CPF cut expected to hit private property market in short-term
By : Dawn Teo
The CPF cut is expected to dampen sentiments in the property market in the short term, especially for cheaper condominiums that are sought after by HDB flat owners looking to upgrade.
But on the other hand, more home buyers are expected to go after more affordable 3, 4 and maybe even 5-room HDB flats.
And that means, the prices for these housing types should remain strong.
Lower-end 99-year leasehold condominiums have been selling well in recent months, thanks to attractive prices that tend to fall between $500,000 and $800,000 a unit.
But the buying spree will probably slow down, as the impact of the CPF cuts hit home.
Nicholas Mak, Chesterton International, said: "Probably there will be some buyers that will probably be buying more affordable units, smaller or cheaper units than they initially planned. And perhaps some young couples, newly formed households might have to postpone that dream condo for a while."
But analysts reckon property developers in general will not drop their prices sharply.
For those still shopping around, analysts say developers are likely to offer more incentives like absorbing the stamp duty or deferred payment schemes, to attract home buyers.
But if you have just taken out a big loan for your new home and are now feeling squeezed, the experts say, try not to sell it as it will be difficult to find a buyer.
Roy Varghese, Ipac Financial Planning, said: "My advice to everybody is, do not panic. There's no need to sell your homes. I think there has to be a real change in mindsets in Singaporeans. They have to live within their means. We tend to spend money on luxury items be it mobile phones, or vacations or the coffee that is not at the kopitiam. We really have to look out for where we can get value for money. So if there are any luxury items that we can give up, so be it."
In fact, the experts say if you can afford it, this could be a good time to buy a private property as interest rates are on the way up but still relatively low.
And prices, already at a 4-year low, probably have not hit the bottom yet.
THE Housing and Development Board (HDB) has warned flat owners not to over-declare the value of any resale flat transaction. It said that, if an over-declaration is discovered, all parties and the property agents involved will be prosecuted.
The warning comes at a time when a practice known as "cash back" has surfaced in recent months because the prices of HDB resale flats have fallen below valuation levels.
A board spokesman said that it had received a few anonymous tip-offs of suspected "cash back" cases but that there was no evidence to show that the parties involved had over-declared their resale prices.
However, some housing agents said they had encountered more "cash back" demands from flat buyers recently.
Mr Chris Koh, vice-president of Dennis Wee Realty, said: "One of my agents lost a deal because he was not willing to do it. In the end, the buyer went to buy another unit where the owner agreed to offer 'cash back'."
He added that, on the telephone, agents representing buyers ask if there is any "cash back". "The moment you say 'no', they will not arrange for the buyers to view your flats."
The "cash back" practice works like this: For example, the owner of a five-room HDB flat has tried unsuccessfully for six months to sell his unit at the valuation price of $300,000. He then gets desperate and is willing to part with the flat at below valuation price. The buyer, on the other hand, is willing to buy at $280,000 but he is keen to declare the sale price with the approval of the seller at $300,000.
In return, he will get $20,000 (the difference between $300,000 and $280,000) from the seller in cash after the latter collects his final payment from the HDB.
According to Mr David Huan, managing director of the housing agency, Rainbow Cottage, who has advised his agents against the "cash back" practice, the liberalisation of HDB loans has unwittingly lent support to this practice.
According to several property agents, due to a competitive market, banks often value HDB flats five to 10 per cent higher than HDB-approved valuations.
"As long as the buyer's debt ratio does not exceed 35 to 40 per cent of his income, the banks will be willing to lend," said Mr Huan.
Under the current resale procedure, buyers and sellers of HDB resale flats are required to declare in the application form their particulars and information relating to the resale transaction, including the transacted price and the amount of cash deposit.
Housing agents who broker the resale transactions are required to declare the price and the amount of cash transacted.
Under the Oaths and Declarations Act, any person who makes a false statement in a statutory declaration is guilty of an offence that carries a penalty of up to three years in jail or a fine, or both.
Under the Housing and Development Act, any person convicted of making a false statement can be fined up to $5,000 or be imprisoned for up to six months or both.
The HDB said that, if the information was found to be false before transaction was completed, it would cancel the application.
