Low-cost housing curbs will only affect new buyers

[irisng]

SINGAPORE — National Development Minister Khaw Boon Wan made it clear yesterday that if a new housing option is offered, which could see flats being priced lower than current Build-To-Order (BTO) flats, restrictions “will only apply to the new buyers, and will not apply to existing flat owners”.

Mr Khaw said this as he related how an elderly woman, who lived in Queenstown, travelled to his Meet-the-People’s Session in Sembawang on Monday, after she heard that the resale of Housing and Development Board (HDB) flats in the open market may be stopped, and that all resale transactions would be to the HDB only.

On Sunday, two days after signalling a rethink of the role and nature of public housing, Mr Khaw floated three ideas on possible restrictions to help lower the prices of new flats.

They are: Longer minimum occupation period, shorter lease and no resale in the open market.

Yesterday, Mr Khaw recounted: “She had not slept well since she heard the news ... She wanted to know if she had heard correctly.” He told the woman that she had misunderstood the media reports. While there were many calls for the HDB to “return to basics”, these would have a major impact on existing flat owners, especially the seniors, like her, the Minister added.

Mr Khaw wrote on his blog: “We want to provide affordable housing for new homeowners, especially young couples, but we will not forget the interest of the many hundreds of thousands of existing homeowners. Some plan to rely on their flat to finance retirement needs. Some hope to bequeath their flats to the next generation. Some rely on renting out a room to bring in extra cash proceeds. Their concerns matter to me too.”

And if a low-cost housing option is offered, Mr Khaw said it must come with restrictions to differentiate it from the existing BTO flats.

“Obviously, if we offer such an option, these restrictions of a longer minimum occupation period, or shorter lease or no resale in the open market will only apply to the new buyers, and will not apply to existing flat owners like the Queenstown lady,” he added.

Property analysts interviewed felt the new low-price housing option should also come with a restriction on the sublet of the units. If such a restriction is not imposed, it would “take away the essence” of the HDB’s goal of home ownership, said Mr Chris Koh, Director of Chris International.

Head of Research and Consultancy at Chesterton Suntec International Colin Tan said that shortening the lease could pose other unintended problems, such as how some banks may not provide loans to borrowers to service loans for properties which have shorter leases. This may result in older flats with longer leases appreciating in resale value, which may further impact the market, he added.

[phantom_opera]

70y lease like China on the cards, probably with 10y MOP also

10y MOP is a long time, this will deter those high flyers from choosing 70y lease BTOs

[Kelonguni]

70y lease like China on the cards, probably with 10y MOP also

10y MOP is a long time, this will deter those high flyers from choosing 70y lease BTOs

High flyers salary range at 35 yrs old unlikely to qualify. Unless their salary is not fixed or mostly unrecorded.

If singles i think 70 yrs more than enough, even 60. Because add 35 years to 70, will be 105 years old.

If they marry, then will qualify for other types of housing. So i think it makes sense.

[phantom_opera]

this will be more political then practical to shut the mouths of critics by having a housing option that u can't monetize

[timmy]

70y lease like China on the cards, probably with 10y MOP also

10y MOP is a long time, this will deter those high flyers from choosing 70y lease BTOs

Wouldn't shortening the lease significantly impact the older hdb flat prices? In essence govt is quantifying the price of lease, which until now doesn't matter becos implicit assumption is govt will top up depleted lease at some stage (eg via SER). This is unlikely to be in line with their promise not to affect existing homeowners. A better solution may be tan kin Lian's one, or longer MOP. Just my 2 cents. Feel free to disagree.

[edwinleeap]

Wouldn't shortening the lease significantly impact the older hdb flat prices? In essence govt is quantifying the price of lease, which until now doesn't matter becos implicit assumption is govt will top up depleted lease at some stage (eg via SER). This is unlikely to be in line with their promise not to affect existing homeowners. A better solution may be tan kin Lian's one, or longer MOP. Just my 2 cents. Feel free to disagree.

My real question is: how does shorter lease affect the chances of SERS?

If 60 year lease also qualify for SERS without restriction, then no difference with 99yr lease.

[timmy]

My real question is: how does shorter lease affect the chances of SERS?

If 60 year lease also qualify for SERS without restriction, then no difference with 99yr lease.

