HDB upgrading and VERS from National Day Rally 2018

One big thing from PM Lee Hsien Loong’s National Day Rally Speech yesterday was the new measures about housing – more flats will be upgraded under Home Improvement Programme, HDB will also have a Home Improvement Programme II scheme to upgrade older flats a second time at around the 60- to 70-year mark and the Voluntary Early Redevelopment Scheme (Vers).

If you are a HDB owner, this seems a pretty good deal as it means more options to upgrade your flat and to sell it back early to the Government if you want to.

Extension of Home Improvement Programme and Home Improvement Programme II

The Home Improvement Programme scheme is definitely a great news, because honestly, who doesn’t like newly furnished toilets and having the flat value go up right? And with the new Home Improvement Programme II, this means that all HDB flats will be upgraded twice in their lifetime because the government is “determined not to let our public housing degenerate into ragged slums” when the flats get old and deteriorate. So dodgy corridors and funky-smelling old flats will become a thing of the past.

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Voluntary Early Redevelopment Scheme

This is the new measure that got us quite excited and wondering how it’s going to work. The idea is that under Vers, residents in eligible precincts can vote to have the Government take back their flats, starting from around the 70-year mark of their lease and receive compensation for it. Owners will also get help to find new housing.

Since the details of how exactly the scheme will work is not out yet, we give chance and don’t poke first. We wonder about how much compensation we can get, what help we will have to find a new house etc. But the idea of the scheme is quite good leh. It provides an option for flat owners to unlock some value of their old flat instead of letting the lease reach 99 years and the flat value becomes zero dollar. Better than nothing right?

It essentially means that we have an additional option to get value from our flat. This is important as there is financial security with the Government guaranteeing that our flat have some value on the market even when it is old. This is adding one more benefit of owning a HDB flat compared to a condo or private property which also has a lease but when it runs out, the property is gone and you cannot get back any money.

Of course this is not the SERS programme and PM Lee has warned that the terms for Vers will be less generous than Sers. This is because there is less financial upside for the Government to take back these flats early. So if you are thinking can go buy an old flat and wait to earn with VERS, this is telling you that please don’t speculate property. Because HDB flats are not for flipping and speculation. Better don’t think of it as En Bloc-ing your condos.

And the skeptics in us will ask, why the Government so good? PM Lee said that Vers can allow HDB to progressively redevelop old estates over a longer period, instead of only when their leases expire. This means that instead of having to tear down multiple HDB blocks all at once to rebuild them and making the whole estate very messy and dusty, the redevelopment process can be staggered so that it is more organized.

The devil is in the details and we hope that this scheme will work well after the Government sort out the details.

Why 99 years lease

While he is announcing these goodies, PM Lee also explained why the Government capped HDB leases at 99 years. He also said that 99 years is a long time which is enough for us to stay in there our whole lives, which is quite true. And even if we want to leave our flat to our children or grandchildren, they should be having their own plans and not depending on our flat for survival, which is also quite true.

And speaking of leaving flats to the younger generation, PM Lee said that HDB flats need to be returned to the Government after 99 years so that the land can be recycled to build new flats for the young or else they will keep getting ‘hand me down’ flats because no space to build new flats. Like that quite sad for the future generation right?

It will be extra sad for those who didn’t get to inherit a flat from their parents or grandparents. “Our society would be split into property owners and those who cannot afford a property. That would be most unequal, and socially divisive,” said PM Lee.

Ok, maybe there is a point there.

Listening to the rally speech makes us feel more assured that Government is thinking of all ways to look after those who stay in HDB flats. We guess the message that the Government is trying to tell us through all these is that HDB flats are for you to stay in and we will help you maintain a good affordable living environment as long as the economy continues to do well. Cross fingers.