Debunking the official myths about HDB
flats (Part 1): Singaporeans are owners of their HDB flats (revisited)
The Housing Development Board was set up in 1960 during a time
when large numbers of people are living in squatter settlements and
slums around the city centers.
Under the then indefatigable Minister for National Development
Mr Lim Kim San, HDB began the task of solving
Singapore’s housing crisis and resettling the squatters.
It built 21,000 flats in less than three years. By 1965 it had
built 54,000 flats, exceeding the 50,000 target of its First
Five-Year Building Programme.
Today, about 84 percent of Singaporeans live in HDB flats compared with only nine percent in 1960 when
HDB was first established.
The ruling party has always prided itself for building homes to
house the majority of the population. HDB has
become its crowning achievement and the mainstream media never
fails to attribute Singapore’s high home “ownership” to the
PAP during every elections.
While it is true that most Singaporeans have a roof over their
heads, whether they actually own the flats they live in is
debatable.
There are three categories of properties in Singapore: freehold,
999 year and 99 year leasehold properties.
Technically speaking, only those living in freehold properties
can claim to own them since they are permitted to bequeath the
estates to their descendents forever.
All HDB flats are 99-year old leasehold
properties which means that the government can reclaim them after a
period of 99 years. When Singaporeans purchase HDB flats, they sign a Tenancy/Lease Agreement with
HDB and the usual Sales and Purchase
Agreement for private properties. (thanks to reader Ang Kong
Kia)
In a sense, HDB dwellers are only
“leasing” their flats from HDB for 99 years,
they do not strictly own them though the misconception has been
perpetuated for years by the ruling party and the state-controlled
media.
Addendum contributed by reader Papsmearer:
[Basically, when you borrow money from the bank to buy your 99
year leasehold HDB flat, you are in effect
borrowing money to pre-pay your lease (you can call it rent too)
for 99 years.
Normally, when you rent from a landlord, you might be required
to sign a 1 year lease agreement which stipulates among other
things, the monthly rent. At the end of the 1 year, the landlord
may not decide to renew your least. In the case of a HDB flat, by prepaying your lease for 99 years, you avoid
the uncertainty of the normal lease.
Secondly, people claim that they own the flat because they make
a profit when they sell it. What they are actually selling is their
interest in the pre-paid lease, not the actual flat themselves,
because they don’t own it. They are selling the right to live in
that unit, and basically, assigning their rights as tenants to
another individual for a fixed price.]
Furthermore, there are some restrictions placed on the sale of
HDB flats: e.g. one must live in it for a
period of 5 years before they can be sold; the ethnic quota must be
maintained in the process, previous HDB
subsidies will have to be returned and a hefty resale levy is
slapped on the seller which can be as high as $50,000.
If Singaporeans are really owners of their HDB flats, then they should be allowed to sell them to
anybody at any time like in the private property market without
being subject to these restrictions imposed by HDB.
Besides, most of them have to take up a bank loan to finance the
purchase of the flats. In the event that they are unable to service
the loan, the bank will repossess the flats.
The reality is, Singaporeans do not own their HDB flats. They are merely renting it from HDB for a maximum period of 99 years and paying a pretty
high monthly “rental” at that.
When old flats are demolished by HDB for
redevelopment, its inhabitants are not paid at prevailing en bloc
rates. Instead, they are given discounts for new flats built to
replace them.
The remarkable success of HDB in
transforming the landscape of Singapore lies in the small size of
the island and population. Given that almost all land is owned by
the government, HDB has no difficulties in
acquiring land, much of which is undeveloped to build new
towns.
Post-independence Singapore has a small population which makes
it easier for the government to relocate them to the newly built
HDB flats. The feat will almost be impossible
to replicate in an already densely populated city like Hong Kong or
in a larger country like Malaysia.
The government deserves credit for ensuring that the majority of
the population has a roof over their heads, but to claim that
Singapore has one of the highest home ownership in the world when
its citizens are merely renting leasehold properties at exorbitant
prices from HDB is stretching one’s
imagination to the limits.
It is time for Singaporeans now and the future to realize the
truth – that they do not own the HDB flats
they live in and they belong ultimately to the government which
retains the right to acquire and demolish them anytime they
wish.
http://www.tremeritus.com/2011/01/11/debunking-...
