intensive or new uses ahead of the expiry of their 99-year land lease tenures. As buildings that are several decades old can become obsolete, redeveloping to create more relevant offerings makes sense.
There are various examples in the private home market of successful en bloc sales of leasehold residential developments, which are more than 30 years old. Typically, these en bloc sales resulted in the building of new condominium developments that housed many more units.
With HDB homes, there is the Selective En bloc Redevelopment Scheme (Sers), which is part of the government's efforts to renew older housing estates. Under Sers, selected precincts with high redevelopment value are bought by the government, so as to allow for new buildings and facilities to be introduced into the estate. Sers residents are offered the chance to move into a new flat with a fresh 99-year lease, and which has better design and modern facilities.
Latest Sers exercise
On Apr 7, 2022, HDB announced the selection of Blocks 562 to 565 at Ang Mo Kio Avenue 3, comprising 606 units, to undergo Sers. This is the first such project unveiled since May 2018.
Completed in 1979, flats in these four blocks are around 43 years old, and comprise mainly 3-room and 4-room units.
The flat owners will have their units sold back to the government at a market value determined by a private valuer appointed by HDB. They will then be offered the chance to buy new-built HDB flats, ranging from 2-room flexi to 4-room units, at Ang Mo Kio Drive.
The owners will receive a S$10,000 removal allowance to defray moving expenses, and HDB will pay the stamp and legal fees for the purchase of a comparable replacement flat. Also, eligible flat owners may receive a Sers grant of up to S$30,000.
Perhaps some owners of private leasehold homes may do better financially than HDB flat owners from en bloc exercises. Still, HDB flat owners involved in Sers receive help to buy a replacement home in the same locale. Where private home prices are rising, an owner of a private home that was successfully sold in an en bloc exercise may face higher prices when looking for a replacement home post collecting the proceeds from the en bloc sale.
Risk of no en bloc
However, for home buyers, who are hoping to buy an older HDB flat so to benefit from Sers, be warned that only a small proportion of HDB flats will benefit from Sers.
HDB said only about 5 per cent of all HDB flats are suitable for redevelopment under Sers, and most of these projects with high redevelopment potential have already been selected for the scheme. To date, more than 41,000 households in 82 sites, including the latest site, have benefited from Sers.
Equally, buying an older private leasehold condominium unit in the hope of cashing in on an en bloc sale is risky. Will enough owners support an en bloc sale at a price that works for a developer? Also, often, an en bloc sale may work only if the government allows for the extension of the land lease.
In general, the government's policy is to allow leases to expire without extension. Nevertheless, extensions of state leases are considered on a case-by-case basis where they are in line with planning intention and help to further specific economic and social objectives.
Looking ahead, owners of HDB flats and private homes built in the 1970s, which sit on initial land leases of 99 years, may start to worry about land lease decay soon. Will there be much liquidity when a home's land lease tenure runs down to 30 years or less?
Voluntary early redevelopment scheme
When the outstanding land tenure of a home reaches around 30 years, a HDB flat owner may enjoy an edge over a private homeowner. The Voluntary Early Redevelopment Scheme (Vers) is another part of the government's efforts to renew older public housing estates.
Vers will be a voluntary scheme offered to selected precincts when they are aged 70 years or older. More homeowners will be able to benefit from redevelopment before their 99-year HDB lease expires under Vers as compared to Sers.
Homeowners in precincts offered Vers will have to vote to decide if they want the government to take back their flats before the land lease runs out. Terms will be less generous than Sers.
Many locals aspire to own and live in private leasehold condominiums. Some condominium developments offer a wide range of facilities and some people want to own private homes for social status.
But HDB homeowners may benefit from various rejuvenation programmes such as the Remaking Our Heartland Programme, Neighbourhood Renewal Programme, and Home Improvement Programme (HIP).
Under HIP, the government pays for essential improvements relating to ageing flats such as the repair of spalling concrete and structural cracks. Also, flat owners can opt for heavily subsidised improvements such as a new grille gate at an additional cost and seniors can opt for elderly-friendly fittings such as grab bars.
Many people own leasehold homes and some people worry about land lease decay, especially if they hope to pass something valuable to their loved ones. Thus, there is likely to be much anticipation over the details of Vers.
Through the combination of Sers and Vers, land lease decay can be better mitigated for owners of HDB flats than owners of private homes, which sit on initial land leases of 99 years.
Perhaps, buying a million-dollar HDB resale home trumps purchasing an older leasehold condominium unit. Also, trading the HDB home for a private leasehold home may hardly amount to an upgrade.
https://www.businesstimes.com.sg/real-estate/with-sers-and-vers-hdb-homes-can-trump-private-leasehold-homes
Through these two schemes, land lease decay can be better mitigated for owners of HDB flats than owners of private homes, which sit on initial land leases of 99 years
Apr 19, 2022
https://i.imgur.com/Sos0zjV.png
MANY HDB flats, private homes and commercial buildings in Singapore are built on land parcels with initial lease tenures of 99 years. Having properties sit on leasehold land allows the government to recover land upon lease expiry to reallocate it to meet fast changing socio-economic needs.
