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The Straits Times says

Taking pragmatic approach to property

Few topics capture Singaporeans' interest as much as property. Apart from being able to enjoy its use, the prospect of capital appreciation can get many excited. Propelled by such anticipation, some have paid high sums for short-lease Housing Board flats, betting that these are eligible for the Selective En bloc Redevelopment Scheme (Sers), under which they could be offered new units on fresh 99-year leases. Such cases prompted National Development Minister Lawrence Wong to issue a caution about the strict selection criteria for Sers, which is why only 4 per cent of HDB flats have qualified since 1995. Extending Sers to the majority of flats would be ruinously expensive, and it would unhinge the concept of leases.

Most Singaporeans accept the reality that fixed-term leases are, by definition, finite - and are priced accordingly. When the time comes, land that is owned temporarily must revert to its original owner - the state, in the case of HDB blocks. This simple rule underlying fixed terms allows land to be used productively for the greater good. In a land-scarce city, there will always be competing uses for land: for residences, commerce, transport, recreation and public security. The Government needs to consider what is best for the country's needs and to systematically plan for these well in advance, basing calculations on the expiry of leases. If land is not returned as expected, plans would go awry and could jeopardise the provision of public services.

The primacy of the common good is also why the state is empowered to acquire private land for essential programmes like hospitals, flood alleviation works or a new rail line. If a crucial tract of land is not available because, say, an expiring lease has been extended for political reasons, a project might be scuttled or people would have to take a longer route because of a diversion.

Land is a precious asset of the state and is treated as part of the nation's reserves, the safeguarding of which is a primary role of the elected president. This helps to ensure that the nation does not suffer if a future, profligate government were to sell state land or extend leases merely to boost its coffers for one purpose or another.

Property is also precious to Singaporeans - it is often their single largest asset and is closely tied to their sense of wealth and security. But many assume it will always keep appreciating in value. This is unrealistic as all markets have their ups and downs, the use of land is subject to larger national interests and land values are vulnerable to climate change as well. In the case of HDB flats, age has to also be taken into account, with around 70,000 flats more than 40 years old. Hence, owners should not leave decisions too late. Seniors, for example, can tap the Silver Housing Bonus scheme or Lease Buyback Scheme. As with all aspects of ageing, it would be wise to plan ahead.

A version of this article appeared in the print edition of The Straits Times on April 19, 2017, with the headline 'Taking pragmatic approach to property'. Print Edition | Subscribe