HDB 99-year lease expiry: Potential time bomb for home ownership?

6 min read

A majority of Singaporeans live in public housing. According to the Census 2020, 78.7% of resident households live in HDB flats. Many of them also see their flat as more than a home. Some Singaporeans assume their flat will provide for their retirement.

The idea is that, when they get older and need less space, they can sell their flat (which would have appreciated in value), and buy a smaller one. Coupled with their CPF, it should see them through their twilight years. But is this really a safe assumption with all HDBs having just a 99-year lease?

HDB blocks with 99-year lease
HDB flats come with 99-year lease. After the lease runs out, they will revert back to HDB.

The 99-year lease

Some would argue that HDB flats are not so much owned as they are rented. The reason is the 99-year lease on these units. During a Parliamentary session on 20 January 2014, then Minister of National Development Khaw Boon Wan confirmed that, at the end of their 99-year lease, HDB flats will revert back to the landowner (HDB). The land will then be turned over to the state. This means the value of a HDB flat at the end of the lease is zero.

To most Singaporeans, this is an abstract principle.

To date, no HDB development has reached the end of its 99-year lease. Instead, we’ve seen older flats being chosen for Selective En-Bloc Redevelopment Scheme (SERS).

Is SERS the answer to the time bomb?

SERS was launched in August 1995, and is — by official definition — a programme to rejuvenate aging housing estates. We note that neither HDB nor the Ministry of National Development has explicitly stated that SERS is meant to renew housing leases, although it has served that function in its implementation.

SERS provides residents with compensation based on a valuation of their flat, as well as rehousing benefits. These benefits vary according to each resident’s situation. Some of these include:

  • Guaranteed availability of a flat, at a planned replacement site
  • A subsidised price for the replacement flat, with S$30,000 grant
  • Compensation equal to the market value of the resident’s flat
  • Cover reasonable expenses to help with the moving

Before 2004, residents affected by SERS could choose new units only at a given replacement site. From 2004 onwards, residents could choose flats from other estates, without losing their rehousing benefits. As of 2011, residents affected by SERS also receive priority when applying for a new flat anywhere.

HDB often rolls out SERS when an estate is about 40 years into its 99-year lease. Since its inception in 1995, 77 SERS projects have been completed.

So there is no need to worry about the 99-year lease time bomb, right?

To be blunt, we would worry anyway. The two reasons are:

  • No guarantee of SERS happening
  • No guarantee of adequate compensation

No guarantee of SERS happening

The locations targeted for SERS are not disclosed until the final announcement, in order to prevent speculation. This means you cannot buy an old flat (one with 59 years or less on the lease) with any confidence that SERS will happen. The fact that it has happened for some HDB projects is not a guarantee that it will happen for all, and the government does not seem to have any obligation to use SERS.

In fact, the number of SERS projects has decreased over the past decade, with the last one announced in 2018. Then Minister of National Development Lawrence Wong has also said in 2017 that only 4% of HDB flats have been identified for SERS since its launch.

Singaporeans who buy old flats — 40 years or more into the lease — should be wary of assuming it provides for their retirement.

Say you are are 35 years old when you buy such a flat. By the time you retire at 65, there will only be 29 years lease left on the flat. Most of your CPF money would have gone into servicing the loan for this flat, but you would be lucky to make even half of what you’ve paid upon resale.

In our experience, few buyers are interested in sinking hundreds of thousands of dollars into a property that will only last another 30 years or so.

Even if there are interested buyers, the prospective pool is limited due to loan limitations. There are banks that will not give out loans for flats with less than 40 years left on the lease. In addition, the CPF withdrawal limit is pro-rated if the flat does not cover the youngest buyer up to age 95.

There’s the Lease Buyback Scheme that you can bank on to supplement your retirement, but it has its drawbacks as well.

So here’s our recommendation: do not fork out high prices for flats with expiring leases, even if the location seems great. If you insist on buying a flat with 30 or 40 years left on the lease, do not count on it to supplement your retirement. SERS may not come around to save you.

No guarantee of adequate compensation

HDB conducts a satisfaction survey for each SERS event, which is posted on their website. The latest survey, published in 2013, had an 87% approval rate. While this is not solely related to financial compensation, we can safely assume that being adequately compensated (i.e. at least being able to purchase a replacement flat) is reflected in this.

However, there is no guarantee that overall compensation will suffice. Even if market valuation is paid for the flat (and we assume it has not drastically declined at the time), it may not be sufficient to pay for a new property in the given market.

We assume that HDB will do everything in its power to mitigate this, such as through the subsidised prices for new flats. But for retirees who are thin on savings, a low valuation — or an inflated property market at the time — can eat into their already meagre funds.

What’s the way to go, then?

Ultimately, regardless of the property type, it falls to each property owner to be financially savvy, and to pick their property investments (or home purchases) with foresight. In the case of HDB flats, it’s best not to bank on SERS if you’re buying an old flat.