However, amid rising demand for homes and new economic needs, some leasehold land parcels are redeveloped for more intensive or new uses ahead of the expiry of their 99-year land lease tenures. As buildings that are several decades old can become obsolete, redeveloping to create more relevant offerings makes sense.
There are various examples in the private home market of successful en bloc sales of leasehold residential developments, which are more than 30 years old. Typically, these en bloc sales resulted in the building of new condominium developments that housed many more units.
With HDB homes, there is the Selective En bloc Redevelopment Scheme (Sers), which is part of the government's efforts to renew older housing estates. Under Sers, selected precincts with high redevelopment value are bought by the government, so as to allow for new buildings and facilities to be introduced into the estate. Sers residents are offered the chance to move into a new flat with a fresh 99-year lease, and which has better design and modern facilities.
Latest Sers exercise
On Apr 7, 2022, HDB announced the selection of Blocks 562 to 565 at Ang Mo Kio Avenue 3, comprising 606 units, to undergo Sers. This is the first such project unveiled since May 2018.
Completed in 1979, flats in these four blocks are around 43 years old, and comprise mainly 3-room and 4-room units.
The flat owners will have their units sold back to the government at a market value determined by a private valuer appointed by HDB. They will then be offered the chance to buy new-built HDB flats, ranging from 2-room flexi to 4-room units, at Ang Mo Kio Drive.
The owners will receive a S$10,000 removal allowance to defray moving expenses, and HDB will pay the stamp and legal fees for the purchase of a comparable replacement flat. Also, eligible flat owners may receive a Sers grant of up to S$30,000.
Perhaps some owners of private leasehold homes may do better financially than HDB flat owners from en bloc exercises. Still, HDB flat owners involved in Sers receive help to buy a replacement home in the same locale. Where private home prices are rising, an owner of a private home that was successfully sold in an en bloc exercise may face higher prices when looking for a replacement home post collecting the proceeds from the en bloc sale.
Risk of no en bloc
However, for home buyers, who are hoping to buy an older HDB flat so to benefit from Sers, be warned that only a small proportion of HDB flats will benefit from Sers.
HDB said only about 5 per cent of all HDB flats are suitable for redevelopment under Sers, and most of these projects with high redevelopment potential have already been selected for the scheme. To date, more than 41,000 households in 82 sites, including the latest site, have benefited from Sers.
Equally, buying an older private leasehold condominium unit in the hope of cashing in on an en bloc sale is risky. Will enough owners support an en bloc sale at a price that works for a developer? Also, often, an en bloc sale may work only if the government allows for the extension of the land lease.
In general, the government's policy is to allow leases to expire without extension. Nevertheless, extensions of state leases are considered on a case-by-case basis where they are in line with planning intention and help to further specific economic and social objectives.
Looking ahead, owners of HDB flats and private homes built in the 1970s, which sit on initial land leases of 99 years, may start to worry about land lease decay soon. Will there be much liquidity when a home's land lease tenure runs down to 30 years or less?
Voluntary early redevelopment scheme
When the outstanding land tenure of a home reaches around 30 years, a HDB flat owner may enjoy an edge over a private homeowner. The Voluntary Early Redevelopment Scheme (Vers) is another part of the government's efforts to renew older public housing estates.
Vers will be a voluntary scheme offered to selected precincts when they are aged 70 years or older. More homeowners will be able to benefit from redevelopment before their 99-year HDB lease expires under Vers as compared to Sers.
Homeowners in precincts offered Vers will have to vote to decide if they want the government to take back their flats before the land lease runs out. Terms will be less generous than Sers.
Many locals aspire to own and live in private leasehold condominiums. Some condominium developments offer a wide range of facilities and some people want to own private homes for social status.
But HDB homeowners may benefit from various rejuvenation programmes such as the Remaking Our Heartland Programme, Neighbourhood Renewal Programme, and Home Improvement Programme (HIP).
Under HIP, the government pays for essential improvements relating to ageing flats such as the repair of spalling concrete and structural cracks. Also, flat owners can opt for heavily subsidised improvements such as a new grille gate at an additional cost and seniors can opt for elderly-friendly fittings such as grab bars.
Many people own leasehold homes and some people worry about land lease decay, especially if they hope to pass something valuable to their loved ones. Thus, there is likely to be much anticipation over the details of Vers.
Through the combination of Sers and Vers, land lease decay can be better mitigated for owners of HDB flats than owners of private homes, which sit on initial land leases of 99 years.
Perhaps, buying a million-dollar HDB resale home trumps purchasing an older leasehold condominium unit. Also, trading the HDB home for a private leasehold home may hardly amount to an upgrade.
https://www.businesstimes.com.sg/real-estate/with-sers-and-vers-hdb-homes-can-trump-private-leasehold-homes