Shorter leases, tax on profits among ideas mooted by MPs to lower HDB flat prices

The debate on the affordability of public housing in Singapore continued for eight hours on its second and final day on Tuesday. PHOTO: ST FILE

SINGAPORE – Fifteen MPs from both the Workers’ Party (WP) and the People’s Action Party (PAP) on Tuesday aired their views on the affordability of public housing in Singapore and offered suggestions to improve the situation.

The debate in Parliament, which continued for eight hours on its second and final day, was triggered by two motions on public housing affordability filed by Progress Singapore Party (PSP) Non-Constituency MP Leong Mun Wai and National Development Minister Desmond Lee.

Do ideas about public housing need a reboot?

The time has come for Singaporeans to reboot their ideas about Housing Board flats and see them as affordable places to live in rather than assets which continue to rise in value like equities, said WP MP Leon Perera (Aljunied GRC).

HDB flats are not like stocks and shares, and expectations that the price of a flat is going to go up and up and never come down are not sustainable, he told Parliament.

Mr Perera added that the need to reassess the role of public housing is necessary now in the face of lease decay and the need to keep housing affordable for young people who are starting families.

There are and will be many people who will not benefit from an ecosystem of policies centred on people monetising their HDB flat for retirement, he said.

“If we frame our policies to prompt rising HDB resale values in the belief that monetising that resale value should be one of the main ways we provide for retirement, where does that leave those who do not want to sell and move out?” he asked.

“Many elderly Singaporeans are living in flats worth a considerable sum. But they do not want to downgrade.”

His views were echoed by his WP colleague Gerald Giam (Aljunied GRC), who said that for the first two decades of the Government’s asset enhancement policy, the property asset-driven mindset “worked like a charm”.

He said HDB resale flat prices increased 382 per cent in value from 1990 to 2010. Many HDB leases saw eye-watering increases in their property wealth, he added.

Mr Giam said: “However, this pathway to wealth requires ever-increasing property prices to sustain it. Every property bought would need to be sold for significantly more than the purchase price.”

BTOs affordable, but their shortage and high resale prices of concern

Ms Mariam Jaafar (Sembawang GRC) said rising resale prices and rents have sparked debate about whether public housing is still affordable.

She said housing-related appeals make up a third of the caseload at Meet-the-People Sessions for her and many of her parliamentary colleagues.  

“There is genuine concern among some young Singaporeans, and their parents, whether they will be able to afford a flat,” she said.

She added that the core problem is not the affordability of Build-To-Order (BTO) flats, but a shortage of such flats and waiting times as high as seven years, driven by Covid-19 related disruptions as well as a shifting mix of such flats with a higher proportion of BTOs in mature estates.

Adding to this are high resale prices. Taken together, these three issues mean some people find they cannot get a flat they want, BTO or otherwise, she said.

Shorter leases of 50 years or 70 years

Ms Mariam said that while the current BTO market is not flawed, one way forward would be to introduce shorter-tenure flats with leases of 50 years.

This will allow for cheaper flats while shifting the market further away from speculation, and helping to set price levels for flats of different tenures, she said.

Mr Perera also proposed the addition of BTO flats with alternative lease lengths – namely 70-year leases with the option of a 29-year top-up.

He said: “This will allow BTO flats to be sold at a lower price. Such flats may also better suit the life plans of many buyers.”

He also proposed that some BTO flats be built ahead of demand, a suggestion also brought up by Mr Xie Yao Quan (Jurong GRC) and Ms Denise Phua (Jalan Besar GRC).

Make those who buy private property sell HDB flat

Nominated MP Shahira Abdullah suggested that the Government require owners to sell their flats when they purchase a private property to free up more HDB flats.

Ms Mariam also proposed a similar move, urging the Government to move quickly to send a strong signal that public housing is not an investment.

Mr Gan Thiam Poh (Ang Mo Kio GRC) suggested that the Government review the tax on profits made by the sellers of property, including HDB flats, and increase grants to first-time HDB flat buyers on top of increasing supply, in order to check runaway prices and support first-time home owners.

Singaporeans could also get help to acquire new BTOs close to family members in mature estates, said Mr Henry Kwek (Kebun Baru).

He added: “HDB can extend the housing proximity grant beyond those living within 4km of family members to include those within a 30-minute off-peak journey by public transport.”

The Housing Board can also consider reserving 30 per cent of new BTOs in mature estates to those who qualify for such a grant, he said.

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