HDB En Bloc Sales
There’s been a lot of talk lately about whether Housing Development Board (HDB) flat owners really own their flats, or whether they’re just tenants on a 99-year lease. We can argue about this until the cows come home, but deep down, what Singaporeans really care about is whether there is money to be made out of that HDB flat. For older flats, (right now, that generally means those with 50 years or less left), be prepared to see a huge drop in value once they start creeping towards the tail end of their leases. For instance, there will be no point to get a resale HDB flat if there are only 35 years left on the lease. Once the resale value of a flat begins to fall, it’s time to start praying that it will be selected for the SERS, or that you and your neighbours can band together to get it redeveloped under the newly-announced VERS.
What is SERS HDB scheme?
You’ve probably heard people talking about Singapore's en bloc sales in the same reverent tones they talk about Toto or 4D prizes. And we all have that uncle who became an overnight millionaire when his place was sold in an en bloc sale. SERS (Selective En Bloc Redevelopment Scheme) is similar to a "HDB en bloc sale," although there are some important differences between the two. Basically, when SERS takes place, the government notifies the homeowners that they’re going to acquire their flats. The owners will be offered a compensation package that is usually quite generous. They will also be assisted in purchasing a flat with a fresh 99-year lease at subsidised rates. These new flats are usually located near their original homes. In a nutshell: The government takes your flat, gives you money for it, and then gives you the option of moving to a new flat with a fresh 99 year lease. So, how does SERS differ from a private en bloc sale?
What about VERS? How is VERS different from SERS?
As the name suggests, Voluntary Early Redevelopment Scheme (VERS) will be a voluntary scheme that allows homeowners to decide to give up their flats for redevelopment. They will need to take a vote to decide whether or not to sell their flats to the government as the lease starts to run out. At the same time, the VERS scheme will help the government redevelop estates gradually over 20 to 30 years, instead of taking all the flats back at the same time and trying to redevelop all that land within a much shorter timeframe. The details of VERS haven’t been fleshed out yet, since it will not be needed for another 20 years, when the oldest HDB flats hit 70 years of age. As SERS is not a given, whether your flat is selected for SERS depends on the luck of the draw. Currently, there are no HDB flats that are old enough to test if the government will heartlessly take flats back without compensating owners when their leases expire. VERS is another HDB scheme to alleviate the problem of people becoming homeless in 50 years’ time. Here are some of the details we know:
- Flats with better redevelopment potential have a higher chance of being earmarked for VERS. This could mean flats in central locations or near MRT stations.
- Only after a precinct is selected, will owners living there get to vote.
- VERS will allow HDB flat owners to vote on whether they want to sell their flats back to the government when they are at least 70 years into their 99-year lease.
- The compensation flat owners will enjoy through VERS will be less attractive than what SERS offers. Which means that there is no guarantee that proceeds will be sufficient to purchase an entire new flat. Homeowners should also not expect the scheme to make them rich overnight.
- The government has not ruled out the possibility of giving private developers a role in VERS
, but they have also mentioned that even if private developers do get involved, they will be tasked to develop public housing estates. This is bad news for HDB flat owners and means they should not expect to earn private en bloc-type profits.
What’s the difference between SERS, VERS and regular HDB resale?
There is no way to predict the future when it comes to SERS, especially as we’re only about halfway through the very first batch of 99-year leases. But if your HDB estate has the following attributes, it has a better chance at being selected for SERS than one that does not:
- Your estate is located in a central area in a mature estate.
- Your estate is located near an MRT station.
- The property in your estate does not use land space efficiently. (Basically, that means that everything is not packed like sardines and stacked to the sky.) This includes low rise blocks, big and spacious older flats and large open spaces.
- There is alternative housing available in your neighbourhood where the HDB can shift you and your neighbours.
- The property market is doing well. Don’t expect too many SERS acquisitions in a recession.
What happens during the SERS process?
Here’s what you can expect a SERS process to entail: The government notifies you that your home is going to be acquired for redevelopment.
- You attend an exhibition / info session to find out more about the SERS process and ask questions.
- A valuer shows up at your flat to assess its market value.
- You go for an appointment at HDB Hub, where you’ll be briefed about your finances and surveyed to help the government decide which replacement flat (with a fresh 99 year lease) to allocate you.
- You complete a precinct survey so the government knows what facilities you want.
- HDB informs you about the amount of compensation you will receive for the SERS acquisition.
- You choose between several rehousing options and submit your application for a new flat. You can also participate in the Joint Selection Scheme, which lets your household and up to five others select your flats on the same day so you can continue to live close to each other.
- You show up in person book your new flat according according to your balloted queue number.
- You show up to collect your keys. You also pay for the flat. You can use the money you received from the SERS acquisition—take note, however, that some of this money might first have to be used to pay off existing loans or to return to CPF the money you used to buy your original flat.
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