National Development Minister Khaw Boon Wan feels it isn’t necessary for HDB to sell new flats with a 70-year lease alongside 99-year flats as there is unlikely to be strong demand.
“First, the upfront cost which HDB has to incur to offer a 70-year lease option is the same as that for a 99-year lease. Second, while a 70-year lease flat should be cheaper than a 99-year lease, the cost reduction is not directly proportionate to the reduction in lease. This is due to the time value of money, and the fact that flats with shorter lease tend to depreciate faster,” said Mr Khaw.
He was responding to a query in parliament from MP Seah Kian Peng, who asked if MND would consider offering first-time buyers such an option.
For those who prefer flats on 70-year leases, they can buy them from the resale market, shared the Minister, adding that first-timers will still be eligible for housing grants.
“The fact is that we price new flats on a 99-year lease to be highly affordable for first-time buyers. With significant housing grants, first-timer families who today earn $1,000 per month can afford a 2-room BTO flat in a non-mature estate. Those who earn $2,000 can afford a 3-room BTO flat, and those who earn $4,000 per month, a 4-room BTO flat. They can do so with little or no out-of-pocket cash.”
But Mr Khaw noted that there are exceptions, such as studio apartments, which are sold on a 30-year lease to senior citizens as their retirement homes.
Romesh Navaratnarajah, Singapore Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
