Renewing HDB estates in financially viable way

HDB is committed to improving the quality of our housing estates.
HDB is committed to improving the quality of our housing estates. ST PHOTO: KUA CHEE SIONG

Since the announcement of the Voluntary Early Redevelopment Scheme (Vers) last year, there has been public interest in its design and implementation.

This complex long-term undertaking requires significant public resources, and we should take time to carefully work through the details to ensure a fiscally sustainable scheme.

Some have suggested alternatives to Vers. For example, Ms Christine Li (Is there a more permanent solution than Vers for HDB Flats?, Jan 20) suggested selling freehold HDB flats with an embedded call option (Feco), that is, a buyback clause at the end of 99 years.

While this is an interesting idea, it will be fiscally challenging to implement. The higher prices for the Feco flats, as suggested by Ms Li to account for the freehold tenure, will not generate sufficient revenue for the Government to buy back these flats at a later stage.

Alternatively, if we were to raise the selling price of the flats, this would have an impact on the affordability for home buyers.

Either way, considerable fiscal subsidies will be required, and it will be difficult to sustain such funding over time. The Housing Board will continue to take in feedback and ideas, as we study the best way to go about rejuvenating our public housing estates.

Meanwhile, HDB's existing programmes like the Home Improvement Programme, Neighbourhood Renewal Programme, and Remaking Our Heartland initiative will continue to provide residents in older towns with a quality living environment, while helping to ensure that HDB flats remain a good store of value.

Indeed, a recent study by the National University of Singapore found that older HDB flats depreciate less in value compared to leasehold private housing because of these government programmes.

We have also put in place a range of monetisation options like the Lease Buyback Scheme for flat owners who wish to unlock the value of their flats.

HDB is committed to improving the quality of our housing estates. We are setting higher standards of quality in new towns like Punggol and Tengah, and also upgrading existing towns.

We will strive to do all this in a way that is sustainable and fair to current and future generations.

Daniel Chan Kian Sen

Director (Projects & Redevelopment)

Housing & Development Board

A version of this article appeared in the print edition of The Straits Times on February 23, 2019, with the headline 'Renewing HDB estates in financially viable way'. Print Edition | Subscribe