Is it fair or meaningful for AMK SERs residents to be told a year later of what they need to pay for their replacement flats?
It has been reported that the 606 households in the Ang Mo Kio Selective En Block Redevelopment Scheme (SERs) will receive compensation that is about 7.5 per cent higher than previous estimates.
The Housing Development Board (HDB) had previously estimated the compensation amount for owners of three-room flats (68 m2 or 82 m2) to range from $290,000 to $390,000 while four-room flat owners were estimated to get $380,000 to $450,000 for their flats which are about 92m2 in size.
These four blocks, Blocks 562 to 565 at Ang Mo Kio Ave 3, were completed in 1979 and are about 43 years old.
HDB cited resale market movement and well-maintained buildings as two main factors for the higher actual compensation that residents will receive.
According to Straits Times, residents can opt for new replacement flats with a fresh 99-year lease in Ang Mo Kio Drive, next to ITE College Central, which have estimated selling prices that range from $438,000 to $563,000 for a 90 m2 four-room flat, and $396,000 to 487,000 for an 80 m2 four-room flat. New three-room flats, which are 65 m2, are estimated to sell for $292,000 to $384,000.
HDB has shared that the actual selling prices of the new replacement flats will be made known during flat selection in late 2023.
Under SERs, owners are compensated for their existing flats based on their flats’ prevailing market value at the time of the Sers announcement which was in April this year.
In response to queries, HDB said it was unable to factor in market movements from February to April as the estimates were prepared ahead of the April 7 announcement.
A parliamentary petition was earlier submitted on 1 August by Non-Constituency Member of Parliament, Mr Leong Mun Wai on behalf of the five residents asking to impose a moratorium on SERs and review how compensation and relocation options are given to affected residents.
The petition called for the intended use of reclaimed sites under SERS to be made public so their “actual or potential value” could be assessed.
“As a result of the evaluation by HDB of the SERS site and the replacement site, many of the affected residents are expected to pay for shortfalls of sums of tens of thousands, if not hundreds,” it said.
The signatories said HDB should also waive resale levy, stamp and legal fees in all future SERS exercises instead of applying it on a case-by-case basis.
TOC understands that the parliament petition is also supported by over 300 residents who signed an earlier petition that was handed over to the Minister of National Development.
Many residents affected in the SERs exercise, have voiced frustration over having to cough up extra money to buy a replacement flat of the same size since they have already paid up for their flat in full, and how the replacement site appears to have fewer transportation options and amenities.
Elderly residents who are retired and have no source of income are the most affected.
Currently, HDB’s website said residents affected by SERS will be compensated based on the market value of their flat at the point of the SERS announcement, and “reasonable expenses” to help them move.
It seems rather strange that while HDB states that the increased compensation of 7.5 per cent from its original offered price, the actual price range is not given even though the HDB’s officers have already delivered the actual compensation, to the residents.
Since the four-room flat owners were previously told that they would be getting $380,000 to $450,000, we would get $408,500 to $483,750 with a 7.5 per cent markup.
Given that “the actual selling prices of the new replacement flats will be made known during flat selection in late 2023”, and BTO prices are pegged to resale prices which have risen quite a lot since the SERs was announced, together with the current trend of high increasing prices — how likely is it for the actual selling prices in late 2023, to be even higher, than the estimates (available now)?
One of the residents from the affected flats asked me if I could try to estimate and project the current trend of rising prices to late 2023, when the replacement flats’ prices will be known to the residents.
The HDB Resale Price Index has increased by 5.4% in the last 2 quarters (168.1 Q3 2022 divided by 159.5 Q1 2022), since the SERs was announced in April.
If this rate of increase continues until late 2023 — the increase may possibly be about 16.2% (5.4% x 3 – 6 quarters from Q1 2022 to Q3 2023)
This works out to a possible estimated price of $497,336 ($428,000 x 16 per cent) to $654,206 ($563,000 x 16 per cent) for a 4-room flat with a size of 90 m2 against the estimated compensation prices of $408,500 to $483,750, for 4-room 92 – 93 m2.
HDB’s earlier selling price was based on the valuation provided by its private valuer according to established valuation principles and market practices. And somehow later, it came up with another value which was 7.5 per cent more than what was initially offered.
Is it, therefore, arguably, a possibly systemic policy issue, when there appears to be a gap of more than a year between the determination of the compensation prices and the replacement flats’ prices?
Especially if the replacement flats do end up being priced higher a year later and similarly, how the flat owners are seemingly being undercut for the increase in value of their existing flats which would have been a year later.
One would ask if such a scenario would be fair to the flat owners who are being forced to be evicted from their HDB flats under SERs.
But of course, it may work both ways — such as the prices crashing during this gap period and benefiting the flat owners. But this is highly unlikely given the momentum of the property market in Singapore.
Ideally, it would seem that the fairest way to resolve such a conundrum is to have the selling price and replacement flat price offered at the same period of time.
This is why it may just be appropriate for a review of the SERs as what the parliamentary petition by the AMK residents has asked for.
