Wonders of the HDB enbloc scheme

My parents’ flat has been selected for the HDB enbloc scheme. This is a scheme where HDB (Housing Development Board) buys over your existing flat in return for a new flat at a newly developed estate. HDB flats, where 80% of Singapore’s population lives, are 99yrs leasehold properties. The enbloc scheme ensure that the government can take back older HDB flats before the flats get so old their value dips to almost zero.

The HDB public flats were started in the 1970s as a way of efficient land use in land scarce Singapore. Most people back them stayed in settlements called kampongs.  So the oldest HDB flats by now are around 40+ years old. As most would know, properties on 99yrs leasehold drops in value as the lease decreases, exponentially in the later years eventually until the market value of that property is 0 when the lease is up and the government takes back the property.  So a HDB flat that is more than say 60yrs old, it will not logically be very sort after if you are young enough to outlive your property and want to take a mortgage on your flat. Banks in Singapore will stop giving loans to property older than 60yrs if it is on 99yrs leasehold. 

Current estate

Now my parents were pretty happy being selected for the scheme at first. They get a new flat and have heard that you usually will get some payout in cash. Because the buys back your flat at market price (usually much higher) and offer you the new flat at HDB new flat subsidized price (supposedly much lower price). The cash difference (CD) is usually used for the renovation purpose of the new flats. Those selected for enbloc will get a new flat with the 99yrs counter back at 0, while the government keeps things in a fine balance. All good.

Here is where the irony begins. HDB has full decision rights on which estate to enbloc. Doesn’t that make the HDB flat more like a rental than a property you actually own if the HDB can uproot you anytime? Thought public housing, HDB flats are anything but cheap and a few hundred thousands for pre-paid rental doesn’t seem like such a great deal.  Bought your flat to last your lifetime? Too bad! Done expensive designer renovation? Too bad again! Though HDB will pay you market rate so the renovation will be taken into account when evaluating compensation. Love you neighbourhood and conveniences of your matured township? Too bad as well! With the HDB enbloc and 99yrs leasehold scheme, you have no say on your property especially on the subject of uprooting you from said property.

However, the reason the residents of my parent’s estate are up in arms is none of those above.  It is because most of them will have to TOP UP cash if they want a new flat of the same size.  Because according to the HDB, the new estate they are moving these residents to is so valuable that even after the subsidies, it is more expensive then their current flat. Event with the sky-high open market resale price (my parents current flat is worth almost half a million in the market), the HDB feel the new flat should be even more expensive than that. What will most probably happen at my parents’ current estate is the HDB will tear the old flat, build new ones and sell at an even higher price than the news one my parents are moving to. Because the plot of land my parents’ flat sit on is so much better than the new one they will get. Already there are private developers mentioning how much they are willing to bid for that land to build DBSS flats.  Can’t the HDB just offer the residents of my parents’ estate at least a one to one flat since it is going to be at a lousier location? The HDB’s answer to an old neighbour who said she could not afford to top up any more cash? : Down grade to smaller flat. My parents stay in a mature estate and many of the residents are retirees. Most will have to dig into their retirement funds if they wish to live at the current standard of living in the new estate.  Now without the cash difference from HDB, they have to further dig into their retirement fund for renovation. Renovations are necessary for new HDB flats as they are bare. Meaning no electrical cabling, tiles, doors, basically everything.  So if they do not have much saving in cash, the will just have to make do with rather barren renovations

HDB will not engage or try to help these people but continues to publish articles showing the shining side of the enbloc scheme and telling everyone it is only in very rare instances where people are unhappy with it. Well try doing a survey at my parent’s estate. I’d really like to see how often the “really rare instance” shows up. HDB has no answer or compromised for the situation except to downgrade to a smaller flat. They compassionately told the old neighbour the new estate has really small flats especially catered for the elderly. Auntie replied,” So my children and grandchildren won’t even have a place for a proper weekend family gathering anymore. “

All these while, the HDB maintains incidences of unhappiness are rare. When the resident committee approached the HDB for help they were told that their case will be reviewed after the general elections. What’s that to mean? Don’t vote PAP and you will be left to die or what? Anyway, PAP won in the end. But the issue remains in limbo. The residents there will just have to suck it up and pay more a flat of the same size in a lousier plot of land because they are suay to kena chosen for this particular enbloc scheme. Or they can downgrade to a smaller flat and lousier quality of life. HDB won’t care about this one particular enbloc project in trouble; the majority of projects are alright. Did the government say everyone matter and no one left behind? Well residents at my parents’ estate aren’t feeling the love.