SINGAPORE - A Housing Board flat sold on a 99-year lease is an asset that will appreciate as the country prospers - a fundamental tenet of Singapore's home ownership policy, said National Development Minister Lawrence Wong on Tuesday (Aug 21).
Said Mr Wong: "There is a high likelihood that over a period of time, if the economy does well, if incomes rise, then property values will appreciate together with the fundamentals of the economy, and your stake in the nation - your home - can also appreciate in value."
Mr Wong was answering a question by a member of the public on the 99-year leasehold for HDB flats at a forum organised by government feedback unit Reach on what people thought about Sunday's National Day Rally.
Audience members peppered Mr Wong and Reach chairman Sam Tan with questions on cost of living, housing and foreign affairs - topics central to Prime Minister Lee Hsien Loong's speech.
The first question of the night, by a Toa Payoh resident who identified himself as Mr Lu, touched on a hotly debated issue of whether residents own, lease or rent their HDB homes.
Mr Lu asked if the Government should clarify that a 99-year lease is actually a form of long-term rental, and if it was thus misguided for residents to seek capital gain from their properties.
Mr Wong said a 99-year lease is an ownership, not a tenancy.
"When you buy a car, how long can you use a car for? Is it a rental car, or your car? A 99-year lease is far longer than 10 years. It is yours. It is an asset. It is owned by the homeowner," said Mr Wong.
Explaining further, he set out why residential properties, public or private, are sold on 99-year leases. Since 1967, all land sold by the Government is on leases not exceeding 99 years.
"We are land-scarce in Singapore, we have constraints. If we give out and sell freehold land today, everyone who buys it will be very happy, and your children and whoever you pass your land to will be very happy, but eventually, there will be those without land," said Mr Wong.
Hence, the limited leasehold terms allow Singapore to recycle land for the future. Although finite, it will cover the housing needs of at least two generations, he added.
Mr Sam Tan, who is also Minister of State for Foreign Affairs, Social and Family Development, agreed, adding that good economic growth in the past five decades has led to homes becoming valuable assets.
"So long as we as a people and country work together to grow our economy and share in the wealth of economic growth, then going forward, our homes will be an important and valuable asset that we can use as a retirement nest egg," said Mr Tan.
To another question about the potentially divisive nature of the Voluntary Early Redevelopment Scheme (Vers), in which HDB residents will vote on whether to sell their flats en bloc, Mr Wong acknowledged the Government was aware of this and was working on how to make the process less polarising. He noted that the HDB has had a lot of experience with polling residents and it has generally been smooth.
"I think the concerns are real and I acknowledge that the stakes are higher; it is not just about upgrading of lift or HIP (Home Improvement Programme), it is potentially more consequential. Stakes are higher," he said.
"But we have time to work out the exact mechanism and how to go about doing it without causing too much divisions, creating acrimony within the block itself. We don't want that to happen."
An ideal mechanism for the voting process is one in which residents can have a collective say if Vers were to be offered, he said. He added that the Government would work out the details bearing in mind these concerns.
This article was first published in The Straits Times. Permission required for reproduction.