BTO flats in prime locations may get more govt subsidies but face resale restrictions: Desmond Lee

To keep future housing projects in prime locations affordable, additional subsidies may be required, said National Development Minister Desmond Lee.
To keep future housing projects in prime locations affordable, additional subsidies may be required, said National Development Minister Desmond Lee.ST PHOTO: LIM YAOHUI

SINGAPORE - Build-To-Order (BTO) flats in prime locations may receive more subsidies as the Government considers ways to ensure new Housing Board units remain affordable for ordinary Singaporeans.

Among the ideas under study - home owners may face restrictions on the resale conditions for future public housing projects in prime areas.

In a Facebook post on Friday morning (Dec 11), National Development Minister Desmond Lee said a new housing model is necessary for BTO flats in "new areas with very prime attributes" as they will be "a lot more expensive than current BTO flats".

To keep future housing projects in prime locations - such as those in the city centre or those in Greater Southern Waterfront - affordable, Mr Lee said the Government may have to apply more subsidies, on top of the existing subsidies that are already provided today for all BTO flat buyers.

But he acknowledged that the additional subsidies may raise some issues.

"There is the issue of fairness when these additional subsidies add to higher capital gains for buyers of such flats in prime locations," he said.

"In addition, we want to preserve the character of public housing in these estates, so that like other HDB estates in Singapore, they continue to remain inclusive over time."

He also reiterated that a diverse range of flat types will be built in upcoming estates in prime locations, including two-room flexi flats and rental housing where possible, to cater to different needs and keep Singapore's public housing inclusive and diverse.

Mr Lee said the Government will consider measures that "balance between these various objectives" for upcoming new flats in the prime areas.

"We have received many ideas - for example, some have suggested introducing some restrictions on the resale conditions for future prime area projects," he said.

Calling for more suggestions from the public, he said there is a "whole range of ideas" that can apply to these future flats under the new housing model, which will be carefully studied by the Government.

Last month, Mr Lee said in an interview with Chinese-language daily Lianhe Zaobao that a range of housing types will be "deliberately injected" in upcoming estates in prime locations.

He also acknowledged the "lottery effect" of these well-located flats when they are resold at high prices, resulting in a "likely windfall" for home owners.

He said then that the pricing of flats must be kept affordable at the first sale by HDB and also in resales, hinting that a series of a measures may be implemented to ensure "if resale is permitted for these flats, that they remain affordable for generations to come".

Longer MOP, extra stamp duty, shorter leases as possible solutions

Experts said it was reasonable to expect that public housing projects in prime areas may be subjected to different measures compared to those in the suburbs and newer residential estates.

Finance, economics and real estate professor Sumit Agarwal from the National University of Singapore’s Business School noted that with the obvious benefits to living in prime areas, there was a need to apply mechanisms to make it harder for these homeowners to profit from resales.

“In the first order, it’s very important we have integration - we don’t want two Singapores, with one Singapore in the suburbs and another in the city centre, where rich Singaporeans and foreigners live,” he said.

Prof Agarwal suggested a different tax structure for people looking to sell their flats in prime estates before buying another property.

“They will have to pay an additional stamp duty on top of existing stamp duties or resale levies paid by others. This will discourage them from trading their HDB and give them more incentive to stay in their flats.”

He also proposed, as a further disincentive to selling, that the minimum occupation period (MOP) of five years be extended to seven for these HDB flats.

Ms Christine Sun, OrangeTee & Tie’s head of research and consultancy, raised the idea of selling these flats with shorter leases pegged to the buyer’s age - which is already a feature of upcoming assisted-living flats in Bukit Batok.

It was announced on Thursday that seniors 65 and above would be eligible for these flats, and with a lease ranging from 15 to 35 years as long as it covers the applicant and their spouse until at least 95 years of age. 

“This helps to ensure buyers are truly buying the flats for their own stay and not for investment,” said Ms Sun.

“They need to think carefully if they want to purchase flats with shorter lease when compared to new flats in other locations. Shorter lease will also mean that the price of flats will be kept more affordable.”