Residents of four Housing and Development Board (HDB) blocks at Ang Mo Kio Avenue 3 that have been selected to undergo the Selective En bloc Redevelopment Scheme (Sers) will be given two new options of replacement flats with leases less than half the usual 99 years, according to a letter by HDB to residents dated Saturday (July 2).

In the letter that is delivered by HDB officers to residents on Saturday, HDB said that affected residents can purchase a three-room or larger new replacement flat on a 50-year-lease.

The second option allows residents to take up a lease buyback scheme for their existing Sers flat, and buying a new replacement flat on a short lease similar to that left on their Sers flat after selling the lease to HDB.

These two new options, which are believed to be a first for Sers, are in addition to the existing option of buying a new replacement flat on a fresh 99-year-lease, said HDB to residents in the letter, which TODAY has seen and verified to be authentic.

Residents had previously expressed unhappiness at having to fork out up to S$100,000 for a new replacement flat.

HDB had stressed that it understands the concerns of the residents and will explore ways to help them. It also stressed that the new flats come with a fresh 99-year lease while the Sers flats completed in 1979 would already be 49 years old when residents have to move out around end-2027.

Some residents had in turn also suggested that HDB make the replacement flats more affordable for older residents by allowing them to buy flats with the same number of years left on the lease as their existing units.

In its letter on Saturday, HDB said that it recognised that “Sers can be an emotional journey for residents, especially for those who have lived in the estate for a long time and are attached to their neighbours as well as their familiar surroundings”.

HDB also noted that there were flat owners who had expressed concerns that the compensation amount for their existing flats would not be sufficient for them to a purchase a new replacement flat of an existing size on a fresh 99-year-lease.

“We hear you and understand your concerns,” said HDB.

"With these options, there is a suite of rehousing choices for residents who can decide which one meets their needs."

FLATS ON 50-YEAR LEASE AT REPLACEMENT SITE

HDB said that the 50-year lease offered in the latest option would be close to the balance lease of the residents’ existing flat by the time they move out around the year 2027 or 2028.

“With a shorter lease flat, you should be able to take up a new replacement flat of a similar size as your existing flat without having to pay a top-up amount,” HDB said.

In an example provided in the letter, it said the estimated market value of a 92 or 93 sqm four-room Sers flat on the sixth floor is valued at around S$415,000.

The estimated subsidised selling price of a 90 sqm replacement flat that is also on the sixth floor, after factoring in a S$30,000 Sers grant, is S$470,000 for one that is on a 99-year-lease lease, and S$359,000 for one on a 50-year-lease.

This means that instead of having to fork out S$55,000 for a replacement flat, residents will get to pocket S$56,000 instead either in cash or in their Central Provident Fund (CPF).

For a 68 sqm three-room Sers flat on the sixth floor, its estimated market value will be S$315,000 while a 65 sqm replacement flat will cost S$308,000 and S$233,000 with 99- and 50-year leases respectively.

This means residents can expect to pocket S$7,000 if they opt for 99-year lease or S$82,000 for 50-year lease.

To be eligible to exercise this option, HDB said applicants must be at least 45 years old at the point of the Sers announcement.

“This ensures that the lease of the new flat can cover you until at least the age of 95 and provide you with a home for life,” it said.

HDB said that this group of buyers will still have to meet the minimum occupation period of five years before they can sell the flat on the open market.

HDB added that these examples are estimated figures and the actual compensation amounts for Sers flats will be available in the fourth quarter of this year and the selling prices of the new replacement flats will be made known during the flat selection in late 2023.

LEASE BUYBACK SCHEME

As for those who are 65 years or older at present, HDB said they can opt to take up the lease buyback scheme for their existing Sers flat.

HDB explained that this scheme allows senior residents to “monetise any remaining lease of their flats that they may not need” to meet their retirement needs.

Under this scheme, HDB said such flat owners can retain 15 to 35 years of the lease — in five-year-increments — of their existing flat that will cover them till at least the age of 95, and sell the remaining tail-end lease to HDB.

They must sell back at least 20 years of lease to HDB.

The proceeds can then be used to top up their CPF Retirement Account and purchase a CPF Life Plan that will provide them with a monthly pay-out for life.

They will also enjoy a lease buyback cash bonus of S$30,000 if the Sers flat is a three-room unit, or a S$15,000 bonus for a four-room flat.

In any case, HDB said that in view of the Sers exercise, this group of flat owners will also receive market compensation for the balance lease of their flat they retain.

With this compensation, HDB said they can choose to buy a new replacement flat at Ang Mo Kio Drive of the same flat type, on a short lease that is equivalent to the remaining lease of their Sers flat after the lease buyback.

To illustrate how this works, HDB gave the example of a married Singaporean couple who are both aged 65 and are both joint owners of a fully-paid for three-room Sers flat.

Similar to the earlier example, the estimated market price for their Sers flat on the sixth floor is S$315,000.

If they opt to retain 30 years of lease valued at S$192,600 and sell the remainder to HDB, their lease buyback proceeds will be S$122,400.

The couple can then buy a new replacement flat with a similar 30-year lease. HDB said the estimated selling price of such a flat on the sixth floor, after factoring in a S$30,000 Sers grant, is S$139,000.

As the estimated market value of their Sers flat under the lease buyback scheme is valued at S$192,600, this means that the couple will also receive S$53,600 in total net proceeds.

Source:
courtesy of TODAY

by LOW YOUJIN

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