"Where the offence is uncovered after the purchase of their flat, HDB may compulsorily acquire the flat under its Act," it said.
220,000 3rm flats available!? but how many sellers are there & even there is, the cash demand fm the sellers are usually above $10k to $30k++! do mr mah consider this as affordable?
Fm CNA, 01 Sept 2003 1905 hrs (GMT)
New HDB flats will stay affordable: National Development Minister
By : Asha Popatlal
The CPF rate is going to be cut, but National Development Minister Mah Bow Tan insists that new HDB flats will stay affordable.
Mr Mah said: "Being Singaporean is when I say 'Let's apply for a flat' and my girlfriend knows exactly what I mean. I don't think there is any other place in the world that has that."
But now that CPF rates are being cut, will this uniquely Singaporean proposal be heard less often?
Will Singaporeans still have enough in their CPF for a new flat?
Well, provided they do not over-commit themselves, Mr Mah said there should be no problem.
Take 3-room flats for example, with 220,000 units available, Mr Mah says there is currently no shortage.
In fact, first-time households earning $2,000 or less a month, can walk into HDB and get their keys almost immediately.
Nevertheless, HDB may build more 3-room flats in Selective En-bloc Redevelopment or SERS projects.
And if Singaporeans need a bigger place, 4-room flats in Punggol, Sengkang and Sembawang will be offered under build-to-order exercises this month.
And Mr Mah assured they would be priced affordably.
A household earning about $2,770 a month only needs to use about 21 percent of their month income to finance their purchase.
This is below the revised Ordinary Account contribution rate of 22 percent.
As for lower income Singaporeans, from next month, familes earning less than $2,000 will also be subject to credit assessment and mortgage loan caps.
Mr Mah said: "These prudential mesaures will ensure that low income families buy flats when they are financially ready and not over commit themselves. HDB will continue to assist this group to own their homes by selling flats at subsidised prices and to give them financial counselling."
For those who cannot afford to buy a flat, renting is now more accessible.
The monthly income cut-off has been raised so that more families can qualify for subsidised rental flats.
But Mr Mah warned that when tenants get better off, they must try to buy a flat or they will never give up their subsidised rental flats.
"In Hong Kong, many tenants are like that. They rent flats but at home, they have large plasma TV screens and they drive large Mercedes cars. But they have gotten so used to rental housing they have gotten entrenched in it," he said.
The pool of rental flats is also getting a boost next month from the relaxed rules over sub-letting.
The move will make about 250,000 flats, occupied for 10 or 15 years depending on whether there is a loan, eligible for rent.
the MOP for those that did not take grant or subsidy has been reduce fm 2½yrs to 1yr since jan 2003, hwever the MOP for those with grant or enjoy the subsidy still remain 5yrs.
this is no longer realistic anymre as the reason for imposing MOP is to prevent buyers making short term profit, bt the present situation & even next few yrs, it's unlikey to make quick bucks fm hdb anymre!
by reducing MOP can actually help those owners that face financial difficulty where they are tie dwn by the MOP ruling. hdb shld allow dwngraders to sell their flat in open mkt after 2½yrs instead of 5yrs. though the new ruling say, they will allow to shorten the MOP bt it only apply to those "deserving cases".
and the concessary interest rate which is 2.6%, which is based on cpf int rate of 2.7%. (hdb conc rate is peg on 0.1% lower than cpf), why this cant be changed? cant hdb reduce the conc rate to 2% while cpf int remain the same?
AS THE Government continued to explain its "retuning exercise", Parliament heard yesterday about more Housing Development Board policies that would take effect from Oct 1.
First, the Public Rental Scheme. Although the Government raised the monthly income cut-off from $800 to $1,500 on Friday to make rentals more accessible for low-income Singaporeans the latest policies underscored its enduring belief in home ownership.
The HDB will convert all existing tenancies to term tenancies and implement income-based rentals, said Minister for National Development Mah Bow Tan.
"Tenants whose financial situation has improved should be encouraged to take up a home ownership flat," Mr Mah told Parliament, saying the Government does not want better-off tenants to become entrenched in subsidised housing.
He said rents for the new $801 to $1,500 household income bracket would range from $90 to $111 for a one-room flat, and from $123 to $150 for a two-room flat.
