SINGAPORE: The Government is planning a new scheme which will allow more HDB households to benefit from redevelopment before the 99-year leases on their flats expire, Prime Minister Lee Hsien Loong announced on Sunday (Aug 19).
The Voluntary Early Redevelopment Scheme (VERS) is part of a “long-term plan” to allow the Government to progressively redevelop precincts, Mr Lee said in his National Day Rally speech. It will take place when the flats reach about 70 years of age, he added.
Mr Lee said that the Government will compensate residents whose flats are taken back early, and will also help them get another flat to live in, just as they would if their leases had run out.
But the terms will be less generous than that of the Selective En-Bloc Redevelopment Scheme (SERS), as there will be “less financial upside”.
Hence, he said, the scheme will be voluntary, and residents would have to vote for VERS, just like they currently do for the Home Improvement Programme (HIP).
“If the residents vote yes, we will proceed,” he explained. “The Government will buy back the whole precinct, all the flats and redevelop it, and residents can use their proceeds to help pay for another flat.”
“If the residents vote no, then they can continue to live in their flats until their leases run out.”
[Give the residents the illusion that they have a choice. And if they choose to run out their leases, then it was NOT the govt that did this to them, but they did it to themselves. Or (if there were not enough votes for VERS), their neighbours did it to them.]
However, Mr Lee said that the Government will need time to work out the details of the scheme, such as how to select the precincts, pace the redevelopments out and the specific terms of the Government’s offer. He added that they also need to study how to afford VERS for the long term.
Hence, the scheme will not start for another 20 years, although planning for it will begin now, he said.
NEED FOR REDEVELOPMENT TO BE STAGGERED
In explaining the rationale for the new scheme, Mr Lee said that the Government has good reason to take back more flats, and redevelop them as they grow older, before their 99-year leases are up. He added that when HDB towns grow older and the leases in the estates are nearing expiry, it is necessary to also redevelop the towns.
The Government, he said, wants to do this in an orderly way.
He explained that HDB often built in a “tremendous rush” in the early years due to the housing shortage, and several older HDB estates, such as Marine Parade, Ang Mo Kio and Bedok, were built within short periods.
“If we do not plan ahead, 99 years later, all the leases in such towns will expire around the same time, and all the flats will be returned to the state in a few years,” he said.
“We will have to find new homes for a lot of people at once, and HDB will have to tear down and rebuild all the old flats in a hurry, just like when we first built Marine Parade, Ang Mo Kio and Bedok,” he added.
“I don’t think this is a good idea”, he said. “The towns will become construction sites all over again, with cranes all over the place.”
Hence, Mr Lee said old towns should be redeveloped progressively, over 20 to 30 years, rather than within 4-5 years.
"And that means starting from when the oldest flats reach about 70 years old onwards," he said.
"So some flats, you redevelop when they get to 70 years old, some 75, some 80, and you stretch it out over 20-30 years, and progressively, do things in a measured and considered way."
SERS LIMITED TO ABOUT 5 PER CENT OF FLATS
In his speech, Mr Lee pointed out that SERS is a very good scheme for estate rejuvenation. But he noted it is a “very limited scheme”, and HDB estimates that only about 5 per cent of flats are suitable for SERS.
The issue of the lease expiry of older HDB flats has been in the spotlight recently, following a blog post last year by National Development Minister Lawrence Wong. He had said that SERS is, as its name implies, done on a selective basis, and said that home owners should not automatically assume that all old HDB flats would be eligible for it.
More recently, amid concerns about the impact of lease expiry on HDB resale prices, Mr Wong said in Parliament that there is still value in older HDB flats that can be unlocked for retirement.
Mr Lee said that there will be a few more SERS projects to come, but many projects with high redevelopment potential have already been done.
He explained that SERS is meant for selected HDB blocks or precincts which have high development value that can be unlocked. Tanglin Halt, which is being redeveloped through SERS, is one such example.
