National Development Minister Lawrence Wong has cautioned resale flat buyers to not assume that all old HDB flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (SERS). Mr Wong referred to a report in the Chinese newspaper which said that some buyers were paying high prices for older flats in anticipation of SERS and said that only 4 percent of HDB flats have been identified for SERS since the scheme’s launch in 1995.
“But SERS, as the name implies, is on a selective basis. It is only offered to HDB blocks located in sites with high redevelopment potential. These are typically sites where the land has not been well utilised. It is also subject to the availability of suitable replacement sites for residents and the Government’s financial resources.
This is why only 4% of HDB flats have been identified for SERS since it was launched in 1995. We will continue to maintain this strict selection criteria. So please do not assume that all old HDB flats will be automatically eligible for SERS.
In fact for the vast majority of HDB flats, the leases will eventually run out, and the flats will be returned to HDB, who will in turn have to surrender the land to the State. As the leases run down, especially towards the tail-end, the flat prices will come down correspondingly.” – Minister Wong
In 2014, former NCMP Gerald Giam asked the then-Minister for National Development, Khaw Boon Wan, what the value of HDB flats would be once their 99 year leases expire. He also asked whether the pace of SERS — the Selective En Bloc Redevelopment Scheme — will be fast enough to replace the flats reaching the end of their lease.
The Minister confirmed that the value of the flats will be zero at the end of their 99-year lease. He also indicated that the selection of sites and pace of SERS depended on factors including the site’s redevelopment potential. He revealed that there are about 31,000 flats which are more than 40 years into their 99-year leases.
Mr Giam noted that this number will grow larger each year, and that it remains to be seen what the Government’s plans are for lessees whose flats approach the end of their lease.