Pasir Ris-Punggol GRC MP Gan Thiam Poh recently proposed that the government sell new flats with shorter leases to make them affordable for low-income families and younger people.
However, a Straits Times report shows that several property experts oppose it, saying it is untimely and would mean revising the current housing policy and existing financing plans available to home buyers.
Mr Gan said that rising property prices in the country have caused many couples and upgrading families to worry about acquiring new homes, but with shorter leases, they can better control their costs.
“It is about giving them the option and leeway to spread the financial burden and defer the paying of higher prices until they earn more money,” he noted.
Nicholas Mak, Head of Research and Consultancy at SLP International, said the proposal may look good on paper but may turn into an administrative nightmare during implementation.
“Shorter HDB leases will run up against the brickwall of current financing options offered by CPF and banks,” he said, adding that “most of us want to sell our property at a profit… with shorter leases, it will not be profitable, and may even be a loss.”
Banks may not be willing to offer long-term mortgages for flats with shorter leases, said Deon Tan, Director of brokerage firm Providence Capital Advisors. Even if they do, she said that some banks might place more restrictions such as offering lower loan quantums and short-term loans.
While such flat types may be cheaper, Lee Sze Teck, Senior Manager at DWG Research and Consultancy, said that Singapore may not be ready to accept flats with shorter leases. It would make it harder for Singaporeans who outlive the leases to acquire new flats, according to him.
“The aim is ultimately to help everyone to own a roof over their head. Shorter leases cannot solve long-term housing needs.”
Related Stories:
Government revises DC rates
HDB to install more lifts at multi-storey carparks
Shorten leases to lower flat prices, say MPs