To quell uncertainty, explain public housing policies clearly and promptly

Tue, Aug 21, 2018


IN the space of 30 minutes during the National Day Rally on Sunday night, Prime Minister Lee Hsien Loong made a dizzying number of announcements related to public housing in Singapore. These centred mostly on the upgrading of Housing Board (HDB) flats and the re-development of precincts, and the perennially hot-button issue of a flat's 99-year lease.

With more than 80 per cent of the population living in HDB flats today, the new policies will have a significant impact on current and future generations of flat-dwellers. In his speech, Mr Lee promised that every flat will get two rounds of upgrading during its 99-year lease period (once at the 30-year mark and again at the 60-70 year mark), with the existing Home Improvement Programme (HIP) scheme extended to include blocks built up to 1997 (instead of 1986 previously).

There's also a new voluntary early redevelopment scheme called Vers that, if enough residents vote for, will allow the government to take back flats from around 70 years of age for re-development. Residents will be compensated accordingly, although the amount will be less than what they would get if their flat was picked for the Selective En bloc Redevelopment Scheme.

A day after the Rally, the Ministry of National Development announced that elderly owners in all HDB flats - including those in five-room units or executive maisonettes - will, in future, be able to sell part of their lease back to HDB and use that income for retirement. The housing initiatives are long-term plans to keep the flats safe and liveable, and also help them retain their value as their leases run down. They are also ambitious plans that will cost billions of dollars, as well as span a few generations and successive terms of government.

In particular, Vers - the scheme that has got many tongues wagging already, because it's another option for people to monetise their flat before the lease runs out - will only start a good 20 years from today as the oldest HDB flats are at most 50-plus years old. As Singaporeans await the finer details of the scheme, some have already surfaced a number of concerns. How should the level of compensation be determined, so as to satisfy as large a number of people as possible? What should the minimum level of consent be, in order for a precinct to have Vers?

Will the residents who have to vacate be able to purchase another flat in or around the same precinct, or would most of them have to move to another part of the island? Will their standard of living be the same, at the very least? We have seen how some private en bloc attempts have turned into protracted heated affairs, and there is some concern that Vers could go down the same route. More importantly, would the introduction of Vers and the additional round of HIP upgrading end up fuelling unhealthy property speculation in the HDB market yet again?

What's clear is that flat-dwellers, especially those in older flats with dwindling leases, should not liken Vers to an en bloc sale and harbour high hopes of raking in a big windfall. All eyes will be on the level of compensation of Vers, as this could prove to be the item that determines whether residents give the thumbs up or not.

The government needs to properly manage expectations, explain the different policies and changes in great detail, and reassure Singaporeans concerned about their ageing flats and expiring leases. It would be better to do this as soon as possible, rather than let the speculation drag on and cause uncertainty on the ground. Communicating the policies clearly and promptly will go a long way to sending out a strong message that every flat continues to be a valuable nest egg for the people's retirement needs.