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National Day Rally: PM Lee explains 99-year leases of public and private housing

Prime Minister Lee Hsien Loong addressed home owners' concerns of their flat leases running down to zero at Sunday's National Day Rally, saying that in fact "99 years is a very long time".

"Very few of today’s HDB owners will outlive their leases. HDB estimates that it will happen to less than 2 per cent of households, including those who have bought resale flats."

"So it is not likely to happen to you. It could happen to your children if they inherit your flat. But this should not be a problem if your children buy their own (build-to-order) flat, with its own 99-year lease, as many do. An inheritance for them would be a gift and a bonus. And even if you have to return your old flat at the end of its lease, don’t worry."

This comes after recent debates about whether HDB flat buyers should be called "lessees" rather than "owners", given that new HDB flats come with 99-year term leases and are not freehold.

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Mr Lee took pains to explain why HDB leases are for 99 years, saying it is a way of being "fair to future generations".

HDB sells home buyers a flat for 99 years, and they can own it and pass it on for one or two more generations. After that, the flat is returned to the state, and the government redevelops the land and builds new flats for future generations.

"This is the only way to recycle the land to ensure that all our descendants can buy new BTO 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 added that the government also cannot extend the leases easily, because buildings sometimes wear out even before they turn 50 years old, how much more after 99 years when the mechanical and electrical systems will be obsolete, and the concrete would have deteriorated in Singapore's tropical climate.

"And 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."

The others would be rebuilt into newer and better flats and townships for future generations, he said.