There are many existing old hdb precincts with large land areas but are low rise. If govt wants to intensify land use to cater to 6.9 million people, it has to SERs these areas. Too long to wait for lease to expire in 60 years time. In other words, these will still qualify for SERs without restriction and are no different from 99-yr lease. As for new class of BTO with say 60 year of lease, the chance of SERs will be low in next few decades if govt max out plot ratio right from day 1. No waste of land means limited chance for SERs.

[Regulators]

gen y keep screaming for low cost housing, after buying they cannot sell to anyone but hdb or have mop of 10 years n cannot rent out, you think they will bite? knowing gen y, they are the type that want to have the cake n eat it n want to profit like their parents, I don't think they will go for it n would LL look for resale, in the end slapping their own mouths lol.

[Kelonguni]

gen y keep screaming for low cost housing, after buying they cannot sell to anyone but hdb or have mop of 10 years n cannot rent out, you think they will bite? knowing gen y, they are the type that want to have the cake n eat it n want to profit like their parents, I don't think they will go for it n would LL look for resale, in the end slapping their own mouths lol.

I don't think all are like that. Those simply looking for a place to stay and bring up family will still take the discount.

[mcmlxxvi]

i welcome 60LH and 10yr MOP no resale to open mkt.

gimme a 50k bto in matured estate then.

[Regulators]

with 30% discount n all this draconian restrictions, let us wait and see how many of these gen y will go for it, it will be the minority of gen y. let me tell you why, anyone who buys will be stuck for ten years not being able to invest any other kind of property n when these gen y reach a stage when they are earning well in less than ten years, they will get frustrated about not being able to own a condo, it is just human nature to improve one's life. in fact most of these gen y that make noise can actually afford a resale with some help from parents but they just want to make noise to see what carrots govt can give them. I think kbw just doesn't understand them well enough.

I don't think all are like that. Those simply looking for a place to stay and bring up family will still take the discount.

[DC33_2008]

How can 30% down of BTO affects only1st time buyer? There will be indirect impact on other hdb flats.

[Kelonguni]

i welcome 60LH and 10yr MOP no resale to open mkt.

gimme a 50k bto in matured estate then.

It will have to commensurate with the discounts given.

200K 5-rm BTO with 60LH and 10yr MOP. Can stomach still.

But might have new income caps. Can only buy this if combined income does not exceed $6 or $7K.

[Kelonguni]

with 30% discount n all this draconian restrictions, let us wait and see how many of these gen y will go for it, it will be the minority of gen y. let me tell you why, anyone who buys will be stuck for ten years not being able to invest any other kind of property n when these gen y reach a stage when they are earning well in less than ten years, they will get frustrated about not being able to own a condo, it is just human nature to improve one's life. in fact most of these gen y that make noise can actually afford a resale with some help from parents but they just want to make noise to see what carrots govt can give them. I think kbw just doesn't understand them well enough.

Some of those I know sincerely just want a place to stay and never thought about selling or cashing out. Even if you offer them super high price for their HDB they do not want to sell unless they are forced to.

So it depends on who you talk to...

[Regulators]

they r in the minority

Some of those I know sincerely just want a place to stay and never thought about selling or cashing out. Even if you offer them super high price for their HDB they do not want to sell unless they are forced to.

So it depends on who you talk to...

[Leeds]

By creating a new housing option with shorter lease and restrictions and leaving the normal BTO flats as it is means that a different 'social class' will also be created. This is against the government's efforts in wanting to close the social divide which we now experiencing.

I believe the government is only putting the various options for discussions and to gain acceptance from different shakeholders. A more socially and politically acceptable option will evolute through the discussions.

[Regulators]

the noise makers asked to be put into that class

By creating a new housing option with shorter lease and restrictions and leaving the normal BTO flats as it is means that a different 'social class' will also be created. This is against the government's efforts in wanting to close the social divide which we now experiencing.

I believe the government is only putting the various options for discussions and to gain acceptance from different shakeholders. A more socially and politically acceptable option will evolute through the discussions.

[Rosy]

Imo 10 years is a reasonable time frame for a normal couple with degrees to save up enough money for a 2nd investment property.

Unless both couples are thrifty and without kids, it can be done within 5 years or so.

