Vers allows for more orderly redevelopment

The Government has come up with a new Voluntary Early Redevelopment Scheme for Housing Board flats that turn 70 years old, which people can vote for by precinct.
The Government has come up with a new Voluntary Early Redevelopment Scheme for Housing Board flats that turn 70 years old, which people can vote for by precinct. ST PHOTO: KUA CHEE SIONG

Residents in ageing Housing Board (HDB) towns will get a chance to experience what it is like to go en bloc as the Government seeks to avoid the mass redevelopment of such estates all at one go.

Under the new Voluntary Early Redevelopment Scheme (Vers), owners in flats aged 70 years and older can vote for the Government to buy back their homes before their leases run out, if their precinct is selected for Vers.

They can use the proceeds to buy a new flat, while the Government redevelops the precinct. If they vote against such a move, they can continue to live in their flats till the leases run out.

Prime Minister Lee Hsien Loong, in announcing the planned scheme at his National Day Rally speech yesterday, said Vers would allow the authorities to redevelop older HDB towns in an orderly way - paced over two to three decades, rather than crammed in four or five years.

He noted that several older estates, such as Marine Parade, Ang Mo Kio and Bedok, were built in a rush to stave off a housing shortage, mostly during the 1970s and 1980s.

Without a scheme such as Vers, "we will have to find new homes for a lot of people at once", he said.

"HDB will have to tear down and rebuild all the old flats in a hurry... These towns will become construction sites all over again, with cranes all over the place," he said.

The scheme, he added, allows redevelopment to take place in a "more measured and considered way".

It also gives more Singaporeans a chance to experience large-scale redevelopment - something previously restricted to those part of the Selective En-bloc Redevelopment Scheme (Sers).

Only 5 per cent of flats are estimated to be eligible for Sers, and most of them have already been completed.

Unlike Sers, however, the compensation for Vers will be "less generous", as there is less financial upside for the Government to take back these flats early.

Eligible Sers flats often have "high development value", where the HDB is likely to build more flats in the underutilised plot of land.

Also unlike Sers, Vers will be determined by a vote.

Mr Lee noted that Vers will not be implemented for another 20 years, adding that the Government needs more time to work out how to select the precincts, space the redevelopments out, decide what the compensation would be and how to afford the scheme for the long haul.

Some of the oldest HDB flats are in estates like Queenstown, Jurong and MacPherson.

"But I think such a scheme is necessary, and so we will start planning for Vers now," Mr Lee said.

Observers said the announcement, together with more upgrading programmes (see other report), sends a clear signal that the Government will not let the value of a flat automatically drop to zero.

National University of Singapore real estate professor Sing Tien Foo said Vers targets a group of people who are likely to increasingly face challenges in monetising their ageing flats, without being a moral hazard.

He added that older flats in strategic locations such as near the city centre or an MRT station are more likely to be sold back early, as they have lost their structural value and there is redevelopment potential.

 
 

But International Property Advisor chief executive Ku Swee Yong wondered if the scheme would undo the warning call made by the Government last year not to pay overly high prices for ageing flats.

"Despite the uncertainty about whether people will vote for Vers, sellers being sellers may listen to this announcement and have unreal expectations about what their flat can go for," he said.

"They might tell a buyer that the precinct has a higher chance of being 'Vers-ed' and raise prices, just like how Sers has never been a certainty but people still gambled based on that."

 
A version of this article appeared in the print edition of The Straits Times on August 20, 2018, with the headline 'Vers allows for more orderly redevelopment'. Print Edition | Subscribe