KHAW CONFIRMS VALUE OF HDB FLATS WILL BE ZERO AT END OF 99-YEAR LEASE

[fat al]

I ask u all one question, if someone buys an hdb and lives in it. Is it an asset or liability? Since one day your hdb will become zero value

Your flat is an asset. Your mortgage is the liability. Hahha

How about:
Your flat is prepaid rental expense in advance for 99 years. Mortgage is liability.

[etan]

Well said!
By Khaw's latest statement, is he sending the wrong signal to the public?
If can afford, better to buy FH, to get real value.

to say all leasehold public flats will fall to zero really send a shiver down to those who can read and understand..there are many ignorant public masses who I bet even dunno what he was saying..

[safetyfirst]

I ask u all one question, if someone buys an hdb and lives in it. Is it an asset or liability? Since one day your hdb will become zero value

Your flat is an asset. Your mortgage is the liability. Hahha

How about:
Your flat is prepaid rental expense in advance for 99 years. Mortgage is liability.

i will vote this as my favourite answer.

[thefarside]

What about those flats at Spottiswoode Park, Blk 101 to 106, built in 1970? There is also HUDC flats in the area but not privatised yet. Not sure if this info is correct.

Spottiswoode Park Blks 101 - 106 (or is it 109) are all 5-room point blocks? Near 20 storeys each tower I think. I am no expert, but my own observation of the SERS trend it looks like they generally avoid 5-room SERS. Seem to - it could be coincidental because the ramp in 5-room only started from the 80s and so far when they take down the estates built in the 70s they seldom come across such flats.

My own other feel is if they try to SERS the older five rooms clusters, there is a reasonable chance the vote might fail because who would want to trade their old spacious flats for the new generation five rooms? For 3/4 roomers at least you can say they are being offered an opportunity to "upgrade" at a similar price with a fresh lease thrown in... and can upsize if they want 3>4, 4>5 rooms.

PAP haters please do not flame me as this does not mean I am some kind of cheng hu lang who know how they work.

[promptpost]

From what Mr Khaw commented (see below), can someone point out to me which part of his comments that he really confirms value of HDB flats will be zero at end of 99-year lease?

Mr Khaw said :-
"The Selective En bloc Redevelopment Scheme (SERS) is part of the Government’s estate renewal strategy for older estates. It allows intensification of land use and revitalises such estates through new developments. At the same time, it offers an opportunity for flat owners to buy a new replacement flat with a fresh 99 year lease.

In the last 10 years, SERS has benefitted the owners of about 18,000 flats. As the name suggests, the identification of suitable precincts for SERS is selective. The selection of sites and pace of SERS will depend on factors such as their redevelopment potential, and the availability of replacement sites for rehousing and other resources.

Currently, there are about 300 HDB blocks with 31,000 flats which are more than 40 years into their 99-year flat leases.

Like all leasehold properties, HDB flats will revert to HDB, the landowner, upon expiry of their leases. HDB will in turn surrender the land to the State."

[Freenasi]

There are tricks when coming to 'investing' HDBs. Some people are able to maximise the profits out of it. I know few people in the past who flipped HDBs and make a good sum, which now the loophole is plugged. It is wise to personally do some research than to jus take the agents' words. Well, Mr Khaw has repeatedly said that HDB focus is now on providing a roof rather than a asset. It remains to be seen the outcome of this theme.

[opmi]

Look at old master plans if u really want to know.

Thx! I just did.

Unf, Master Plan 1958/1980 doesn't show plot ratio, while Master Plan 2003 shows pretty much the same plot ratios as 2008.

I agree with 'thefarside'. Think u can only get the info by doing the "ground work", unless u go for those super easy targets of 0.X plot ratio (aka HDB Terrace Houses).

Still, unless there's urgency in intensifying usage of a plot, the government can just let your lease run out. Low plot ratio + close to amenities might still not guarantee SERs, IMHO.

the older Master Plans have plot ratios. In term of people per hectare.

Of course, no guarantee for SERS. If look at HK, SG GPR can only goes up. It is cheaper to SERS near amenties than to build new infrastructure.

[specuvestor]

I ask u all one question, if someone buys an hdb and lives in it. Is it an asset or liability? Since one day your hdb will become zero value

Your flat is an asset. Your mortgage is the liability. Hahha

How about:
Your flat is prepaid rental expense in advance for 99 years. Mortgage is liability.

From layman point of view it's an asset because for most part of the 99 years it is appreciating partly due to inflation, plus the 4X leverage kicker... so positive reinforcement

From policy makers and econs point of view it is a COST. These are costs that contributes to our inflation and competitiveness... policy makers that focus on "asset appreciation" is either not very intelligent, smoking something or politically driven.. or all the above

Those who ''own'' an HDB , be it home or commercial are actually owning the lease , not the properties al at , all are tenants not owners of HDB.

I actually ask a HDB officer why we get title deed when we fully paid our HDB flat. Shouldn't it be master lease? Frankly I think there must be some legal implication in this arrangements that a lawyer would be able to explain. Which also comes to the next question below...

Just to share.

From a book that I had read, the word "Real" in the term "Real Estate" does not actually mean "real" in English language. Its from Spanish word that mean royal. In today's world, it means the our government. So the properties that people own actually belong to the government.

Excellent point... same meaning as the soccer team Real Madrid. End of the day the state is sovereign. That's why some say there is no difference between 99, 999 or FH since the state can take possession of it. But I do think there is subtle legal implications to it, just like strata titles. The anecdotal evidence is that FH preserve and increase in value much better than 99 over say >30 years.

[etan]

Hahaha! As much as I like to do guess work, I think this is a piece of prime land sitting on high ground with full sea view. At the moment the area looks a bit untidy with a winding road going through in-between the blocks.

Well the govt can do wonders with the Land Acquisition Act.

Come 2027 when the port activities consolidate to Tuas, I guess this place will be transformed.

PAP haters please do not flame me as this does not mean I am some kind of cheng hu lang who know how they work.

[etan]

Knowing it is one thing, acceptance is another. The emotional part is really hard to accept.
We can accept 10yr car life, after which it goes to scrap, but not for property. The Chinese believe that buying property is partly to stay, and partly to pass on to next generation, or at least, upon death it can be sold and money be distributed to kins.

I have seen people during their hay days they live in bungalow, but now they rent those 1 rm flat. Their work attitude is also like 3-days-wind 4-days-rain type. Somehow, it seems like they are racing against - Life vs money, who will run out faster. Hope you know what I am saying becos it's direct translation from Hokkien. I really don’t know what is up in their minds!

Anyway, I think it’s a good feeling to pass on some money or assets when we say bye bye to this world! Or do we prefer this saying: Come to this world with nothing, so leave this world with nothing?
Anyway, it's personal choice lah!

Ok, back to the topic, imagine U buy a 37 yr old flat (lease bal. 99-37=62 yrs) at Marine Terrace for $880K. I call them paying insane prices for a flat.

Basically that person is buying a 126sm built-in for $880k for 60yrLH. Maybe he thinks it's worth it; he is paying a premium for some sea view, or near good schools, or he believes it is in a good district.

I thought the answer is abvious since the building will be fully depreciated by then and the value of the lease goes to zero. The same goes for private properties with 99 year lease.