The limits on HDB rentals were introduced even as some Members of Parliament suggested that it was time to revisit the Government's asset-focused policies.
"Some citizens want the Government to ensure their peace of mind and protect their livelihood, and not whether they can own a home quickly," said Dr Lily Neo, MP for Jalan Besar.
Lower-income households will also be affected by the HDB's plan to cap the quantum of mortgage loans according to the flat type purchased.
Credit assessments will also be extended to households with monthly incomes of $2,000 and below, ending the exemption they enjoy now. The loan grants of up to 100 per cent they receive are also likely to be halted as a result of the changes.
Mr Mah said: "These prudential measures will ensure that low-income families buy flats when they are ready financially and do not over-commit themselves."
However, those who are already over-stretched but cannot downgrade immediately due to the minimum occupation period (MOP) rule will find some relief in the Minister's words that the HDB will waive the rule "for deserving cases".
Another balm for downgraders is the flexibility that the HDB will exercise for those who are in severe financial hardship and need a second concessionary loan.
Retrenchment, severe pay cuts, business failure, prolonged illness and the death of a sole breadwinner were some of the examples cited by Mr Mah, as "severe financial hardship".
The regular policy is to not grant a second concessionary loan to downgraders. Now, those who qualify for the temporary measure will have their loan capped at the value of the outstanding loan on their existing flat or 80 per cent of the value or purchase price of their next flat, whichever is lowest.
But the Government will not lower the concessionary rate of 2.6 per cent. Mr Mah explained that the rate was set at 0.1 per cent above the CPF minimum interest rate of 2.5 per cent. Cutting it, he said, would result in lower CPF interest rates, which said nobody would want. He did not say why the peg could not be dropped.
Meanwhile, Acting Minister of Manpower Ng Eng Hen said that CPF rates could not be increased as they are already higher than its peg to weighted average of the one-year fixed deposit rate and savings account rate of the three local banks.
the painting of the bricks may serve two purposes, one is water-proofing & the other is aesthetic wise. the writer probably misunderstand it.
Fm ST, 05 Sep 2003
Bricks are red, so why paint HDB blocks red?
By Helmi Yusof
IF SOME thrifty Singaporeans had their way, police expressway-patrol cars would be cheaper Japanese models instead of German BMWs.
Lampposts would be shorter, upgraded HDB lifts would not stop on every floor, and ministers' pay would be cut by up to half. Also, top civil servants would be denied business-class seats on trips and there will be no refreshments during their meetings.
Readers have been swift with suggestions on how the civil service can cut costs since Deputy Prime Minister Lee Hsien Loong announced last Friday the setting up of the Cut Waste Panel.
The Straits Times has received almost 100 calls and e-mail messages, and the panel's new website, a dozen e-mail responses.
The eight-member panel led by civil service head Lim Siong Guan will sift through the suggestions, and send them to the relevant agencies for study and implementation, if appropriate.
Other members are MPs Ang Mong Seng (Hong Kah GRC) and Ahmad Magad (Pasir Ris-Punggol GRC); journalists Chua Mui Hoong of The Straits Times and Chen Hwai Liang of Lianhe Zaobao; Case executive director Seah Seng Choon; PricewaterhouseCoopers' Gautam Banerjee; and People's Association's Devi Haridas.
Their plate will be full because many Singaporeans are seeing wastage everywhere they look. One griped about the many TV sets running Channel News Asia programmes, on mute, in Ngee Ann Polytechnic's canteens.
Another pointed to extravagant spending that went into changing the names of government agencies last year. For instance, the Trade Development Board became IE Singapore, and the National Science and Technology Board morphed into A*Star.
A national serviceman said the Singapore Armed Forces' clothing allowance of up to $226 a year, given to combat soldiers to replace torn or old uniforms, is too generous.
The most common gripe was the use of plasma TVs in civil-service and statutory-board buildings. Since a Straits Times reader decried the two sets in Jurong Police Division Headquarters last Friday, people are reporting seeing them at the HDB Hub, MRT stations and elsewhere.
What's emerging is that one man's notion of beauty is another man's view of waste.
Wrote a Hougang reader: 'The HDB flats are made of red bricks. So why do they have to paint my block red?'
