SINGAPORE: The new housing systems announced by Prime Minister Lee Hsien Loong on Sunday, August 19, enable older flats to retain their value for a longer period of time and become a viable alternative for potential buyers, analysts said.
In his speech at the National Day Rally, Mr. Lee said that the Home Improvement Program (HIP) will be extended to more flats for housing and development (HDB), including homes built until 1997.
In addition, each HDB flat can be upgraded twice during their lease of 99 years under the new HIP II scheme. The second upgrade takes place when the flats are about 60 to 70 years old.
This will provide more security for people who might want to buy older flats, said Lim Yong Hock, the main executor of PropNex Realty.
"It gives people a bit more confidence to buy the older flats, especially those who plan to buy and live there until they die," Mr Lim said. "They know that even if they are going to buy an older flat, five to ten years later, the HDB will still make improvements to the house."
"But there will still be other considerations – for example, these could be locations, the renovation (costs) and last but most importantly the price," he added.
READ: NDR 2018 – Extensive home improvement scheme to brighten up another 230,000 HDB flats
However, in order to make older flats attractive to buyers, some changes need to be made to the Central Provision Fund (CPF) termination limit, noted Lim.
At the moment, if the remaining lease of a house is less than 60 years, there are restrictions on how much CPF money can be used to buy it.
A homeowner can use CPF money if his age plus the number of remaining years of the lease is at least 80 years, but subject to restrictions.
However, if the remaining lease term is less than 30 years, CPF can not be used at all.
"Younger buyers can not fully use the maximum number of CPF amounts," Lim said. "So this becomes a limitation, unless there are more changes and adjustments, you might see more younger buyers buying older flats."
ADDRESSING THE 99 YEARS OF LIFE CARE UNDER VERS
Another housing plan announced by Mr. Lee is the Voluntary Early Redevelopment Scheme (VERS). The government buys back older flats before the lease contracts expire for 99 years and compensate the residents whose apartments have been taken back early.
Residents who have to vote for VERS can then use the proceeds to buy a new flat.
READ OUT: NDR 2018 – Plan planned to redevelop more old HDB flats before lease contracts end
The scheme could reduce concerns about the value of older flats.
"Many owners feared that when the end of the lease comes, no one will buy the flat from them and they will be forced to return the flats and eventually do nothing," said Chris Koh, director of real estate firm Chris Koh International.
"At least now, owners who have old flats know that there is a future … You now have options instead of staying in your flat until the end."
There is still the question of how many homeowners would get back if they choose to go for VERS. Premier Lee had already said that the conditions would be less generous than those of the Selective En-Bloc Redevelopment Scheme (SERS), because there are "less financial benefits".
"People are deteriorating if they feel that pricing is not attractive enough or they think that if they accept the price, they will not have the financial means to find a new place," explains the Singapore University of Social Sciences (SUSS). from Associate Professor in Economics, Walter Theseira.
"There is always a problem, or people now find that they can find a suitable replacement."
READ: New VERS scheme can be used among residents & bitter; & # 39; Achieve, warns Alex Yam
Yet Karen Chan, who lives with her parents in a 48-year-old flat with three rooms on Stirling Road, hopes that new benefits will be achieved, similar to SERS, when VERS starts.
"I am quite surprised because I thought there was no chance that we would be part of these arrangements," Chan said. "I believe for the older generation – it would be good for them to have different options."
NO IMMEDIATE IMPACT ON RESALE MARKET
VERS only starts in 20 years, when some flats turn 70 years old.
Similarly, HIP II will be implemented in about 10 years, which is why real estate analysts said it is unlikely that the schemes will have an immediate impact on the HDB resale market.
"If VERS or HIP took place next year on January 1st, such a timeline could make people enthusiastic," said Prop Lim, "Lim." A too long waiting time means that there are too many uncertainties in the market. "
For Mdm Anbrijt Thakarsingh, who lives in a 43-year-old flat in Bukit Merah, she is already certain that she does not intend to sell her apartment to the government. She wants to pass it on to her children instead.
"What happens at the end of the 99-year rental period is up to them," she said. "I am happy to stay as long as we are there … no matter how much money is being offered."