But it was not built optimally, and the precincts, he said, were not always well laid out: There are low-rise flats, large surface car parks, many empty spaces and odd leftover areas.
He said that in cases such as Tanglin Halt, it makes economic sense for the Government to take back the flats early and redevelop the site.
“Because there is a lot of value unlocked, we share this value with residents through generous compensation,” he said. “And with generous compensation, we can make the acquisition compulsory.”
SINGAPORE: After the announcement of the new Voluntary Early Redevelopment Scheme (VERS) for HDB homes, some questions have emerged about it, including how much home owners might receive and whether all flats will be eligible for it.
“It would be rash to rush into details now when some of these things can only happen decades from now,” said National Development Minister Lawrence Wong on Tuesday (Aug 21) in an interview with Channel NewsAsia's Talking Point team.
“Let’s not get too excited about what is going to be in the VERS package or which flats will get VERS or speculate unnecessarily,” he said when asked about details of the scheme.
The housing scheme was announced by Prime Minister Lee Hsien Loong during his National Day Rally speech on Sunday.
Under VERS, the Government may buy back older HDB flats before their 99-year leases run out, and compensate residents whose flats are taken back early.
Residents, who have to vote for VERS, can then use the proceeds to buy a new flat. The scheme will only start in about 20 years, Mr Lee said, when some flats reach 70 years old.
“Obviously there is a lot of interest in what the details would be but this is a very long-term commitment and we will have to study how the implementation is to be done, and how it can be done in a way that is sustainable financially as well,” said Mr Wong.
Part of the rationale for introducing VERS is to allow more HDB households to benefit from redevelopment before their 99-year leases run out. The issue of lease expiry has been a cause for concern among some home owners recently, and Mr Wong revealed that the Government has been looking into the matter for the past two years.
When asked for his response on whether the VERS announcement was a way of “fobbing off questions on housing” ahead of the next general election, Mr Wong said the Government owes it to Singaporeans to share its plans for the future.
“On the one hand there have been many requests for the Government to share some of its thinking about what roadmap for public housing will be,” he said.
“If we were to hold back and only reveal or announce VERS when the details are ready, that might be 15 years from now, so people might be living with 15 years of uncertainty.”
Mr Wong added: “We have been studying this for some time. Not quite ready with all the details and still a lot more work that needs to be done to work through the operational details and the implementation details.
“But we thought that given concerns that have been raised, we do owe it to Singaporeans to explain at this stage, at the very broad level, our thinking about how we think the next phase of public housing will unfold over the coming years and decades.”
[I won't go as far as to say that VERS is just a way to "fob off" questions. But it is a signal that the govt will address the issue, and one possible way is VERS. But it probably won't fly. And the govt will have 20 years to roll out its REAL plans. Or at least alternative plans.]
HOW WILL GOVERNMENT PAY FOR VERS?
When asked about whether the Government will ask the President to tap into the accumulated reserves to fund VERS, Mr Wong would only say that the scheme needs to be fiscally sustainable.
“It is a significant fiscal expense and whatever we do we will have to make sure that fiscal arrangements for VERS are sustainable, and do not put a heavier burden on the next generation. So those are part of the details that we are working on,” said the minister.
He added: “When we look at policy options, when we review policies, nothing is sacrosanct. You can always look at all the different options - there will always be pros and cons attached to any particular proposed measure, so we will have to review all of the possibilities and eventually work out what is best way forward.”
Mr Wong also touched on the review of CPF rules to provide more flexibility for buyers of shorter-lease flats.
On a suggestion if authorities would consider having CPF restrictions kick in only when there are 30 years left on the lease, instead of the current 60, Mr Wong said: “We know what the concerns are, there are many possibilities to address the concerns so I wouldn’t rule out anything at this stage until we have done a proper study, completed the study with the CPF Board.”