Last edited by sunsetbay; 08-09-2003 at 02:43 PM..
I REFER to the letter, 'Review income ceiling for loan' (ST, Aug 29), by Mr Chia Shyh Chiuan suggesting that the Housing Board review the household income ceiling for flat buyers to qualify for a loan from HDB. HDB provides mortgage loans at a concessionary interest rate to help young Singaporean families buy their first flats as well as to assist citizen families to upgrade from smaller to bigger flats.
At the current household income ceiling of $8,000 per month, more than eight out of 10 households qualify for a concessionary loan. Households earning above $8,000 should be able to obtain loans from commercial banks and financial institutions. Hence, HDB has no intention to raise the income ceiling.
We also wish to clarify that households which have taken a bank loan are still eligible for an HDB concessionary loan for their subsequent flat purchase if they meet HDB's prevailing eligibility conditions.
LEONG CHOK KEH
Deputy Director (Policy and Property)
for Director (Estate Administration and Property),
THE Government may be changing the Central Provident Fund (CPF) rules so that retired workers' financial needs will be better met, but the retirement funds of one group of Singaporeans could be hit by a re-housing scheme they did not choose.
The residents of Tanglin Halt and Commonwealth Drive are mostly in their 50s, 60s and 70s, do not speak English, are retired and do not have much money in their CPF accounts.
In January, they were disturbed to hear that their homes had been identified for the Selective En Bloc Redevelopment Scheme (Sers). Now, they are downright dismayed.
On Aug 24, the 497 affected households received letters from the Housing Development Board (HDB). The notice informed them how much they would be getting as compensation for the apartments and how much they will have to pay for the new flats.
It is the difference between the compensated amounts and the prices of the new flats that has the residents worried.
Compensation payment ranges from $65,000 to $85,000 for owners of two-room flats and $90,000 to $130,000 for owners of three-room flats.
Prices for the replacement flats, which comprise three- to five-room units, range from $130,000 to $370,000. Studio apartments cost $60,000.
For many HDB dwellers affected by Sers, the difference is a small price to pay for a brand new home in a prime-location mature estate.
But for this greying group of people in Tanglin Halt and Commonwealth Drive, it's a price they may not be able to afford.
Out of the nine households in the affected blocks that Today spoke to, six complained about the plan to demolish their homes.
"If (HDB) had done this when we were younger, it would have been okay. But now?" fretted housewife Rebecca Chew, 59. "How are we going to come up with $25,000 plus renovation costs at our age?"
Mrs Chew was offered $110,000 for her three-room flat; an equivalent replacement costs about $135,000.
Like many of her neighbours, she doubts she will be able to secure a loan from the banks because of her age. Even the HDB conducts credit assessments.
Although many of them have children, those spoken to by Today did not want to pass on the burden to their offspring. Some could not even if they wanted to.
"I am 74. My only son is 40 and a bachelor, with no money to get married. He is working part-time because his education standards are low. I think we will suffer," said one resident at Block 71.
The new Sers flats will be ready in 2007. If residents cannot take them up or have no children to move in with, they can choose to buy a flat on the resale market or opt for subsidised up-graded two-room or three-room buy-back flats from the HDB.
None of the residents interviewed wanted to move into the studio apartments that will be built in the new Sers blocks the first time studio apartments are integrated with other flat types.
The studio apartments, meant for those aged 55 and above, come with a 30-year lease and will be claimed by the HDB if the tenants die before then.
Even owners of two-room flats the hardest hit do not see studio apartments as an option. Said a resident who wants to be known as Ms Chan: "They don't want their money to go to the Government. They would rather pass it to their children," she said.
Not all residents are against the move.
Mr Senthil Kumar, 34, a tenant for three years, thinks the 40-year-old estate is due for an upgrade. "If not today, then some other day. It has to be done," he said.
The residents have two weeks to decide whether to accept the HDB's offer or make an appeal for more compensation.
But many fear that if they appeal and lose, they will lose the ex-gratia component of the HDB's compensation offer. This can amount to nearly $30,000.
If they accept the offer, they have until Oct 30 to decide whether to choose a replacement flat under the scheme or find alternative accommodation.
An HDB spokeswoman, when told about the dilemma some residents face, said they could opt to buy the cheaper two-room or three-room buy-back flats in other estates.
