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World NewsAng Mo Kio Sers: HDB offers residents replacement flats...

Ang Mo Kio Sers: HDB offers residents replacement flats with 50-year leases – Mothership.SG

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The Housing and Development Board (HDB) has extended a new offer to residents of four HDB blocks at Ang Mo Kio Avenue 3 that have been selected to undergo the Selective En bloc Redevelopment Scheme (Sers), Today reported.

50-year lease

HDB said affected residents can purchase a three-room or larger new replacement flat on a 50-year-lease.

Letters dated July 2 were delivered to residents by officers on Saturday.

“With a shorter lease flat, you should be able to take up a new replacement flat of a similar size as your existing flat without having to pay a top-up amount,” HDB said in the document.

Lease buyback

A second option was also extended to allow residents to take up a lease buyback scheme for their existing Sers flat, and buying a new replacement flat on a short lease similar to that left on their Sers flat after selling the lease to HDB.

Original option still stands

The third existing option of buying a new replacement flat on a fresh 99-year-lease still stands.

The Sers flats completed in 1979 would be 49 years old when residents have to move out some time in end-2027.

The two new options emerged after some residents complained they have to fork out up to S$100,000 for a new replacement flat, which they cannot afford given that some of them are advancing in age.

HDB addressed this issue in its letter.

It said it noted that there were flat owners who had expressed concerns that the compensation amount for their existing flats is insufficient to purchase a new replacement flat of an existing size on a fresh 99-year-lease.

The math: 50-year lease

99-year lease

A 92 or 93 sqm four-room Sers flat on the sixth floor has a market value of about S$415,000.

A 90 sqm replacement flat with a a 99-year-lease also on the sixth floor is estimated to cost S$470,000, after factoring in a S$30,000 Sers grant.

Residents will have to fork out S$55,000 for a replacement flat.

50-year lease

The same flat is S$359,000 on a 50-year-lease, after factoring in a S$30,000 Sers grant.

Residents will get to pocket S$56,000 in cash or in their Central Provident Fund (CPF).

However, HDB said applicants must be at least 45 years old at the point of the Sers announcement to be eligible to exercise this option.

This ensures that the lease of the new flat can cover the resident until least the age of 95, HDB said.

The minimum occupation period of five years still applies for this group of buyers before the flat can be sold on the open market.

The figures cited by HDB in the letter are estimated figures.

The actual compensation amounts for Sers flats will be available in the fourth quarter of 2022.

The selling prices of the new replacement flats will be made known in late 2023 during the flat selection.

The math: Lease buyback scheme

Those aged 65 years or older at present can opt to take up the lease buyback scheme for their existing flat, HDB also said.

Flat owners can sell the remaining tail-end lease to HDB after retaining the length of lease of their existing flat to cover them till age of 95.

Senior residents are allowed to “monetise any remaining lease of their flats that they may not need” to fund retirement needs.

They will get lease buyback cash bonus of S$30,000 if the Sers flat is a three-room unit, or a S$15,000 bonus for a four-room flat.

Proceeds from the scheme can be used to top up the CPF Retirement Account and purchase a CPF Life Plan to provide a monthly pay-out for life.

This group of flat owners can choose to buy a new replacement flat at Ang Mo Kio Drive of the same flat type, on a short lease that is equivalent to the remaining lease of their current flat that is under the scheme.

The residents will receive market compensation for the balance lease of their flat, less that for the length of the lease that they sell their flat back to HDB.

Given that the estimated market price for their Sers flat on the sixth floor is S$315,000, the lease buyback proceeds will be S$122,400 — for 19 years of the lease — after retaining 30 years of lease.

The 30 years of lease is valued at S$192,600.

A new replacement flat bought with a similar 30-year lease is estimated to be S$139,000, after factoring in a S$30,000 Sers grant.

The residents will receive S$53,600 in total net proceeds (S$192,600 minus S$139,000).

Top photo via Google Maps

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