S’poreans apply pressure on HDB to explain if flat buyers are really homeowners

Singaporeans asking hard questions.

By Belmont Lay | July 21, 2017

Singaporeans are demanding answers to some pretty hard questions.

In recent days, The Straits Times forum has been inundated with questions directed at the Housing and Development Board (HDB) that led to calls for more clarification.

The main queries can be boiled down to two questions:

1. Why are HDB flat buyers required to pay property taxes because what is the rationale and how is it derived?

2. Can flat buyers really be considered as homeowners because they appear more like lessees renting from the government?

Three-week wait for HDB response

The initial query published as an ST forum letter on June 24 had to wait three weeks for a formal response from HDB.

HDB’s response, however, failed to quell the curiosity of Singaporeans.

Two more letters have since appeared in ST forum pages, culminating into a series of harder questions and further clarifications, and even calling out HDB for being unclear.

The gist of the two recent letters can be summarised as such, for easy reading:

Homeowners own the land. And it is clear that HDB flat buyers do not.

Therefore, people who buy HDB flats are known as lessees and HDB is the lessor.

This effectively makes flat buyers as “lease owners”, rather than homeowners.

The term “homeowner” is, therefore, misleading and ought to be conveyed in its correct manner to flat buyers because 99-year HDB leases are running out.

In time to come, HDB flat buyers will eventually have to return the flat to the state for free and that their property value will depreciate leading up to that point.

And all these points go back to the original query as to why HDB flat buyers have to pay property taxes if they are not really true owners?

Here are the two follow-up ST forum letters that continue to ask pointed questions in need of real answers from HDB:

Still unclear if HDB buyers are owners or lessees

As a layman, I am still confused by the HDB’s reply that purchasers of HDB flats are owners (HDB buyers are home owners, not tenants; July 19).

I live in an HDB flat and have a duplicate lease.

The lease was executed by me and my spouse many years ago as a lessee in the presence of a lessor – an HDB representative.

My understanding is that HDB purchasers are lessees and the HDB is the lessor.

There is a distinct difference between owners and lessees.

As more than 80 per cent of residents are purchasers, can the HDB be clearer in its response?

Andrew Seow Chwee Guan

HDB was describing a lease ownership

It is somewhat misleading to term HDB buyers “homeowners” rather than “lease owners”.

The two terms mean very different things legally.

Homeowners own the land outright and never have to return it or pay rent on it. They are restricted only by the prevailing laws of the land.

Lease-owners, on the other hand, exclusively possess the flat for a specified time only, after which the flat returns to the state for free. During the time that they own the flat, they are in addition bound by the terms of the lease agreement they sign with the landlord.

HDB’s director (Branch Operations) Lim Lea Lea states in her reply (HDB buyers are home owners, not tenants; July 19) that the name of each HDB flat owner is reflected in the Land Registry .The Land Titles Act imposes a requirement for a lease beyond seven years to be registered in the Land Registry.

Accordingly, the reasons given by Ms Lim as to why HDB-owners are homeowners in fact, fall into a standard description of a leasehold arrangement beyond seven years.

Calling HDB buyers homeowners works to perpetuate the misconception that they own the flat outright.

This results in serious and damaging misunderstandings.

For example, many are unaware that their flats will simply revert to the State at the end of the lease term for free and that their property value will depreciate leading up to that.

This fundamentally affects their decision-making with regard to buying or selling their flats.

This is made worse when we refer to HDB flats as “nest eggs” which will continue to appreciate.

The nature of HDB-ownership is different from standard commercial leases or tenancy agreements, and it may not be accurate to start calling HDB-owners “lessees” or “tenants”.

But with the leases of some HDB flats starting to run out, the population is starting to realise the true nature of their HDB-ownership. This transition must be delicately managed – but not by continuing to perpetuate the misconception.

Cheah Wenjie

 

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About Belmont Lay

Belmont can pronounce "tchotchke".

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