What Happens at the End of a 99 Year HDB Lease


Are Singapore residents sitting on the biggest housing time bomb in the island’s history?


Perhaps the scariest thing in this age of information and knowledge at your fingertips is that nobody knows. You can speak to 5 different people and get 5 different answers. There seems to be a mix between people on the one hand drifting along, certain that everything will all be ok, and that the government won’t turf them out on the street, while on the other hand, we are heading for social disaster.


What Happens at the End of a 99 Year HDB Lease?


Not that long ago, there was the concern that the majority of people were unaware that there was a problem at all. That has gradually changed to more people do know, but don’t seem too concerned about doing anything about it. But there are some people who are worried. Very worried.


Here’s the dilemma. Last year (2014) 82% of Singapore residents lived in HDB (Housing and Development Board) flats. Due to decades of sustained effort by the government to promote home ownership, over 90% of these residents now own their flats. Now, when I say own them, they own the 99 year leasehold. Or whatever was left of the 99 year leasehold when they bought the property. And like all leasehold properties, these flats will revert back to the landowner – or the HDB in this case – when that lease period expires, who in turn will surrender it to the state. So to put it bluntly, even though you may own the flat today, when that lease ends, ownership will revert back to the HDB, and for all intents and purposes you will be homeless.


Now those are the facts, and you can see why some people are worried, but it maybe isn’t all doom and gloom.

As of today, no HDB has reached its 99 year lease and reverted back to HDB and state ownership. A lot of the people who are in this situation, are convinced – or are trying to convince themselves – that before the 99 year lease is due to expire they will be subject to an en bloc sale, and the whole process will start again.


This may be considered wishful thinking by some, but it is based on something approaching facts. By the very nature of the fact that those flats reaching the end of the 99 lease, will be older, they will be exactly the type of properties that are prime for an en bloc sale. Why else was the system brought in? This is true, but it is the uncertainty that is worrying a lot of people.


Another part of the argument is that those currently in this situation, i.e. those who are in possession of their own apartment after buying it from the HDB, can do what those living and renting the apartment next door, can’t do. They can sell it, and make money in order to then go and buy another property (as long as they meet certain eligibility conditions).


Yes, this is true, and it is true that people have done this, and done well out of it, as prices have increased. There is a limit to this. There will be a tipping point on each property depending on the lease left on it, and the value will start to fall off a cliff once that tipping point is reached, and the owner will basically be left with a worthless property in terms of resale value.


At the minute, people are very much waiting to see what happens.


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