When Singaporeans sell their HDB flats, they are able to keep the profits. This proves that Singaporeans are owners of their homes, and that their flats are an asset.
“Everybody who has actually made a profit on the sale of an HDB flat, you cannot say that it’s not an asset. Of course it is,” the Straits Times reported Minister Indranee Rajah as having said on Wednesday.
Ms Indranee, who is the second Minister for Finance and Education, was responding to questions at a dialogue session with the Indian community held at The Grassroots Club in Ang Mo Kio.
Since Prime Minister Lee Hsien Loong’s National Day Rally speech earlier this month, Singaporeans have raised questions of the status of their HDB flats, in light of PM Lee’s announcement during his speech of the new Voluntary Early Redevelopment Scheme (Vers).
Under the scheme, homeowners would be able to sell the remaining the lease of their flats to the government, provided their flats are at least 70-years old. The scheme, PM Lee said, was to help maintain the value of the flats and to unlock the value for retirement needs.
The depreciating value of the flats, as they run out their 99-year lease, was one of the main concerns of Singaporeans, who felt that they did not own their homes, despite what government ministers have said.
At the dialogue yesterday, Ms Indranee reiterated the government’s postion that homeowners do own their flats.
“If you’re not the owner, then you don’t get to keep the profit either,” she said, referring to her earlier point. “Owners get to sell because you transfer the right to the property. If you’re a tenant, you don’t get the right to sell, you just get the right to live in it but you don’t have the right to deal with the property.”
However, while Singaporeans own their flats, they should also realise that the flat runs on a 99-year lease, what Ms Indranee calls a “life cycle”. This meant that in the first part of the lease period, the value of the flat appreciates.
“But towards the end, as the lease gets shorter and shorter, the market value will necessarily go down,” she said.
Last Friday, PM Lee explained that homeownership “enables every Singaporean to share in our economic growth, because as the economy grows, so will the value of your home.”
“And nearly every household has a substantial asset to its name, even low-income households,” he said.
He also explained why flats were sold on a 99-year lease.
“If instead the Government had sold you the flat on freehold, i.e. in perpetuity, sooner or later we would run out of land to build new flats for future generations,” he said. “Our society would split into property owners and those who cannot afford a property. That would be most unequal, and socially divisive.”
He added: “So it is better to let the leases expire, take the blocks back, demolish them and rebuild afresh…we can rebuild newer, better, more liveable flats, blocks, and townships, more suited to what our grandchildren and great- grandchildren will want to live in.”