Would you buy an old HDB flat (eg. with less than 50 years of lease)? Let us know in the comments section below! 

If you found this article helpful, 99.co recommends Leasehold property in Singapore: What happens when the 99-year lease runs out? and Flat owners: What you must do before your 99-year HDB lease runs down.

Looking for a property to buy or rent? Find your dream home on Singapore’s largest property portal 99.co! If you have an interesting property-related story to share with us, drop us a message here – we’ll review it and get back to you.

Looking to sell your property?

Whether your HDB apartment is reaching the end of its Minimum Occupation Period (MOP) or your condo has crossed its Seller Stamp Duty (SSD) window, it is always good to know how much you can potentially gain if you were to list and sell your property. Not only that, you’ll also need to know whether your gains would allow you to right-size to the dream home in the neighbourhood you and your family have been eyeing.

One easy way is to send us a request for a credible and trusted property consultant to reach out to you.

Alternatively, you can jump onto 99.co’s Property Value Tool to get an estimate for free.

If you’re looking for your dream home, be it as a first-time or seasoned homebuyer or seller – say, to upgrade or right-size – you will find it on Singapore’s fastest-growing property portal 99.co.

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Reader Interactions


    • Anthony Tan

      Why are HDB selling new flat in mature estate at as such high price, $694,000 for a 5 room clementi BTO flat Feb2017. The flat will cost at least $1 million after factored in mortgage interest and renovation. HDB made so much profit from the sales of flat and now after 40 years the ministry tell us only small percentage of flat will be pick for Sers.
      The general public has been mislead by HDB that every HDB flat will be picked for Sers before the lease expired. The examples of Sers on some mature old estate so far created false scenario and misunderstanding to the public. Why nobody in the ministry so far there to stand out and tell the truth about the Sers system.
      Sers itself is double standard and misleading to the public as it creates false hope and illusion.
      Sers must be apply across the board for all HDB flat to ensure fairness.

      Mr Wong is worry about the short lease HDB resale flat selling at high price but do you think this seller has a choice, what the price of new HDB flat in mature estate that HDB is selling to the public ?
      His insensitive comments has generated fear and disunity among millions of Singaporean living in HDB flats.

      I really hope the Ruling party could quickly come out with solutions to address this issue before the people of Singaporean start to loose confidence and put future of Singapore at risk

      • Doug

        Actually, what you say doesn’t make sense because it is Singaporeans who assumed that SERs would happen, URA or HDB did not mention in any way that all HDBs would be applicable for SERs. People basically saw that all HDB so far have undergone SERs and assumed it would happen all along. Lawrence Wong has actually stepped out and told everyone that SERs is not applicable to every HDB estate so I’m not sure if you actually read through this whole post before commenting?

        As for the high price of the Clementi flat you mentioned – Have you studied what price equilibrium is? You might as well be asking why truffle or gold is so expensive.

        SERs must be applied to ALL HDBs to ensure fairness? Fairness in what exactly? You pay for a 99-year leasehold and expect the government to build you a new development every 99 years for the rest of your life, AND the generations passed down? Don’t be absurd Anthony, the government is meant to provide affordable housing, it isn’t meant to be your babysitter goddammit.

        And please do not voice your idiocy on behalf of the millions of Singaporeans who are unlikely to share such unpolished opinions as you. Seeing that you brought up politics, I can’t help but feel you think the opposition would be better? That the opposition would spoon feed you for the rest of your life ? That thought is laughable. Ha.

        • Anthony Tan

          How many Singaporean actually know what will happen to their HDB flat when is near or after the 99 lease expire ?
          Even the property agent themselves are not aware and everybody seem to has the assumptions that flats will be rescue before lease expires, you can also use google to find the people opinion.
          Why is this so, because a flat is a shelter and the basic necessity need for all people.
          Did any of the minister tell the public and communicate on the Sers issue openly before.
          Why is Mr Wong comments stirred up such a big debate online?
          Talk to people around you staying in HDB and see why only now they feel differently after Mr Wong comments?
          Why the HDB valuation officer give such a high valuation price for old resale flat with less than 60 or 70 years lease? Shouldn’t it be straight line depreciation just like car COE?
          Do you mean the ministry do not have means and tools to contain the HDB price, just like the cooling measures targeted at private property.
          The ministry has directly and indirectly caused the high resale hdb price.
          I has been a great supporter for the ruling party but not a blind supporter.
          When things we see not right that affected millions of our people , we should voice out and contribute ideas to help resolve the issue.
          I am very disappointed by Mr Wong insensitive comments and without providing solutions to the problems which created such a big mess online, have you already heard/read the voice of the people online ?
          No doubt hdb is on 99 years lease, government cannot have the impression of running HDB as a profit making organisation. Can’t you see the problem with SMRT, before focus only on profit and no maintenance, caused such a big mess on transportation , now then they realise the mistake and try to correct it.
          The basic need of the people must first be taken into consideration above all.
          If the government could not afford to apply Sers for all hdb flat , please provide us with other options such as lease extension, old flat in mature estate exchange for new flat in non mature estate etc to give Singaporean more choices and also confidence.
          Please remember that about 82% of Singaporean stay in hdb.

