Why It Matters

Reality check on lease expiry

In a first for residential properties in Singapore, the State will be taking back 191 plots of land in Geylang Lorong 3 when their 60-year lease expires in 2020.

This is significant because it is a first look at what may happen several decades from now when lease expiry starts to impact the 99-year tenures of Housing Board flats. As 70,000 of the total stock of one million HDB flats are more than 40 years old, nearly 10 per cent of public housing today will be facing a similar fate of lease expiry in 50 years.

For a while, many HDB home owners believed they would get bailed out by the Government's Selective En bloc Redevelopment Scheme.

But National Development Minister Lawrence Wong put this idea to bed in a blog post in March, leading many to question whether they will be left without options when their flat turns 99.

With Geylang Lorong 3, we get a glimpse into the crystal ball. This is the first time that the phrase "lease expiry process" has been used for residential estates. It involves Singapore Land Authority (SLA) officers guiding each household and facilitating the move - whether to a new HDB flat or private property.

SLA has made clear that those still residing there "will not be left without options". But no extensions are allowed, and no compensation will be given. Overstay, and residents may run afoul of trespassing laws as the land would have reverted to the State.

Owner-occupants will also not get any special priority when they apply for an HDB flat as lease expiry is an anticipated event, said a Ministry of National Development spokesman.

On Tuesday, 16 SLA officers visited the 33 owner-occupiers left at Geylang Lorong 3 to explain the process. In 43 years, when the first HDB leases expire, there will be much more explaining to do.

For the bulk of people in Singapore's housing situation, this reality is still decades away and the lease expiry process may yet change.

But the message is clear today: When buying a home, consider the lease and the chance you or your spouse may outlive it. If you still want to buy a home that will expire before you do, then do not overpay.

A version of this article appeared in the print edition of The Straits Times on June 24, 2017, with the headline 'Reality check on lease expiry'. Print Edition | Subscribe