No one can possibly own a HDB flat after signing a lease agreement.
Whether one was called a HDB flat ‘owner’ – without ownership rights after signing a lease agreement – did not matter decades ago due to the fact that most lessees did pay land cost.
Not only was land cost excluded, most HDB flats were sold below construction cost. (image below from FB post)
Without the land cost component, HDB flats were truly affordable and could be purchased on a single income.*
Today, the land cost component is about 60% of the total price of a HDB flat. ** Even though strata titles are not transferred, HDB lessees have been repeatedly told we are “owners” by politicians and the mainstream media.
In response to Ku Swee Yong’s commentary “that we be honest with ourselves and recognise that we are merely lessees who rent the HDB flats for their terms”, PM Lee insisted that “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 Hsien Loong refutes notion that 99-year HDB lease is extended rental, not a sale | The Straits Times (26 Aug 2018)
It appears that Singaporeans are easily fooled. Going by PM Lee’s logic: HDB lessees = owners, owners of leasehold private properties = lessees? Since when did a lease transaction result in a lessee becoming the owner? Do car leasing companies consider their lessees car owners?
PM Lee: “In fact, HDB owners enjoy extra privileges, because their flats get upgraded from time to time with generous government funding”.
Fact: HDB flats DO NOT belong to lessees. The “generous government funding” upgraded flats which have always been owned by HDB.
PM Lee: “It is also why HDB prefers to sell very heavily-subsidised flats to low-income households rather than offer them a subsidised rental unit at cheap rents”.
Fact: Without the inclusion of land cost, lessees would not require flats to be “very heavily-subsidised”. The CPF housing grant (subsidy) given is only a fraction of the land cost component which should not have been added to the price of HDB flats. Lessees are therefore subsidising the HDB; not the other way around.
Unfortunately, PM Lee was unable to convince Singaporeans that signing off as lessees on a HDB legal document – lease, not sale and purchase agreement – makes us owners.
If “HDB lessees have all the rights over their flats that owners of such leasehold private properties have”, as PM Lee claimed, can lessees band together and attempt a collective sale? Can lessees fence up blocks of HDB flats and put them up collectively for sale?
In an attempt to hammer the message in, then-MND Minister Wong was roped in to repeat what PM Lee had said a week earlier. ‘Factually and legally wrong’ to suggest HDB buyers do not own their flats: Lawrence Wong – TODAY (todayonline.com)
How is it “legally wrong” when HDB’s own legal document stated buyers of flats are “lessees”? Did Lawrence Wong lie through his nose, hoping that Singaporeans would not dare continue to question the government on this issue?
Minister Wong had even claimed that HDB lessees “enjoy ownership rights over their properties during the period of lease”. This cannot be further from the truth because if lessees are indeed owners, why are rules with regard to rental/purchase/sale of flats laid down by the HDB? Why must HDB “owners” seek approval from HDB on renting out rooms/whole unit or subject our “owned” property to a pre-sale HDB inspection? If HDB flats are similar to other 99-year leasehold properties, then why is ethnic quota only applicable to HDB estates?
Errr …what ‘ownership rights’ was Lawrence Wong referring to?
Singaporeans have been fooled for decades into paying property tax on HDB flats we don’t own, paying for the maintenance of public areas such as void decks, car parks, playgrounds, etc, make sinking fund contributions for assets belonging to the HDB, etc.
The world has also been fooled: Singapore does not have a very high home ownership rate but one of the world’s lowest because all HDB flat ‘owners’ are in fact ‘lessees’.
In fact, even a $1 mil HDB flat – fully paid in cash – cannot be pledged as collateral to any bank.
Until Singaporeans dare confront the government on this issue, it will not come clean. The removal of land cost – lessees should not be paying – will certainly go a long way to making public housing affordable again.
Without the right to do as we wish with our HDB flats, are we really ‘owners’?
PS
* How affordable were HDB flats decades ago without the inclusion of land cost? In the mid 1980s, I bought a 5-room flat in Simei jointly with my mother. It cost less than $80,000 and monthly instalments were paid from my single income as a RSAF NCO (first contract).
** Cost breakdown for a $400,000 BTO flat today: $240,000 land cost, $160,000 construction cost. A huge housing grant gives the illusion of a real subsidy when in fact this is used to partially offset land cost which HDB lessees should not have been charged in the first place.
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