Posted: 25th April
2011 By Kenneth
Jeyaretnam
(http://thereformparty.net/blog/2011/04/25/the-reform-partys-stance-on-sers/)
Yesterday Channel News Asia carried a report* on our visit to
Blk 323 Clementi Avenue 5 to find out why homeowners were so
unhappy with the compensation they had been offered under the SERS
(Selective Enbloc Redevelopment Scheme).
Unfortunately they left out my explanation as to why the SERS
scheme was inequitable and how we would improve current policy.
As we understood it, the residents, many of whom were elderly,
had had no choice as the HDB had selected their blocks for SERS.
They were offered new flats but discovered that they would have to
come up with in the region of $50,000 to bring their flats up to
any kind of habitable standard. They would have to come up with
much more if they wanted to live on a higher floor. As their
current flats are only 34 years old and have recently been upgraded
they are entitled to feel aggrieved.
The Reform Party’s stance has always been that 99-year leases
leave Singaporeans dependent on the government for the value of
their property. There is an assumed implicit contract that the
government will replace old HDB flats for new and that owners will
receive a favourable exchange rate. How else to explain why the
price of a second-hand HDB flat does not depreciate like a similar
leasehold private property does? The problem arises that the
government could at any time withdraw its commitment to SERS old
flats and then their resale value would drop sharply. Ultimately
the price of these flats would go to zero as the lease expiry date
approached. In my comment on the upgrading schemes in “Why
Singaporeans Should See through the Upgrading Carrot”**, I
wrote:
Residents of older flats which are subject to the Selective
Enbloc Redevelopment Scheme (SERS) may think they are getting a
good deal as their old flats are replaced with new ones with
approximately the same market value. However as there is normally a
change in land density, involving the construction of much taller
and bigger blocks packed more tightly together , the whole of the
increase in the market value of the land may not be passed on to
the leaseholder. In addition the new flats, though technically the
same number of rooms, are much smaller than those built even
fifteen or twenty years ago.
The Reform Party plans to allow HDB leaseholders to buy out
their freeholds if this is technically possible so that they can
sell their flats to the highest bidder and benefit from the full
uplift in value just as those who own private property are allowed
to do. We are confident that this will be of much greater economic
benefit to homeowners than upgrading schemes that are largely
self-financing. It will also be better than being effectively
forced to relocate to new blocks at a location of the government’s
choosing. Nothing could more clearly illustrate that HDB owners are
merely long-term tenants than owners with full rights to their
property.
Mr Arthur Fong, the PAP MP for West Coast Clementi ward, has
commented that only 1 in 10 householders are unhappy with the deal
they receive from SERS. While we are sceptical that residents would
be entirely truthful when faced with a monopoly government-owned
freeholder with so much power over their lives, they may also be
simply unaware of the better terms they would get if they owned the
freehold to their property and were able to receive more of the
value of any change in land use or density.
While the government’s Asset Inflation (Enhancement) Strategy
works as our population grows exponentially while the HDB holds
down supply like a typical monopolist, HDB owners may be happy
because they never have to face up to the economic implications of
owning a leasehold property. However should there be a substantial
and sustained fall in property prices, due, say, to a global
economic slowdown and a shrinkage in Singapore’s foreign worker
population, then the government may no longer find it profitable to
honour the implicit guarantee and HDB leaseholders may be stuck
with what are in essence limited time value claims that go to zero
eventually.
The Reform Party wants to give all Singaporeans the right to buy
the freehold to their HDB at a reasonable price. This will allow
them to receive the full economic value of their property when they
sell. It will also prevent the decision of whether they get to
exchange their old property for a new one or whether their
leasehold interest goes to zero being at the whim of the
government. As an initial step, if we are elected to represent the
people of West Coast we promise to fight in Parliament for better
terms for residents from the SERS.
*http://www.channelnewsasia.com/stories/singaporelocalnews/view/1124611/1/.html
**http://sonofadud.com/2011/03/21/why-singaporeans-should-see-through-the-upgrading-carrot-and-mm-lees-curious-assertion-that-hdb-prices-will-never-go-down/
It so sad to see that RP has not even bothered to find out the
details of the enbloc at Clementi AVe 5 before it commented on the
issue and not to mention of help to these owners.
Please see the HDB url link for the details on the enbloc scheme
at Clementi Ave 5
http://www101.hdb.gov.sg/hdbvsf/eampu200.nsf/0/11FEBCL_ve_page/$file/main.htm
It is HDB that will give the 3 room owners with $50,000 for a 3
room to 3 room offer NOT these owners have to come up $50,000
as claimed by the RP.
The knowledge of RP on the enbloc scheme is
very superficial. Please call up any property agent who deals
with enbloc sales at Clementi Ave 5 before it should try to make
any further comments or offer suggestions on the issue.
