Why the 99-Years HDB Lease Is A Good Idea.


Most Singaporeans will be wondering if the author is perhaps clueless or just simply parroting the party line. The answer is neither. Since Singapore as a country will always be land scarce, the government’s housing policy will have the greatest impact on every Singaporean’s quality of life – now and generations to come. And for that reason, I believe the 99-years HDB lease policy should stay. Here’s why.

  • If you are a young Singaporean buying your HDB flat for the first time, you are likely in your late twenties or early thirties. A fresh lease of 99-years will provide you an opportunity to have a home for the rest of your natural life. Only a select few will outlive their original lease!
  • As society changes over time, we will need to cater for the needs of future generations. The 99-years lease is a way that allows the government to plan an orderly urban renewal strategy. As all the HDB units’ leases will expire at the same time, the government will be able to reallocate the land to better use. For example, in many instances, the government can demolish lower density flats to make room for modern high rises with better conveniences and facilities. Without a planned lease expiry, such an orderly transition will not be possible.
  • Through more efficient use of land, HDB can keep the prices of apartments affordable. If they demolish low density housing, they can rebuild in its place many times the number of units on the same land space. Since land is one of the most costly part of the Singapore housing equation, it makes sense to ensure an orderly renewal of land use especially for housing.
  • Most flats built 40-50 years ago are probably not in good shape. In many cases, the costs of keeping older buildings in livable condition will not be practical. Most of the repairs are funded by public money and in many cases, it is more effective to demolish and replace with a new unit.
  • There is NO economic truth that a leasehold property will forever be appreciating and we should NOT expect that to be the case. The HDB’s mission should always be about providing quality and affordable housing for Singaporeans – not helping anyone make a profit from real property. In short, HDB should never be viewed as an investment to make money.
  • The silver lining to this is that there are also winners in this policy — as the lease runs down to below the mid-point, the resale price should begin to drop as well. This will create a new market for HDB units with shorter leases often a lower price than units with a full 99-years lease. Shorter leases may not be for everyone, but there is certainly a market for this option.

Having said all of that, we have to address and mitigate the concerns of existing HDB owners who may own units with 50-years or less. The government already has an assistance program to backstop older owners who may outlive their HDB units (technically not possible if you are the first owner with a fresh 99-years lease!). The government also have programs to help monetise the remaining lease through lease-buyback as the market may still consider shorter leases undesirable. HDB can also provide financing for older buyers who do not need a full 99-years lease.

Bottom line is the government must always balance the needs of future generations versus the current – and to have a well thought out housing plan for our children. Unfortunately, we see examples of many advanced cities having made housing not affordable for the younger generations. Nearer to home, Hong Kong is a good example of what we do not want for our children in terms of housing!

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