She added that the residents are also entitled to a financial package and rehousing benefits.
This includes a 20 per cent discount, up to a maximum of $30,000, for the new flats, but only for those who are eligible.
The eligibility criteria are multi-fold, though, and the older residents are not familiar with them.
"We are old. Some are widowed ... we are ignorant about this. Do you know how we can find someone to help us?" asked Ms Chia Tung Teck, 63.
common replies from HDB & ministers, "public housing are heavily subsidised".
Fm ST, 11 Sept 2003
Waiver of waiting period for special cases
I REFER to Mr Tan Boon Eng's letter ('7 ways to ease impact of CPF cuts on property'; ST, Sept 5), which suggested that the Housing Board review its policy to allow private-property owners who face financial difficulties to downgrade to new HDB flats without fulfilling the 30-month waiting period.
New HDB flats are heavily subsidised and are meant for those who cannot afford alternative housing. Those who have sold a private property have to observe the 30-month waiting period, as they are generally able to purchase a resale flat using their sales proceeds. There is no time-bar for private-property owners who want to buy resale flats.
Nonetheless, HDB will consider waiving the 30-month waiting period on a case-by-case basis for those who are in genuine financial hardship and cannot afford a resale flat even after the sale of their private property.
TAY BOON SUN
Senior Public Relations Officer
for Director (Corporate Development)
Housing and Development Board
WE REFER to the letter, '7 ways to ease impact of CPF cuts on property' (ST, Sept 5), by Mr Tan Kok Liang.
Mr Tan's suggestions to ease the impact of CPF cuts on residential-property prices centre on controls in the supply of new housing units to support prices of residential properties.
We agree that a residential property, whether private or public, is an important asset to Singaporeans. The value of this asset is of primary concern to home-owners.
However, this concern has to be balanced with the need to ensure affordable housing for new home-owners, who will also have the same aspiration to own their own homes.
The Government's objective is thus to have a stable property market. It is not in our interest for property prices to plunge; neither is it prudent to prop up prices to maintain high asset values.
With regard to the effect of CPF cuts on housing, the immediate result may be that households have less funds for the purchase of properties. However, CPF funds available for the purchase of properties is just one factor affecting demand. The main objectives of the CPF cuts are to enhance our cost competitiveness and position our economy for a renewed period of growth when the external economic conditions improve.
With economic growth and greater job opportunities, more Singaporeans are likely to be able to afford private housing in the longer term. The prices of residential properties may rise in tandem with incomes in this context.
The Government monitors the property market closely. We ensure the stability of the market by providing a sufficient supply of private residential land to meet end-users' demand for space. The prices of private residential land put up for tender are then determined by market forces, based on supply and demand.
As there is currently still demand for private housing, it is not prudent for the Government to totally cut off supply by stopping land sales for residential development, as suggested by Mr Tan.
A better approach to achieve a stable private residential-property market is to operate the government land sales (GLS) programme in a way that allows the market the flexibility to adjust supply to match demand.
It is for this purpose that the Government introduced the Reserve List for the GLS in June 2001. A site on the Reserve List will be put up for tender only if a developer applies for it to be sold, and offers an acceptable price.
In this way, the market has more flexibility to decide on the appropriate level of supply, in response to demand. Prior to June 2001, there was less flexibility as all sites were sold through the Confirmed List, where sites were put up for tender according to a fixed schedule. Since October 2001, in response to weaker economic conditions, the Government has suspended the Confirmed List.
The Reserve List has worked well so far in allowing the market to adjust supply to match demand, and to prevent oversupply in the market. For example, developers triggered the sale of only one residential site in the first half of this year, in response to the weak economy caused by the Iraq war and the Sars outbreak.
The Reserve List system is more flexible than the Certificate of Entitlement scheme suggested by Mr Tan, as it allows developers to apply for more sites if there is demand and insufficient supply.
Likewise, in the case of public housing, the Housing Board's building programme is designed to match the overall demand. To better manage the supply of new flats and ensure that demand for flats is genuine and not speculative, all new flats for public applicants are currently offered for sale through the Build-to-Order system. Construction of the flats will proceed only if the take-up rate is good.
