A letter published in the Straits Times claimed recently that the promise of owning a 99-year-leasehold HDB (Housing & Development Board) flat as an investment for old age is no longer valid today. The letter writer, Ronnie Lim Ah Bee, pointed to the announcements by National Development Minister Lawrence Wong to bolster his claims.
Writing for his Ministry’s blog in March last year, Mr Wong asked HDB flat owners to not assume that all old HDB flats will become eligible for Sers (Selective En bloc Redevelopment Scheme). He said that “only 4% of HDB flats have been identified for SERS since it was launched in 1995”, and that “it is only offered to HDB blocks located in sites with high redevelopment potential”.
About 70,000 flats (of the 1-million HDB flats) are more than 40 years old, and almost 10 percent of flats will face lease expiry in 50 years. The Minister’s announcement essentially means that such flats they will have zero value once it reaches 99 years and owners will have to vacate their homes. Most owners will see the land their flat was on being returned to the State at the end of the 99-year-leasehold.
The letter writer said that “many seniors who want to downgrade to Built-To-Order studio apartments for the elderly are in a fix as they are unable to sell their old flats”, and that many such seniors “stand to lose their deposits on their new flat if they cannot sell their old flat.”
Analysts expect 99-year-leasehold HDB flat prices to remain flat this year" data-reactid="15">Analysts expect 99-year-leasehold HDB flat prices to remain flat this year
resale flats[/a] dipped by 0.8 per cent in the 1st Quarter of 2018 from the previous three-month period. The price drop is significant from its peak in the 1st quarter of 2013.

99-year-leasehold
Some, like Mr Lim, are disappointed by the price drop in HDB resale flats. “Most of them were hoping to downgrade and live on the profits from selling their flats but have become disillusioned,” Mr Lim said.
He added: “The Government needs to step in to manage this problem and not just leave things to market forces.”
Without the possibility of lease renewal, the implications for HDB flat owners of older resale flat owners are less certain, as a steady and steep depreciation may wipe out what many count on as a retirement asset.
The Government implemented market pricing and the asset enhancement policy for public housing in the late 1980s. The aim of this programme was to allow heartlanders a chance at enjoying the appreciation of their HDB flat – which is a key asset for most of them. The programme led to more than 10 fold increase in the price of HDB flats in the nest 30 years.
commented on the news of Mr Wong’s blog post saying: “This is as close to an admission of the mistakes of that policy from government as we’re ever going to get.”" data-reactid="34">Mr Wong’s comments about Sers in 2017, caused many to doubt if the Government was scaling back on its Asset Enhancement Programme. For example, Donald Low, an Associate Dean at the Lee Kuan Yew School of Public Policy,
commented on the news of Mr Wong’s blog post saying: “This is as close to an admission of the mistakes of that policy from government as we’re ever going to get.”
In a subsequent Facebook post, the Minister assured home owners that 99-year-leasehold properties are still a “good store of asset value”, so long as one plans ahead and makes prudent housing decisions. This caused some to ask how in one fell sweep, HDB flats had gone from being “asset enhancement” to “good store of asset value”.
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<Leasehold Properties as Assets> My last blog on choosing a HDB resale flat generated some discussion and debate. Let…
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Lawrence Wong on
Tuesday, 11 April 2017
Chris Kuan for example, responded to Mr Wong’s Facebook post saying that there no getting away from the “gorilla in the room”- which is the fact that the value of HDB flats will be $0 at the end of the 99-year leasehold period." data-reactid="39">Prominent socio-economic commentator
Chris Kuan for example, responded to Mr Wong’s Facebook post saying that there no getting away from the “gorilla in the room”- which is the fact that the value of HDB flats will be $0 at the end of the 99-year leasehold period.
“The depreciation of HDB flat over time will still be driven by the reversion to zero at the end of lease. That in turn will always drive the amount of money extracted from monetization of the flat. The worse outcome is a double whammy of the depreciation effect of reversion to zero in the lease coupled with a sharp fall in real estate prices…the MND may try to avoid that issue but it is what drives the amount of money HDB owners can get out of their “good store of value”. ” – Chris Kuan