Prime Minister Lee Hsien Loong drew a line in the sand on the HDB tenant and owner debate.

Following his National Day Rally 2018, PM Lee said on Aug. 24: "HDB lessees have all the rights over their flats that owners of such leasehold private properties have. You can live in it, you can transact it, you can bequeath it to your children -- it is yours."

PM Lee also said that he found the argument by some commentators on why the lease is merely an extended rental "frankly amazing".

Context

The 99-year lease issue was first dealt with head on by PM Lee during his 2018 National Day Rally on Aug. 19.

PM Lee's decision to focus on housing and the 99-year lease during the NDR was perhaps to respond to the anxiousness of Singaporeans who live in older HDB flats.

This is because some of the oldest HDB flats have crept over the halfway mark of their leases.

Crystallising these fears and elucidating them further, is a real estate agent, Ku Swee Yong, who has been contributing his views to the The Straits Times.

His latest article, published before PM Lee delivered his NDR have been to argue against the narrative that HDB housing is an appreciating asset.

His Aug. 14 article, "Outdated ideas on home ownership and land shortage are crippling us", argued that HDB dwellers have to "recognise that we are merely lessees who rent the HDB flats for their terms".

Here’s another easy way to understand an explanation on why there is a difference between HDB flats and leasehold private properties:

By that we mean HDB owners can own well-built housing at subsidised pricing and benefit from government grants, and then ultimately sell our flats at an en-bloc pricing at a time of our choosing.

But alas, public housing is not the same as private housing.

And that’s not such a bad thing.

Why do we forget that public housing is … public housing?

Google "best public housing in the world" and you will find that Singapore's HDB story has a good share of the top results.

CNN even compared Singapore's public housing to luxury hotels. It described how Singapore's public housing defied the common expectation that public housing worldwide tend to be dilapidated and unloved.

Both Pinnacle@Duxton and SkyTerrace@Dawson won international architecture awards and have been made the poster-child of HDB's success.

In all the hype, it can be easy to forget that HDB flats are still public housing, however glitzy and glamourous they have been made out to be.

The perks of HDB flats

For all the advantages people perceive private property have over HDB flats, they should also be mindful that HDB flats do enjoy perks exclusive to them.

For starters, price. The only way you can get a brand-new property in Singapore at sub $500psf is a  Build-to-Order (BTO) flat. No where else. Period.

Then there are HDB grants – up to $80,000 for some cases – which help Singaporeans get housed. Not something a property developer would give.

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As for down payments, prospective HDB owners would only need to pay a 10% deposit for their flats and it can be entirely drawn from their CPF. In contrast, deposits for private properties are a minimum 20%, of which 5% must be in cash.

Furthermore, while an HDB home loan has a comparatively (for now) higher interest rate than private bank loans, it is more forgiving.

For starters, you can fully pay up your loan before the loan tenure is up without incurring any penalties. Should you miss payments, HDB is also more understanding compared to the banks.

If you take a trip down to HDB hub, you can see scale models of the latest BTO developments and new towns.

Instead of building just flats, you will see how the government plans to develop an entire estate, building town centres, healthcare amenities, child- and eldercare centres and the like – for example the November 2018 launch for the Tengah new town.

You can say that some condominiums enjoy the perk of being built atop shopping centres. They come at a price tag of $1,600psf and up though.

HDB trade-offs

For all the perks HDB flats have, there has to be some trade-offs. Not being a strata owner means that you cannot sell your HDB flat en-bloc or collectively decide you want to repaint your block shocking pink.

Do note that strata-owners also pay more maintenance fees per month compared to the conservancy fees HDB-owners pay. They get 24/7 security, swimming pools and tennis courts though.

Ultimately, the price gulf between HDB and private property is explained by certain rights you gain.

And we have to remember that the mission of public housing is to chiefly put a roof over Singaporeans’ heads and not a tool for profit as afforded by the rights of private property owners.

Top image from HDB.