Mr Tan suggested that the conversion of other types of property to residential use be regulated to prevent oversupply. The Government currently regulates the conversion of property based on planning considerations, ie, whether a residential development is suitable in the area.
However, the economic decision as to whether to convert the properties from one use to another lies with developers, based on their assessment of the demand and supply situation. This approach should remain.
We would, however, like to assure Mr Tan that the Government takes into account all sources of supply, including the conversion of properties such as hotels to private residential properties, in determining the amount of residential land to release under the GLS programme each year.
On the suggestion that old properties be upgraded to meet new demand, the HDB's Main Upgrading Programme, alongside other improvement programmes such as the Selective Enbloc Redevelopment Scheme, the Interim Upgrading Programme and the Lift Upgrading Programme, are all part of the Government's continual efforts to renew the older HDB estates.
In the case of private properties, however, it would again be best left to the market to decide if it makes economic sense to upgrade the old properties.
Mr Tan also suggested that the Government free up more land for industrial and commercial use to bring down business cost. We would like to clarify that the Government's Reserve List currently has seven commercial/white/mixed commercial-residential sites which could potentially supply 103,500 sq m of commercial space, and six industrial sites totalling 13.9 ha. These sites are sufficient to meet any foreseeable surge in demand for commercial and industrial space.
With ample supply of such properties, rental costs for businesses have come down. Since the second quarter of 1996, rentals of industrial properties have fallen by 50.4 per cent, while rentals of office and shop space have fallen by 41.5 per cent and 33 per cent respectively.
The rental rates of office and shop space in Singapore are, according to international ranking, already competitive compared to other major cities.
In conclusion, we would like to assure Mr Tan that the Government would make every effort to maintain a stable property market, and to ensure that costs are kept competitive.
JULIA HANG (MRS)
Assistant Director/Public Affairs
Ministry of National Development
I refer to your report "Sers Woes" (Today, Sept 5).
I was disturbed to hear of the plight of many of the retirees who stay in Tanglin Halt and Commonwealth Drive.
These people completed their financial planning years ago to purchase their 99-year leasehold flats and had planned to stay there till old age.
However, their planning came to nought when the HDB decided to rebuild the place, and the compensation is nowhere near the replacement cost.
Since the HDB is making a profit from tearing down dispersed low-rise flats and replacing them with high-rise flats, shouldn't this exercise be treated like a private housing en-bloc sale, where profits are shared with the residents?
The least the HDB could do is to provide similar flats free of charge to the residents.
Also, with so many empty flats on the market and other empty plots of land for building flats, why does the HDB have to tear down these flats now?
Affected residents compensated fairly in Govt's drive to redevelop HDB estates
I refer to the report "Sers Woes" (Today, Sept 5), the letter "Old and hapless" by Pow Sok Choo (Today, Sept 8) and the letter "HDB should share wealth with retirees" by Tan Chee Yong (Today, Sept 9).
Sers was launched in August 1995 as part of the Government's strategy to renew older HDB estates. It identifies HDB blocks for redevelopment. This optimises land-use and gives households the chance to upgrade to new flats, on fresh 99-year leases, at subsidised prices. By building more flats in the replacement site nearby, it also allows other Singaporeans to move into mature HDB estates.
Households under Sers are compensated generously for their flats. They are paid the prevailing market value and guaranteed a replacement flat at a subsidised price.
Eligible households are also given a 20 per cent price discount on the new flat, up to $30,000, plus a financial package to ease their cashflow.
With these arrangements, Sers lessees are usually well able to afford a new replacement flat.
The flats in Tanglin Halt and Commonwealth Drive are almost 40 years old. The majority of the flats, i.e. 83 per cent, are three-room and bigger flats. The residents will generally enjoy a surplus if they buy a new flat of equivalent flat-type because the HDB compensation for the old flats exceeds the nett subsidised selling price of the replacement units.
Two-room flat households would also enjoy a nett surplus if they buy a three-room buy-back flat.
As a significant proportion of the flat owners are senior citizens, the HDB offers new studio apartments and new three-room flats as replacement flats, in addition to the usual new four-room and five-room flats. This has increased their choices and the affordability of the replacement flats.
