Every day, 99.co picks a piece of property jargon to explain it. Today we look at SERS, which is what everyone hopes for in their HDB estate:
Selective En-bloc Redevelopment Scheme (SERS)
SERS was introduced under the administration of Prime Minister Goh Chok Tong, during National Day in August 1995.
Under SERS, the government would acquire the land from aging HDB estates to renew them. Any residents displaced by SERS would receive compensation and rehousing benefits; this includes a flat with a topped-up 99-year lease, from a list of replacement sites.
The SERS benefits include:
- Guaranteed ability to get a flat at one of the designated replacement sites* (if you choose a flat outside the replacement sites, you are not guaranteed to get one; but you’re still given priority over other applicants)
- Subsidy of up to 20 per cent for the replacement flat (capped at $30,000)
- No resale levy on the replacement flat
- Compensation based on the market value of the flat being replaced
- Small pay outs to help with costs such as moving (it’s up to HDB’s discretion how much is fair)
*As an added bonus, the replacement sites are often nearby. HDB wants to keep the community as intact as possible.
We’ve seen roughly 80 SERS events since their inception in 1995; but they grow fewer each year. The last was 2016, when Blocks 513 to 520 West Coast Road were acquired. But this was after a long two year break (the previous SERS events were in Tanglin Halt Road and Commonwealth Drive in 2014).
The misinterpretation of SERS
When SERS first happened in 1995, it caused a flurry of interest in older HDB flats. Some Singaporeans even went out of their way to buy older flats, in expectation of SERS rehousing benefits. What followed here was also one of the biggest failed presumptions in our property history:
Although the government never explicitly said SERS was a solution to HDB’s limited 99-year leases, most Singaporeans interpreted it that way. We covered this in some detail years ago, when the “99-year time bomb” was becoming a topic of debate. At the time, the assumption was that HDB flats would never simply run out on their lease, because the government would launch SERS before it happened.
The belief was especially intense in the run-up to 2013 (the last property peak), when it believed that the government would never allow HDB flat prices to fall to zero.
By 2017, it got to the point where the government started warning that not all flats were eligible for SERS – in fact, only around five per cent of HDB estates are eligible. This message finally sank in when VERS was announced.
(Like us on Facebook for an update on VERS, our next jargon piece).
What are the rehousing benefits of SERS?
The exact rehousing benefits vary based on your profile. For example, a first or second-timer family will receive a $30,000 SERS grant to get their new flat, which is still at a subsidised price. However, a family that consists purely of Permanent Residents will not get the grant – they will only get their new flat at the subsidised price.
The exact list of benefits is too long to be listed here – check the HDB website on SERS to see what exactly you’d qualify for.
How is the SERS grant paid or used?
The grant is never paid to you in cash (sorry!)
The SERS grant is credited to your CPF Ordinary Account (CPF OA), and can only be used for your replacement flat. You cannot take the $30,000 and use it to, say, help upgrade to a condo.
Also, the grant must be returned to your CPF (with the usual 2.5 per cent interest) if you later sell the replacement flat.
For flats owned by multiple people, the SERS grant is paid equally to their CPF accounts regardless of the manner of holding.
How long does all this take?
From the time of notice to the actual move, it often takes about four years. There’s ample time to get ready, scout out replacement sites, and so forth.
What is the likelihood of SERS for (insert neighbourhood)?
Regardless of who you’re talking to about this, always take their answer with a grain of salt. Trying to guess which estates will be up for SERS is like trying to guess which condos will be up for en-bloc: it’s pure speculation, and you should never count on it.
That said, there are some general conditions that make SERS more probable:
- The estate has a lot of flats that are at the 40 year mark or older
- There’s high visibility for the estate. For example, it faces a main road, or makes up part of a spectacular view when you drive past on a highway. Hey, the government is going to want to make these buildings look good, right?
- The value of the land very obviously outweighs the value of the property on it. This was a foregone conclusion with Tanglin Halt, for example, as the amenities and central location made the land worth much more than the HDB flats on it. This means the most likely SERS locations are in well built-up areas, and close to amenities like malls or MRT stations.
Should I buy an old flat, and hope to cash out when SERS happens?
Don’t. Just don’t. You could be stuck with an old flat that’s almost impossible to sell.
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