In a Facebook post on 10 July, Lee Hsien Yang, the younger brother of Singapore’s prime minister Lee Hsien Loong, asks if Singaporeans are better off today than two years ago.
He posed this question on the basis of examining HDB lease decay and whether there’s a long-term fix to it.
In his post, Lee shared the Bala Table, which is used by the Singapore Land Authority to determine the value of a land parcel based on the remaining lease.
99.co has covered the Bala Curve before.
In short, the table/curve originated way back when Singapore was still a British colony. Then, a British Land Office employee named Bala came up with a table which acts as a rental guideline for state land.
In 1947, Bala’s Table/Curve was adapted to work out leasehold land values – around the time when the colonial administration started handing out 99-year leases instead of further freehold titles. Today, it’s also known as the SLA Leasehold Table.
Anyway, Lee’s argument is when an HDB flat’s 99-year lease approaches zero, what is there left for the Singaporean homeowner?
Lee wrote:
“Starting with the Merdeka generation and every generation which followed, it was a matter of faith. Work hard, keep quiet, save for retirement and buy a HDB flat – getting on the housing ladder would lead to a better future and a comfortable, secure old age.
“Today, retirement and housing has become like a game of snakes and ladders, but with more snakes and fewer ladders. Effectively, almost all HDB flats will turn into depreciating assets worth zero. This is the ticking time bomb of the lease decay.”
Lee shared that when the 99-year lease of the land on which our public housing programme is built expires, there is no lease extension and no compensation.
He then raises the argument: If lease decay is the only way to “recycle land and provide affordable housing to future generations”, why does the SERS (Selective En bloc Redevelopment Scheme) pay market price as compensation?
He also asked for more official details on why only 5% of all HDBs are SERS-worthy (besides the “less-attractive” VERS, or Voluntary Early Redevelopment Scheme).
In essence, Lee is juxtaposing the lottery effect of SERS with the need for “fundamental policy changes which are transparent and equitable on public housing.”
This background sets the stage for Lee to emphasise the need for a system that allows lease extensions beyond 99 years.
This would create an equitable path for Singaporean homeowners worried about lease decay – especially senior citizens.
Lee gave a few examples in the UK and Hong Kong – where a lease can be extended for 50 years and is subject to an annual rent of 3% rateable value of the property at the extension date.
In the UK, there’s a statutory lease extension calculator for greater transparency in determining land value.
“Is it so difficult for Singapore to study examples of these elsewhere, with a view to adopting some elements of the best ideas?” Lee queried.
Subsequently, Lee pushed the need for a transparent lease extension system which can help the elderly who face being uprooted and downgraded to smaller flats, or made homeless, retirees who cannot pass on an inheritance to their children and middle-aged parents who still have loans left to pay.
As to how these extensions can be funded, Lee asked that we dip into “those legendary reserves, or cut the GST”, he argued, “and give people more freedom with the money they put into the CPF.”
At the time of publication, Lee’s post has garnered 2700 likes, 588 comments and 1100 shares.
–
2
1
2
1
2
1
2
2
2
1
2
1
2
2
3
2
5
5
2
2
2
1
2
2
2
2
5
4
1
1
4
2
2
2
2
1
3
2
2
1
–
Do you have something to say about Lee Hsien Yang’s commentary? Let us know in the comments section below.
If you found this article helpful, 99.co recommends Lee Hsien Yang and wife put Caldecott Close bungalow in GCB area for sale for S$16.8m and 38@Oxley: What we now know about Singapore’s most infamous property.
About Terence Ang
Terence edits and writes about the real estate industry, including Singapore property trends, regulations and home-buying journeys. Other than writing, he also edits other writers' work and oversees the day-to-day operations of 99.co's Insider sections.
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.
Meanwhile, if you have an interesting property-related story to share with us, drop us a message here — and we’ll review it and get back to you.
Join our social media communities!
Facebook | Instagram | TikTok | Telegram | YouTube | Twitter
HDB should offer 50% on the next property when the present property lease expaired. Then such property can only sell back to HDB at 50% of the initial purchase price. This will ensure no one sell it to make profit. The property will retain it resale martket vaule through out its lease life.
Similar to term vs life insurance, if you want a surrender value, pay more. What HDB offers is affordable housing that people in Hong Kong can only dream about.
As for tax cuts, we don’t want Singapore to become the next Sri Lanka.
Totally agree with Lee Hsien Yang idea.We should follow the housing system in the UK and Hongkong.
I hope the new generation of Singapore leaders are open to Hsien Yang’s idea if they are sincere to help our fellow grey generation like myself.
Thank you Hsien Yang for bringing this idea to our grey generation whom need honest people like you for this BRILLIANT idea.
High time Singapore acknowledges that there are fairer systems that focus on general welfare and not the best hunting ground for the world’s richest.
Tharman may not be able say much we can at least give credence to another well meaning Lee
The govt takes care of. SC now and will do so after 99 yr..hope so
That is why many HDB owners after MOP are opting for PTE or Freehold property where they hv more options.