Freehold HDB leases would be 'socially divisive': PM Lee

Singapore

PRIME Minister Lee Hsien Loong addressed the issue of Housing and Development Board (HDB) flat leases at Sunday's National Day Rally, saying that their 99 year leases is in fact "a very long time" and very few of today's public housing owners would outlive their leases.

The HDB estimates that less than 2 per cent of households, including those who have bought resale flats, will face the situation of owners outliving their leases.

New flats come with fresh 99-year leases, and can last up to three generations before the flat is returned to the state, Mr Lee said. The government then redevelops the land and builds new flats for future generations.

This is also why HDB leases are for 99 years; it is to be "fair to future generations".

"This is the only way to recycle the land to ensure that all our descendants can buy new (build-to-order) flats of their own. If instead, the government had sold you the flat on freehold, that means in perpetuity, sooner or later we would run out of land to build new flats for future generations.

"The owners would pass down their flats to some of their descendants, many generations into the future. But those not lucky enough to inherit a property, they would get nothing. Our society would split into property owners and those who cannot afford a property. And I think that would be most unequal, and socially divisive.

"That is why 99-year leases are not just for HDB flats. In fact for private housing also, the government only sells land on 99-year leases," he said.

Mr Lee said that the government doesn't easily extend the leases because buildings sometimes wear out even before they turn 50 years old. And after 99 years the mechanical and electrical systems become obsolete, and the concrete deteriorates in Singapore's tropical climate.

"Even if we could fix all that, the recurrent maintenance costs would be very high. So it is better to let the leases expire, take the blocks back, demolish them and rebuild afresh. We may keep a few blocks which have historical or heritage value, or which will remind people what the old days were like, but these should be the exception."

National Development Minister Lawrence Wong last year warned the public about purchasing older flats at inflated prices in hopes of profiting from potential Selective En bloc Redevelopment Scheme.

There have also been recent debates about whether HDB flat buyers should be called "lessees" rather than "owners", given that new HDB flats come with 99-year leases and are not freehold.

But Christine Li, senior director of research at Cushman & Wakefield, pointed out that Singapore is not the only place with leasehold residential properties. Hong Kong and Chinese land is usually parcelled out in 50- and 50-to-70-year leases, respectively. "There, people still do call themselves home owners," she said.

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