          • michael

            After reading Anthony reply and I am more determined to vote for the ruling party. There are too many idiots around. PAP is not prefect, but at least they talk sense.

    • Affordable housing for 99 years…it is fair governance

    • Chong Yin Leng

      If the government does not provide SerS before the expiry of 99 years it is time they work out an equitable solution of renewing the lease when it expires to calm the homeowners with families having sunk in their cpf and savings.
      It is not acceptable to keep silence as a roof that one had paid for would just vanish away,
      But however I feel the government would work out an equitable solution to compensate the hdb owners if they would not be offer SERS it is be understandable. Fair play to your own citizens especially these would be old citizens who had spend their resources raising the next generation

    • Gab

      The core fear is uncertainty. Perhaps terms such as asset, monetize, valuation has been the repeat throughout time which has lulled our acceptance that these homes would be with us till we grow old and die.
      I for one appreciates these issues (yes, issue with an S) being raised as it would force me to think and plan ahead for the inevitable. Yet I am unable to as there is speculation rife on what steps the goverment would take to address this pending outcome
      Do we need to know what steps the goverment take before planning ahead? Unfortunately yes. As with the previous govermental action on cooling the overheating property back in 2016, what they (ruling party) do affects and ripples throughout our lives. I do consider myself as part of the 82 percentile, and I for one would wish that further clarity can be provided on this ticking time-bomb of a matter on whether can and would be possible to resolved.
      Clarity inspires confidence and trust but acting otherwise would not be the wise actions of a ruling government.

    • Charlie Ann

      This article, knowingly or unknowingly have stated the solution.

      “82% lives in HDB”.

      That is a huge number. A number that can command anything. A number that if bonded together as one, act as one, will soon realize that it can generate a very loud voice impossible to be ignored

    • Jo

      Regarding 99 years HDB. What if after i passed or my children passed. Left overs years what to do if no one living? What happend to our property after ?

    • Joe

      Land appreciates, buildings depreciate. If I rented an apartment for $1,200 USD per month, that would amount to $1,425,600 over a 99-year lease. Expecting a home to ‘provide for you in retirement’ is what seems most odd. It seems like people should be happy with stability and security of tenure and getting the opportunity to invest the rest of their disposable income for retirement planning/goals. I think Singapore does a pretty good job dealing with the reality of scarcity of land.

      As a Georgist, I personally prefer the public collection of rent (Land value tax) approach, which probably accomplishes similar goals while providing more freedom of choice but given how poorly Western societies handle this I cannot criticize too much. I think the most important thing for people to understand is to not see housing as an investment or wealth-building opportunity. Land prices go up due to increasing scarcity or subsidy. People should invest their disposable income into true productive assets that benefit society as a whole.

    • Singaporean son

      Firstly, the government’s main role is to provide affordable housing for a citizen for his lifetime. I would argue they have done that – the BTO option is there, and there is a wide range of mature and non mature estates to pick from which caters to different budgets. The lease runs for 99 years, and I think that is clear from the onset. Not any different from private condos with 99 years lease. I for one didn’t see any clause in my purchase contract that the govt is obligated to buy it back via SERS or any other schemes. If you decide to go the resale route, again, the remaining lease is transparent to everyone.

      Secondly, if one chooses to go out and splurge a million bucks on a property with a remaining lease that cannot cover one’s lifetime, that is down to personal responsibility. Why should the government (i.e. people like myself) be expected to bail you out if you went out to make a stupid decision in life? That’s not the govt’s job nor remit.

      The intent of SERS is meant to rejuvenate parts of Singapore strategically. To what end does it serve for the govt to be buying back / renewing leases for ALL HDBs? What it then creates is a new problem, where the next generation is deprived of the opportunity we have, because our generation thinks its okay to “hoard” a 99 lease flat at the expense of them (and basically people).

      The root cause here is simple – people making not very prudent financial choices and expect to be bailed out. If you want to take the gamble, then you should own up to the consequences if the upside doesn’t materialise.

      The solution is simple – if you were to buy a property that is LEASEHOLD, you should understand what that means (or google the definition) and make a prudent decision on how much you are paying for it and if it can cover you for your life time. Again, I don’t know what clarity people are seeking. It is leasehold, you buy based on the fact it will be fully depreciated by the end of the lease. That is the SENSIBLE thing to do.

      I don’t see how this is different from people who decide to splurge it all on nice cars and things they can’t afford, only to end up asking for govt handouts at 70 years old, and complaining the govt is not helping them with taxpayer money.

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