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

[soros]

For land in Rural HK ( called New Territories ) , the lease was extended by 50 years from 1997 when HK was handed back to China to 2047. So we are living in a flat under a lease with only 30 years left to expiry. Not sure on what terms, the HKSAR Government are willing to extend the lease .

[kichialo]

If am individual is paying 600k for a 60 yr lease resale with a combined income of 6k per month, it is financially imprudent and imo should not deserve a govt bailout

I think bailout is a tat misleading. The fact is even when lease runs out, there is residual value on the land and what's built on top of it. This residual value should be accrued to the purchaser of the lease.  

[donmihaihai]

If am individual is paying 600k for a 60 yr lease resale with a combined income of 6k per month, it is financially imprudent and imo should not deserve a govt bailout

I think bailout is a tat misleading. The fact is even when lease runs out, there is residual value on the land and what's built on top of it. This residual value should be accrued to the purchaser of the lease.  

Doesn't we just lease it for 99yrs. We don't own the land the building. The only thing we own is the renovations. So does it mean that at the expiry date all reno need to be restated back? Anywhere in the purchase of 99 yrs lease says we owns something?

[CY09]

Yup donmihaihai is right, we do not own the land. The owner of the land is HDB. We only own the lease to the flat and are considered like sub lessee. Once our lease ends, it is reverted to HDB. HDB will then return the land to SLA at the end of its lease at no value.

[corydorus]

Right. I feel since this is public housing, 99 years is a little too long. It should be lowered to about 70 - 80 years so that the land can be quicker renewed at lower cost for our next generation. Let say average age of marriage is 30 of age. With 70 years lease for new flat is 100 years old. The gov can probably design for free housing (renovated) , design for old and specific design support for those above 100 years old.

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[kichialo]

If am individual is paying 600k for a 60 yr lease resale with a combined income of 6k per month, it is financially imprudent and imo should not deserve a govt bailout

I think bailout is a tat misleading. The fact is even when lease runs out, there is residual value on the land and what's built on top of it. This residual value should be accrued to the purchaser of the lease.  

Doesn't we just lease it for 99yrs. We don't own the land the building. The only thing we own is the renovations. So does it mean that at the expiry date all reno need to be restated back? Anywhere in the purchase of 99 yrs lease says we owns something?

What you purchase is not only the lease but also what's built on it. After all you did not build the flat yourself and have paid for the construction and building of the flat. The lease value can go to zero but there is still value in the infrastructure.

[kichialo]

Yup donmihaihai is right, we do not own the land. The owner of the land is HDB. We only own the lease to the flat and are considered like sub lessee. Once our lease ends, it is reverted to HDB. HDB will then return the land to SLA at the end of its lease at no value.

This is in essence a sleight of hand between the left hand and the right hand. With the stroke of the pen, the lease is restored, and now purchaser is asked to pay full valuation price. 

[yeokiwi]

What you purchase is not only the lease but also what's built on it. After all you did not build the flat yourself and have paid for the construction and building of the flat. The lease value can go to zero but there is still value in the infrastructure.

I suppose they will not stop you from carting the leftover concrete of your remaining house to any of your storage place.
But, since the lease is zero and you want your concrete, are you going to pay for the tear down of your unit or you assume the demolishing is free?

[soros]

The Lease is only a long term rental contract. The leaseholder has no interest in the ownership of the flat or the building. The concrete belongs to the freeholder.

On reaching expiry date, the leaseholder has to vacate the property and hand over the keys to the agent just like any tenant under a 1 year rental contract.

[kichialo]

What you purchase is not only the lease but also what's built on it. After all you did not build the flat yourself and have paid for the construction and building of the flat. The lease value can go to zero but there is still value in the infrastructure.

I suppose they will not stop you from carting the leftover concrete of your remaining house to any of your storage place.
But, since the lease is zero and you want your concrete, are you going to pay for the tear down of your unit or you assume the demolishing is free?

Do google residual value and its context and application in other parts of the world with leasehold property. Have a nice day.