[phantom_opera]

what is wrong with new class of 70ylh? same as china Mah
hk has cage class leh

I for one think is very good move .. give ppl a choice.. old retirees can sell off 99lh and downgrade to 70lh

[Rosy]

Nothing wrong with 10year MOP.

However i do not recommend shorter lease unless it is for singles above 35 or retirees.

[Leeds]

the noise makers asked to be put into that class

The government was largely responsible for what we are today as admitted by the PM. The elected government has the duty of care to make good the wrongs.

[august]

By creating a new housing option with shorter lease and restrictions and leaving the normal BTO flats as it is means that a different 'social class' will also be created. This is against the government's efforts in wanting to close the social divide which we now experiencing.

I believe the government is only putting the various options for discussions and to gain acceptance from different shakeholders. A more socially and politically acceptable option will evolute through the discussions.

Food for thought. In the not so recent past, HDB created new housing options like DBSS, and EC. Do they not create different 'social classes' too? DBSS has since been scrapped. Why is it now that when a new more affordable housing option is being contemplated, suddenly we are bringing up 'social class'?

[Leeds]

Food for thought. In the not so recent past, HDB created new housing options like DBSS, and EC. Do they not create different 'social classes' too? DBSS has since been scrapped. Why is it now that when a new more affordable housing option is being contemplated, suddenly we are bringing up 'social class'?

The 'social class' in question is about not having the possible option to unlift themselves while the rest of the population enjoys. This is different from DBSS and EC which cater to different needs and income levels.

[august]

The 'social class' in question is about not having the possible option to unlift themselves while the rest of the population enjoys. This is different from DBSS and EC which cater to different needs and income levels.

is there a difference? why is 'downgrading' to a new category means creating new social class while 'upgrading' to a new category is not? just semantics isnt it?

[Regulators]

those who buy resale hdb are in the same predicament as they are tied for five years, only difference is they get to sell to open market. if you want to talk social class, isn't there already a class divide between those who live n hdb, those who in pc n those who live in gcb? even for pc, living in ardmore is a different class from this living in caspian, that is a class within a class.

The 'social class' in question is about not having the possible option to unlift themselves while the rest of the population enjoys. This is different from DBSS and EC which cater to different needs and income levels.

[amk]

what is wrong with new class of 70ylh? same as china Mah
hk has cage class leh

I for one think is very good move .. give ppl a choice.. old retirees can sell off 99lh and downgrade to 70lh

Even better one : 15yr MOP 50% off, 20y , FREE !

Seriously, if this is implemented, I can foresee a lot of ppl who buy under this scheme will make noise 5ys later when they cannot catch a booming market. I predict they will say "ok I top up the 30% and you allow me to sell now" , so this becomes a free option. Ppl are greedy , trust me on this.

[Leeds]

is there a difference? why is 'downgrading' to a new category means creating new social class while 'upgrading' to a new category is not? just semantics isnt it?

those who buy resale hdb are in the same predicament as they are tied for five years, only difference is they get to sell to open market. if you want to talk social class, isn't there already a class divide between those who live n hdb, those who in pc n those who live in gcb?

If the new housing option does not allow some form of asset enhancement like the normal BTO flats do, then this group of people would not be able to up the value chain while the rest of the population does. This is inequality and create greater social divide which the government is trying hard to address and without much success thus far.

[amk]

the noise makers asked to be put into that class

Actually the much more entertaining aspect of this is : you think these noise makers will really take it ? I would love to see KBW really doing this, giving what they ask, and see if they actually want it.

[phantom_opera]

Even better one : 15yr MOP 50% off, 20y , FREE !

Seriously, if this is implemented, I can foresee a lot of ppl who buy under this scheme will make noise 5ys later when they cannot catch a booming market. I predict they will say "ok I top up the 30% and you allow me to sell now" , so this becomes a free option. Ppl are greedy , trust me on this.

option to have upside only, how smart lol

[amk]

If the new housing option does not allow some form of asset enhancement like the normal BTO flats do, then this group of people would not be able to up the value chain while the rest of the population does. This is inequality and create greater social divide which the government is trying hard to address and without much success thus far.

Yea sure. In short, "we want the cake, and eat it too". What's new ?