Leaseholds confer ownership rights for finite term: HDB

Mr Ku Swee Yong claims that Housing Board flat buyers are "merely lessees who rent the HDB flats" (Outdated ideas on home ownership and land shortage are crippling us; Aug 14).

By his logic, a 999-year private condominium lease should also be considered a rental. But no one would consider this to be so.

Leaseholds confer ownership rights for a finite term. The tenure can vary from as short as 20 years and could go up to 999 years, or longer.

It is not uncommon to find residential properties with 99-year or shorter leases around the world, including in China and Australia.

Owners of leasehold properties can sell their property and keep the profit. Likewise, HDB flat owners can sell their flats once they meet the eligibility conditions and keep the proceeds, or continue living in them while renting out a room for income.

In contrast, tenancy arrangements are usually for shorter terms during which rent is paid.

Such a tenant usually has no right to sell his tenancy.

If the landlord sells the property, the tenant may have to leave unless the agreement specifies that the sale is subject to tenancy.

The tenant also has no interest in the property's long-term value and does not get any upside.

The values of long leases can rise for many years, even as the tenure runs down. It depends on factors such as economic growth. At the end of the lease tenure, the land reverts back to the state.

By then, the owner would have derived either income from renting out the flat, or an equivalent benefit from living in it for many decades.

In the case of HDB flats, many generations of Singaporeans have benefited from the rise in the value of their flats over the years, in tandem with the nation's growth.

Indeed, public housing owners enjoy unique benefits such as generous housing grants and heavily subsidised flat upgrading, which are not available to private home owners.

The recently announced Home Improvement Programme II and Voluntary Early Redevelopment Scheme are added commitments by the Government to ensure our HDB estates remain liveable and vibrant even as they age.

Lim Lea Lea (Ms)

Director (Branch Operations)

Housing and Development Board

Correction note: An earlier headline said 'Why HDB flats are owned, not leased'. This is not what the HDB said. We are sorry for the error.

A version of this article appeared in the print edition of The Straits Times on September 01, 2018, with the headline 'Why HDB flats are owned, not leased'. Subscribe