Currently, if the remaining lease of a property is less than 60 years, there are restrictions on how much CPF money can be used to buy it.
A home owner can use CPF money if his age plus the number of years left on the lease is at least 80 years – but subject to restrictions.
However, if the remaining lease is less than 30 years, CPF cannot be used at all.
Mr Wong cautioned: “I’m sure Singaporeans know that there is balance to be struck (with CPF retirement adequacy) so we are taking in all the considerations and seeing how best the rules can be updated.”
22 Aug 2018
It would be "unproductive" to play up expectations of homeowners due to the Voluntary Early Redevelopment Scheme (VERS), says the National Development Minister.
SINGAPORE: It would be "unproductive" to play up expectations of homeowners due to the recently announced Voluntary Early Redevelopment Scheme (VERS) - a scheme to take back old Housing Board flats before their leases end, said National Development Minister Lawrence Wong on Tuesday (Aug 21).
"All of us, including the media, (have) to make sure that we don't play up expectations of the market or ... get people all excited and too overly exuberant ... thinking that this will help to prop up the resale market," he told reporters at the sidelines of a REACH feedback forum.
They should also avoid speculating in the market hoping for a "big payout at the end of the day", he said, adding that the Government will try its best to manage expectations.
Prime Minister Lee Hsien Loong had announced at the National Day Rally on Sunday that the Government will take back some Housing and Development Board (HDB) flats starting from when they reach 70 years old to redevelop the housing estates.
Homeowners will get to vote on whether they want to move out and will receive compensation if their flats are taken back, Mr Lee had said. However, details of the scheme are still being worked out and it will only be implemented in about 20 years' time.
Mr Lee had also announced that each Housing Board flat will be upgraded twice under the Home Improvement Programme (HIP) II.
On Tuesday, Mr Wong added that the Selective En Bloc Redevelopment Scheme (SERS) will continue to run its course until all remaining sites with high development potential have been cleared.
According to the HDB’s estimates, only about 5 per cent of flats are suitable for SERS.
"There are still more to go but we will eventually reach the limit … once we do that, we will transit to a VERS programme," Mr Wong said.
He added that the Government will be seeking more feedback on proposed changes to housing policies before the schemes are finetuned.
Mr Wong was speaking to reporters after a feedback session conducted by REACH on the National Day Rally. The evening’s discussion, which attracted more than 130 participants, ranged from concerns about the cost of living, to housing and foreign relations.
Addressing the concerns of a forum participant about social divisiveness which could arise when polling is done for VERS, Mr Wong said: "I acknowledge that in this case, stakes are higher ... but we have some experience and we will have time to study how to work out the exact mechanisms and how to go about doing it without causing too much division or without creating acrimony within the block itself."
Leadership renewal for the Government was another area highlighted at the forum chaired by Mr Sam Tan, REACH chairman and Minister of State for Foreign Affairs and for Social and Family Development.
A forum participant asked whether the long-term plans laid out during the National Day Rally can be fulfilled by the next prime minister.
[Not just the next PAP PM. Because they have floated this "solution" up for all to consider, if the opposition takes over, they would have a solution as well. Of course whether they can execute the plan is another question.]
In response, Mr Wong said it is "quite unique" that Singapore is able to plan so far into the future.
“I don’t know of any other country that is planning and thinking about urban rejuvenation at the scale that we are talking about. So this is indeed a long-term plan. It has never been done anywhere in the world. It is going to be more challenging than our first phase of building HDB,” he said.
“But we have a plan and now the key is for the Government and the people to work together to bring about and realise these plans," he added.
On the Lease Buyback Scheme, which was recently expanded to include all HDB flats, Mr Wong said that the take-up rate is “not very high” but it gives elderly homeowners peace of mind should they need to unlock some value from their property for retirement.
"It's not really about the numbers because not everybody may want to take up this option … But making the option available to every flat owner will … give assurance that whatever happens ... there's always this option that you can exercise," he added.