The HDB put in place a comprehensive communications plan immediately after the announcement to keep the households informed and guide them through the implementation process. This included door-to-door distribution of the Sers information booklet, a week-long exhibition held nearby and individual sessions with the households to explain the rehousing package. There is also a toll-free Sers enquiry line at 1800-866-3070.
The writer, Pow Sok Choo, said the two-week period is too short for Sers lessees to make their decisions on the scheme. The Sers announcement was made eight months ago. The households involved have had ample time to weigh the options and decide on what replacement flat to buy, or to sell their existing flats with the rehousing benefits.
The HDB will assist all households who require more information in making their rehousing decisions.
The report quoted the case of a Mrs Chew who "was offered $110,000 for her three-room flat; an equivalent replacement costs about $135,000". Mrs Chew qualifies for the 20 per cent discount and hence, the equivalent new three-room flat, said to cost about $135,000 in the report, would be sold to her at 80 per cent x $135,000 = $108,000. She would have a net gain of $2,000.
If she chose a cheaper three-room flat or a two-room upgraded flat (estimated to be $45,000) or three-room buy-back flat (estimated to be $75,000), she would gain even more.
The report is erroneous in stating that "the studio apartments, meant for those aged 55 and above, come with a 30-year lease and will be claimed by the HDB if the tenants die before then".
If owners (or the estates for deceased owners) return their studio apartment to the HDB before the expiration of the 30-year lease, they will be compensated at a pro-rated price based on the remaining lease.
So far, only about four per cent of the lessees have given the HDB feedback that the compensation was low. The report is therefore an exaggeration of the actual situation.
Sers is an effective and equitable scheme to rejuvenate selected older HDB estates. Affected residents are compensated fairly and receive significant financial benefits. Sers is a win-win solution that benefits both the current and future residents of mature public housing estates.
Sum Foong Yee (Miss)
Senior Executive Public Relations Officer for Director (Corporate Developments)
THE block of flats that I live in is up for upgrading voting soon and I dread it. In fact, I shudder at the thought of the whole upgrading process. So do many of my neighbours.
Why, before we have even had the chance to vote on upgrading, a huge 'Upgrading Coming Your Way' sign has already been put up.
Living in an environment that is being upgraded is akin to living in a construction site. The air would be extremely polluted with dust and noise. Access to areas in and around the block would be very much hampered.
All these combine to cause great inconvenience to residents, particularly the elderly and the very young. Housewives, old folks and the young who do not leave home in the day have to cope with unbearable noise every day for more than two years.
While the advantages of HDB upgrading have always been extolled, what about the disadvantages? Is upgrading really necessary? In this time of economic slowdown, could our CPF savings be used more wisely? In view of the recently announced CPF cuts, rise in Minimum Sum, risk of unemployment and rising health-care costs, we should be prudent with our CPF savings.
MP Chong Weng Chiew ('Upgrading? Maybe later'; ST, Sept 8) said: 'It's a very heavily subsidised programme that improves your home and surroundings. You may be losing out if you don't want it.'
Just because it is heavily subsidised does not mean that residents should rush to take it up. In fact, if we vote to upgrade, we lose out in several aspects:
Monetary, especially now. With jobs being lost every day, we would rather keep whatever CPF contributions we have in case we need to cover the mortgage while looking for a new job.
Inconvenience caused by upgrading works - disruption to our work and family schedule and this is not counting possible delays caused by contractors with cash-flow problems.
Health. The issue of health problems has never been mentioned in any of this talk about HDB upgrading. My elderly mother's flat underwent upgrading some years ago and, in the process, her blood pressure shot up, thanks to the restless nights she had, the haggling she had to do with sub-standard workers when things did not work or were not properly fixed.
Her cholesterol level went up too, as there were times when she could not cook. Not only that, she suffered from respiratory illnesses due to the dusty environment and she had to spend extra money to get her air-conditioner serviced more regularly.
In fact, not only did she have to budget for the upgrading work, but she also had to incur more expenses for medical consultations, food and cleaning services.
I was with her during that time and do not wish to go through that nightmare twice. I have two young children, one slightly asthmatic and the other just four months old.
Upgrading is more than just about the so-called tangible benefits. Can the disadvantages be presented for a change?
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