HDB was describing a lease ownership

It is somewhat misleading to term HDB buyers "homeowners" rather than "lease owners".

The two terms mean very different things legally.

Homeowners own the land outright and never have to return it or pay rent on it. They are restricted only by the prevailing laws of the land.

Lease-owners, on the other hand, exclusively possess the flat for a specified time only, after which the flat returns to the state for free. During the time that they own the flat, they are in addition bound by the terms of the lease agreement they sign with the landlord.

HDB's director (Branch Operations) Lim Lea Lea states in her reply (HDB buyers are home owners, not tenants; July 19) that the name of each HDB flat owner is reflected in the Land Registry .The Land Titles Act imposes a requirement for a lease beyond seven years to be registered in the Land Registry.

Accordingly, the reasons given by Ms Lim as to why HDB-owners are homeowners in fact, fall into a standard description of a leasehold arrangement beyond seven years.

Calling HDB buyers homeowners works to perpetuate the misconception that they own the flat outright. This results in serious and damaging misunderstandings 

Calling HDB buyers homeowners works to perpetuate the misconception that they own the flat outright.

This results in serious and damaging misunderstandings.

For example, many are unaware that their flats will simply revert to the State at the end of the lease term for free and that their property value will depreciate leading up to that.

This fundamentally affects their decision-making with regard to buying or selling their flats.

This is made worse when we refer to HDB flats as "nest eggs" which will continue to appreciate.

The nature of HDB-ownership is different from standard commercial leases or tenancy agreements, and it may not be accurate to start calling HDB-owners "lessees" or "tenants". 

But with the leases of some HDB flats starting to run out, the population is starting to realise the true nature of their HDB-ownership. This transition must be delicately managed - but not by continuing to perpetuate the misconception.

Cheah Wenjie

A version of this article appeared in the print edition of The Straits Times on July 21, 2017, with the headline 'HDB was describing a lease ownership'. Print Edition | Subscribe