Response by Minister Desmond Lee on the Motion for Adjournment on “Ensuring Equitable Outcomes in Housing Redevelopment”

Jul 4, 2022

1. The Selective En bloc Redevelopment Scheme, or SERS, allows us to provide new homes for residents in ageing estates while redeveloping these sites to build more flats for Singaporeans in need of housing. 

2. By intensifying the land early, the Government shares the gains with the residents through a package that compensates them for their existing flats at market value. This is determined by a private valuer, who will take reference from recent transactions of comparable resale flats, the remaining lease duration, and flat attributes, including the condition and extent of renovation works. 

3. The valuation would factor in public information on existing as well as new amenities and infrastructure coming onstream in the area. If residents have concerns about the valuation of their flats, they can present their own valuation alongside the valuation provided by HDB to the Appeals Board, provided for under the Land Acquisition Act, for the neutral tribunal’s assessment. 

4. On top of the market compensation, eligible households will receive a SERS grant of up to $30,000 and a $10,000 removal allowance to cover the cost of moving. We will also provide residents a sum of money for the stamp and legal fees that they incur.  

5. In terms of rehousing options, they can choose to buy a new replacement flat, at the designated replacement site, at a subsidised price with a fresh 99-year ownership duration. Like all other BTO flats, these replacement flats are priced with a significant subsidy, below market value, to ensure affordability.

6. Alternatively, residents can apply for Build-To-Order (BTO) or Sale of Balance (SBF) flats at other locations and receive priority, with up to 10% of flats set aside for allocation. 

Ang Mo Kio SERS Exercise

7. These SERS policies have been consistently applied across exercises, including the recent Ang Mo Kio SERS exercise and the Marsiling relocation exercise. 

8. In April, we announced that Blocks 562 to 565 at Ang Mo Kio Ave 3 will be undergoing SERS. The site comprises 606 units, with a balance lease of about 57 years. Eligible flat owners will be offered new replacement flats, at Ang Mo Kio Drive nearby. By the time the flat owners collect the keys to their new replacement flats at nearby Ang Mo Kio Drive in around 2027, their current flats would have a balance lease of around 51 to 52 years.  

9. Holding size, location and other attributes constant, an older flat will have a lower market value than a younger one with a longer ownership duration. For past SERS exercises, the flats were generally younger at the point of SERS announcement, with around 70 years of lease remaining. The market value of these flats was therefore generally sufficient for the flat owners to purchase a new replacement flat of a similar type or size, on a fresh 99-year ownership lease.   

10. In comparison, the flats for the Ang Mo Kio Ave 3 SERS exercise are older. So this is the key difference here – the basis of determining the compensation for the Ang Mo Kio SERS flats is the same as past exercises. 

11. Based on the estimated compensation amounts and estimated selling prices of the replacement flats, the Ang Mo Kio SERS flat owners are generally able to purchase a replacement flat of a similar flat type with the compensation provided, that is, a 3-room flat owner will be able to purchase a 3-room new replacement flat that comes with a full 99-year lease. But this is generally smaller than their existing older flats. Those looking for a flat of similar size or with better attributes may have to top up the amount for a fresh 99-year lease.

12. I met some residents affected by the Ang Mo Kio SERS exercise over the weekend together with HDB colleagues. We visited a few households, and also spoke to residents who had gathered and wanted to meet us. Some residents, in particular seniors, had shared with us that they could not afford to top-up to continue living in a replacement flat of similar size as their existing flat, and in familiar surroundings. Some said that they did not need a fresh 99-year lease for their new flat. 

Additional Rehousing Options for SERS

13. We recognise these concerns of older residents and will provide additional options for them to better meet their needs. First, HDB will offer residents an option to purchase a similar flat type at the replacement site, on a 50-year term. Second, flat owners who are seniors will have an additional option of taking up the Lease Buyback Scheme, or LBS, on their existing flat, and then buying a new replacement flat of the same flat type on a short lease. Seniors can monetize their flat further and enjoy an LBS bonus of up to $30,000 when they top-up their CPF Retirement Account to prepare for retirement.

14. Why are we introducing these additional options now? First, we recognise the challenges faced by older residents living in older flats. To some of them, a brand new 99-year term may be less important than a similar sized flat in a familiar locality. Looking ahead, the flats involved in future SERS exercises are also likely to be older, with shorter remaining terms, and these needs may arise too. A 50-year lease flat would be more affordable and the lease term is about the same as the balance lease of their current flat. For the 540 or so residents aged 45 years and above in this SERS exercise, they can consider this 50-year lease option which provides them with a home for life, until the age of 95. They should not need to top up for a replacement flat of the same type. Nearly all will even be able to move to a replacement flat of the same size with no top-up. 

15. Second, these shorter lease options are an extension of the approaches we have adopted to better meet the needs of our seniors over the years, such as the 2-room Flexi scheme, and Lease Buyback Scheme (LBS). In fact, we had been studying variations of shorter term ownership options for older home-owners involved in SERS exercises, and have decided to offer this option now to better address the needs of older residents from this SERS exercise onwards. 

16. Third, the short lease options are consistent with the key principle that the length of the remaining term of a flat has an effect on its market value. As the Member had pointed out, the 50-year lease is not half the price of the 99-year lease, as the market value of a flat does not follow a straight line down. The value of assets in general is calculated based on the time value of money, or the concept that $1 today is worth more than $1 in future. This applies to most financial assets, including leasehold properties in Singapore. Adopting this principle, the value of the first 50 years of the lease is expected to be worth more than the value of its last 50 years. But a shorter lease flat would be more affordable than a longer lease flat, all things equal. 

17. For younger residents, we know that some of them want to buy the new replacement flats on fresh 99-year leases, or to buy resale flats, which can be their home-for-life. HDB will continue to help them in other ways, including with housing loans, if necessary. 

18. HDB is prepared to engage and advise the SERS residents individually. For those who do not meet the home-for-life criterion and face extenuating circumstances, we will consider availing them of the 50-year lease option on a case-by-case basis, if they are open to this option. 

19. These additional options will not be limited to the Ang Mo Kio exercise, they will also apply to the ongoing Marsiling acquisition exercise, and to future SERS exercises too.

20. Sir, in carrying out the SERS programme, we seek to strike a good balance between meeting the needs of existing residents, by providing them with a new flat and giving them other options, while redeveloping the site to provide for future housing needs of Singaporeans. There has been no change to our approach on the compensation to residents. 

21. But with the SERS flats being older, we have now introduced a wider range of rehousing choices for residents who can decide which one best meets their needs. The replacement flats at Ang Mo Kio Drive are nearby and will have their own range of amenities when the development is completed. 

22. However, we recognise that residents have different expectations and needs. For instance, some residents shared that they want to continue to live in their flats, and not make way for SERS, regardless of the benefits. Others would like to exchange their flat with a flat of the same size but with double the length of lease, without paying for the longer lease, or to be provided with replacement flats in more prime locations. HDB will look at each of these residents’ needs and concerns, but while they will try their best, they may not be able to meet everyone’s expectations perfectly. 

23. Having personally met and spoken to some of the residents, and heard feedback provided to me by my colleagues at HDB, I better understand their concerns. With the range of options available, we should be able to address their key concerns of our seniors. Our HDB journey managers will continue to make door-to-door house visits to explain the additional rehousing options to residents, address any queries that they may have, and gather more feedback and concerns from individual residents. We understand this is a big decision and HDB will also provide ample time for residents to decide

24. Finally, let me also thank the Member for her hard work and personal efforts to represent her residents’ concerns, and working closely with the Ministry to address their worries.