HDB a ‘good store of asset value’ for those who plan ahead
I refer to the article “HDB flats ‘good store of asset value’ for those who plan ahead: Lawrence Wong” (Apr 12).
The article states that “A Housing and Development Board (HDB) flat is a “good store of asset value” for those who plan ahead and make prudent housing decisions, National Development Minister Lawrence Wong said.
His comments, made in a Facebook post on Wednesday (Apr 12), come in response to online debate over his comments that not all HDB flats will be eligible for the Selective En bloc Redevelopment Scheme (SERS).
On Wednesday, Mr Wong noted that Singaporean couples enjoy significant subsidies when they purchase a HDB flat for the first time – whether it is a new or resale flat.
“Take for instance a 30-year-old couple, with a combined monthly income of S$5,000, looking for a resale flat in Woodlands near their parents. They can get up to S$75,000 in grants off the resale flat price, and should easily afford a flat with a lease of 90 years.
“Thirty-five years later, the couple will be 65 and the remaining lease of the flat will be 55 years. They still have an asset which can be monetised for retirement,” he said.
Pay resale levy?
As to “He also noted that elderly couples can opt to sell their flat and “right-size” to a two-room Flexi flat with a shorter lease, to enjoy the Silver Housing Bonus of S$20,000 in cash and use their sale proceeds for their retirement” – according to the HDB’s web site – those who have received a housing grant has to pay a resale levy of up to $55,000.
Moreover, according to the article “6 things you weren’t told about the CPF housing grant” (theonlinecitizen, Feb 21, 2017) – “you need to return the grants back into your CPF account when you sell the HDB flat, PLUS ACCRUED INTEREST over the duration of your occupation in the flat. This is on top of ALL the CPF monies used for your flat purchase (PLUS accrued interest). Hence, even if your HDB flat has appreciated in value, don’t be surprised when you are left with little or no cash proceeds when you sell your flat”.
With regard to “Those who prefer to stay in the same flat can apply for the Lease Buyback Scheme and sell part of the remaining lease back to HDB, Mr Wong said” – you may like to read “HDB Lease Buyback: $1.7m gain or loss?” (May 16, 2016).
In respect of “They also have the option to rent out a room, he added” – surely the need to give up in a sense the privacy of one’s home in order to “monetise” may be kind of like stating the obvious.
“Typical” or so few?
As to “These examples are simple, but typical of many HDB households, he said” – how can this be “typical of many HDB households” when then number who have signed on to the HDB Lease Buyback Scheme is so little – “Since the launch of the scheme in 2009, 471 households signed up in the first four years – averaging at about 117 annually. A further 494 took up the scheme following modifications in February 2013 over a period of about two years, an average of slightly less than 250 a year” (“Annual take-up of HDB’s Lease Buyback Scheme more than doubles” (Channel NewsAsia, May 15, 2016)?
Similarly, how many have downgraded to a two-room flexi flat?
“Plan ahead and make prudent housing decisions”?
So, in summary – does “A HDB flat is a “good store of asset value” for those who plan ahead and make prudent housing decisions”, arguably mean that one has either to downgrade to a tiny 2-room flat (assuming one is able to pay the resale levy) or give up the future equity and value of one’s flat in exchange for a lease of say 30 years and some money into one’s CPF?