Don't assume flat will be picked for Sers, buyers told

[reporter2]

Don't assume flat will be picked for Sers, buyers told

Mar 25, 2017

Lawrence Wong spells out conditions for scheme to be met, following recent sales of old flats for high prices

Ng Jun Sen


Early this month, a 30-year-old flat in Bishan sold for $1.09 million. Last month, a 33-year-old flat in Potong Pasir went for $925,000.

With some old Housing Board flats fetching such high prices, National Development Minister Lawrence Wong has issued a word of caution to home buyers: Do not assume your flat will be selected for the Selective En bloc Redevelopment Scheme (Sers) when the lease runs out.

In fact, just 4 per cent of HDB flats have been identified to undergo Sers since it was launched in 1995, he said in a blog post yesterday.
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Under the scheme, the state buys back the flats at the market rate and offers residents discounted new units at another address.

Mr Wong spelt out the conditions that have to be met for Sers to take place.

It is granted only to HDB blocks on sites with the potential to be redeveloped. Typically, the land has not been well utilised.

Suitable replacement sites for residents must be available. The Government's financial resources also have to be considered.

Mr Wong said: "We will continue to maintain this strict selection criteria. So please do not assume that all old HDB flats will be automatically eligible for Sers."

In fact, he added, for the vast majority of flats, the leases will expire and the flats will be returned to the HDB, which will in turn have to surrender the land to the state.

OrangeTee head of research and consultancy Wong Xian Yang said: "When the lease goes to zero, the value of the home is also zero, so the owner gets nothing."

The minister was responding to a recent report in Chinese newspaper Lianhe Zaobao highlighting the high prices of several short-lease HDB flats in the resale market.

Checks by The Straits Times showed that old flats, generally in mature towns, are highly popular.

According to data from property portal SRX, 46 per cent of all resale transactions made in 2015 involved flats older than 30 years, with an average resale price of nearly $400,000.

Mr Lawrence Wong wrote: "While resale flats are transacted on a willing buyer-willing seller basis, I was concerned by the suggestion that some buyers are forking out high prices for older flats, in anticipation of the benefits of Sers."

But this will not pan out for most. "Buyers need to do their due diligence and be realistic when buying flats with short leases. This is especially important for young couples, who have to plan for a much longer future," he added.

Property experts said few buyers pay heed to the lease period when purchasing a resale home.

PropNex Realty chief executive Ismail Gafoor said: "Many buyers today prefer to upgrade and sell the property 10 to 15 years down the road. Hence, lease period is usually not a concern to many buyers."

So far, no 99-year leasehold HDB flat has reached the end of its lease. But as some flats were selected for Sers while they had around 60 years left on the lease, it could lead buyers to buy an old flat and expect to get a more valuable replacement unit under the scheme, said the analysts.

This is unwise, said R'ST research director Ong Kah Seng, adding: "Sers will remain a niche, exclusive windfall for those in strategic locations. Especially as there will be more flats with dwindling tenure appearing in the next decade or so, Sers cannot be a given for all flats."

By writing the blog post, the minister was pre-emptively "nipping the problem in the bud before it becomes unstoppable", said Orange- Tee's Mr Wong.

RESOLD FOR HIGH PRICES RECENTLY

Block 186, Bishan Street 13

Resale price: $1,088,000. Size: 146 sq m.
Age of unit: 30 years. Years left on lease: 69.

Block 132, Potong Pasir Avenue 1

Resale price: $925,000. Size: 161 sq m.
Age of unit: 33 years. Years left on lease: 66.

Block 129, Potong Pasir Avenue 1

Resale price: $905,000. Size: 161 sq m.
Age of unit: 33 years. Years left on lease: 66.

SOURCE: SRX PROPERTY

http://www.straitstimes.com/singapor...rs-buyers-told

[reporter2]

Not all old HDB flats qualify for Sers: Wong

Saturday, March 25, 2017

by Lee Meixian
[email protected]
@LeeMeixianBT


DON'T bet your money on buying an old HDB flat in the hope that the government will buy it back for redevelopment. National Development Minister Lawrence Wong had this warning for homebuyers, especially young couples, which he expounded on in a blog post on Friday.

His advice? Choose a flat with a lease long enough to last one's life expectancy. Leave shorter-lease flats to buyers who are going through a transition in their lives, and are not ready to commit to a longer lease just yet.

Mr Wong's concern was sparked by a recent Lianhe Zaobao article which highlighted the high prices of several short-lease HDB flats in the resale market.

He said: "I was concerned by the suggestion that some buyers are forking out high prices for older flats in anticipation of the benefits of the Selective En bloc Redevelopment Scheme, or Sers.

"But Sers, as the name implies, is on a selective basis. It is only offered to HDB blocks located in sites with high redevelopment potential. These are typically sites where the land has not been well utilised. It is also subject to the availability of suitable replacement sites for residents and the government's financial resources.

"This is why only 4 per cent of HDB flats have been identified for Sers since it was launched in 1995. We will continue to maintain this strict selection criteria. So please do not assume that all old HDB flats will be automatically eligible for Sers."

Mr Wong added that for the vast majority of HDB flats, the leases will eventually run out and the flats will be returned to HDB, which in turn will have to surrender the land to the state. As the leases run down, especially towards the tail-end of their lifespan, prices of the flats will come down correspondingly.

"So buyers need to do their due diligence and be realistic when buying flats with short leases. This is especially important for young couples, who have to plan for a much longer future," he said.

It is for this reason that the government enhanced the CPF Housing Grant in this year's Budget - to encourage first-time homebuyers to choose a resale flat with a sufficiently long lease, preferably long enough to last them until age 95, he said. In other words, a 30-year-old couple could consider resale units with leases that are 65 years or longer.

Mr Wong said that in this way, buyers can benefit from the appreciation in property value over time, especially after factoring in the government's housing grants and subsidies. They can consider unlocking the value of their properties by moving to a smaller flat at a later stage in life when their children have grown up and moved out.

PropNex Realty chief executive Ismail Gafoor agreed with Mr Wong's views but noted that Singaporeans rarely think so long-term when buying a HDB flat. Besides, most public flats built in the 1970s still have leases of at least 50 years to go, which should be sufficiently long for most people.

He added that buying shorter- lease properties in anticipation of Sers is "very speculative" behaviour. Such "Sers-worthy" flats are also usually confined to certain locations, and the identification of them could be the result of loose "market talk, or coffee shop talk, or agent talk".

In his experience, however, he has never come across any Singaporean buyer who specifically sought out a flat with Sers potential.

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[Arcachon]

RESOLD FOR HIGH PRICES RECENTLY

Block 186, Bishan Street 13

Resale price: $1,088,000. Size: 146 sq m.
Age of unit: 30 years. Years left on lease: 69.

Block 132, Potong Pasir Avenue 1

Resale price: $925,000. Size: 161 sq m.
Age of unit: 33 years. Years left on lease: 66.

Block 129, Potong Pasir Avenue 1

Resale price: $905,000. Size: 161 sq m.
Age of unit: 33 years. Years left on lease: 66.

Anyone know how much is the rental for the above unit per month.

They look cheap when you multiply the monthly rent to the remaining lease.

Maybe HDB should let private property owner buy HDB and see happen to the price.