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National Day Rally: PM Lee announces estate rejuvenation plans

The government will expand its Home Improvement Programme (HIP) to upgrade 230,000 additional flats built between 1987 and 1997. This will happen when the flats are about 30 years old, which will happen soon.

This was one of three housing-related announcements that Prime Minister Lee Hsien Loong made at the National Day Rally speech on Sunday. Previously, only flats built up to 1986 would be offered the HIP.

Mr Lee said: "It has been a decade since we launched the programme, so the flats which missed qualifying for HIP are also now starting to show their age." These include estates such as Yishun, Tampines and Jurong.

He also unveiled HIP II - a programme to upgrade flats a second time when the flats reach 60 to 70 years old. HIP II will start in about 10 years’ time.

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Explaining this decision, Mr Lee said: "After (the first) upgrading, these flats should be good for another 30 to 40 years. By that time, the flats will be 60 to 70 years old, and showing their age again. 

"We are determined not to let our public housing degenerate into ragged slums, which has happened in many other cities. So we should do a second round of upgrading, at about the 60 to 70 year mark... 

"HIP II will keep the flats safe and liveable, and also help them retain their value as their leases run down. It should see the flats through to the end of their leases."

He added that HIP II is a "huge financial commitment" for the government. The first HIP will cost the government more than S$4 billion; HIP II will probably cost even more because the flats will be twice as old by then.

"But it is well justified, and we will do it so long as (the Ministry of Finance) has the money."

Mr Lee also announced the Voluntary Early Redevelopment Scheme (VERS) to progressively redevelop precincts. This will happen from about the 70th year of a building's lifespan onwards, and will start 20 years from now.

This is compared to the Selective En bloc Redevelopment Scheme (SERS), which also renews older housing estates, but which is also a "very limited scheme" meant for selected HDB blocks or precincts which have high development value which can be unlocked.

HDB estimates that only around 5 per cent of flats are suitable for SERS. There will be a few more SERS projects to come, but many projects with high redevelopment potential have already been done.

HDB has thus decided on a new scheme, VERS, that will benefit more households through redevelopment before their leases expire.

There is a strategic reason for this: in the early years, because of the housing shortage, HDB often built in a rush. Several older estates were built within short periods, especially in the 1970s and 1980s.

"Therefore, if we do not plan ahead, 99 years later, all the leases in such towns will expire around the same time, and all the flats will be returned to the state within a few years. We will have to find new homes for a lot of people at once. HDB will have to tear down and rebuild the old flats in a hurry, just like when we first built Marine Parade, Ang Mo Kio and Bedok. These towns will become construction sites all over again, with
cranes all over the place. I don’t think this is a good idea," he said.

That said, the terms will be less generous than SERS, because there will less financial upside, and therefore the scheme will be voluntary.

"This is a long term plan. We will not start doing VERS for another 20 years. We need time to work out how to select the precincts, how to pace the redevelopments out, the specific terms of the government’s offer and so on. We also need to study how to afford VERS for the long term. But I think such a scheme is necessary, so we will start planning for VERS now."