HDB PHole Effective Price = $1M!

[makapaaa]

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Coffeeshop Chit Chat - HDB PHole Effective Price = $1M!</TD><TD id=msgunetc noWrap align=right> </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>makapa <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>12:21 am </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 1) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>31638.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>Apr 13, 2010

Allay uncertainty over HDB leasehold

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BUYERS are chasing Housing Board resale prices relentlessly as if they are freehold properties.
For instance, five-room flats in Marine Parade, with less than 65 years of lease left, are changing hands at $700,000 each or more.
If these prices are averaged out over 99 years to compare with new apartments with 99-year leases, it would put the valuation of such units at more than $1 million.
Is the price reasonable?
It would be fairer if the Government spells out the policy on the expiry of HDB leaseholds, so that buyers will have a clearer idea of what they are buying into.
Wong Pang Yee

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[makapaaa]

<TABLE border=0 cellSpacing=0 width="100%"><TBODY><TR><TD class=heading>Latest comments</TD></TR><TR><TD id=messageDisplayRegion width="100%"><TABLE style="WIDTH: 100%" cellSpacing=2 cellPadding=0><TBODY><TR><TD style="VERTICAL-ALIGN: top" align=left><TABLE style="WIDTH: 100%" cellSpacing=2 cellPadding=0><TBODY><TR><TD style="VERTICAL-ALIGN: top" align=left><TABLE style="WIDTH: 100%" class=Post cellSpacing=0 cellPadding=0><TBODY><TR><TD style="VERTICAL-ALIGN: top" align=left>The answer is actually straight forward.
The property or land goes back to the land owner; since the land belongs to The Housing Development Board (HDB), the properties will be returned to the HDB when the lease runs out.

Interestingly, most buyers had mistakenly assumed our government will compensate the home owners with a replacement flat or through some cash payout at the end of the lease.

That is a wrong perception. There is no residual value after the lease runs out. Our government is not obligated to pay anyone anything after the lease expires. If our government so decides to compensate these owners, it is really their prerogative and it is not an obligation on their part.

The lease system works somewhat like a Tenancy Agreement. After the Tenancy Agreement ends, other than returning the security deposit back to the tenant, the Landlord is not obligated to pay or incentivise the tenants to move out.

So the current situation where HDB prices rise explosively despite leases running out is really a sign of a bubble. People get 30-year mortgages for a rental contract which might be worth nothing after the lease runs out. The system only works if you sell early enough to cash in on the profits but this contradicts the governments policy that an HDB flat should be seen as a home to stay in and not a cash cow...
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[hockbeng]

<TABLE border=0 cellSpacing=0 width="100%"><TBODY><TR><TD class=heading>Latest comments</TD></TR><TR><TD id=messageDisplayRegion width="100%"><TABLE style="WIDTH: 100%" cellSpacing=2 cellPadding=0><TBODY><TR><TD style="VERTICAL-ALIGN: top" align=left><TABLE style="WIDTH: 100%" cellSpacing=2 cellPadding=0><TBODY><TR><TD style="VERTICAL-ALIGN: top" align=left><TABLE style="WIDTH: 100%" class=Post cellSpacing=0 cellPadding=0><TBODY><TR><TD style="VERTICAL-ALIGN: top" align=left>The answer is actually straight forward.
The property or land goes back to the land owner; since the land belongs to The Housing Development Board (HDB), the properties will be returned to the HDB when the lease runs out.

Interestingly, most buyers had mistakenly assumed our government will compensate the home owners with a replacement flat or through some cash payout at the end of the lease.

That is a wrong perception. There is no residual value after the lease runs out. Our government is not obligated to pay anyone anything after the lease expires. If our government so decides to compensate these owners, it is really their prerogative and it is not an obligation on their part.

The lease system works somewhat like a Tenancy Agreement. After the Tenancy Agreement ends, other than returning the security deposit back to the tenant, the Landlord is not obligated to pay or incentivise the tenants to move out.

So the current situation where HDB prices rise explosively despite leases running out is really a sign of a bubble. People get 30-year mortgages for a rental contract which might be worth nothing after the lease runs out. The system only works if you sell early enough to cash in on the profits but this contradicts the governments policy that an HDB flat should be seen as a home to stay in and not a cash cow...
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The current Gov wont be around to take responsibility when the shit hits the fan 30 yrs later so they couldn't care less. They will be long retired and enjoying life.