ZOOM MEETING REACH - PUBLIC HOUSING IN PRIME LOCATIONS 

4 Jul 2021

(17Jun2021) (Amended on 3Jul2021)

*Solution 1 - For HDB owners*

1. *Pricing* the HDB flat in designated prime location

a. HDB flat pricing (whether in prime location or not) - must be based on *market value*. 

(This is to conform to Free Market Economic Principle). 

b. Economic commodities must be correctly price - so as not to artifically skewed HDB prices - and distort the HDB reselller market.

- ie. if price too low to make the HDB flat affordable, it will have a lottery effect - where people will resell it for huge profit - the moment the restriction to resell is lifted --- and turn it into an investment product rather than a house to be lived in.

- By pricing at market rate, people will according to their affordability bid for such flats at prime location or other places in which they can afford.

2. *Characteristics* of such HDB flats in designated prime location

- It is important not to attest *exceptional conditions* to HDB flats build in prime location - and make it extraordinary.

- Hence suggest that most of the HDB characteristics to be kept - as these HDB characterisitcs are designed for their *specific purposes* such as :-

a. *99 years lease* will still be maintained - like all other HDB flats. (So as to ensure HDB owners can live for 2 generations - and not short-changed - simply because this flats fall under prime location).

b. Allocation of flat subject to *balloting* - just like other HDB flats. (So as to ensure fairness in flat allocation)

c. *Car park, landscaping, park, playground for recreation and void deck for social interaction* - can be slightly upmarket as compared to normal HDB flats or inherit some characteristics of a condo - to blend in with the ambience of the prime location estates ---- but ensuring the town council fees are not exorbitant.

3. *Sharing or Allocating* a prized market commodity in the prime location - *equitably* across the various income and social strata of population

a. A *few dimensional matrix* can be constructed for this purpose.

b. *1st dimension* of the matrix is the *income group*, that can be divided into :-

- High income

- Middle income

- Lower income

(Note:- a more granular income categories can be considered - based on more informed data from the Government).

c. *2nd dimension* of the matrix is based on *races*, that comprise of :-

- Chinese

- Malay

- Indian

- Others

d. *Balloting* will be based on these 2 dimensional matrix - for the purpose of fair allocation.

- *Allocation* should be based on the proportion of population belonging to the *different income group and racial group*.

4. Ensure buyers of HDB owners can *afford the flat in prime location* - if based on market value.

a. The categories of income group - is the primary determinant of how to ensure various income strata of the population can afford HDB flats in prime location.

b. Various categories of income group

i. High Income group - no or minimal subsidy or grant should be given to this group. 

ii. Middle income group - *Government subsidy or grant* higher than normal HDB flats should be granted - that make it comparable to the normal HDB 5-room, 4-room and 3-room flat. 

Eg. the 5 room flat at market price in the prime location can fetch $1 million dollars. The Government grant and subsidy should covered the amount up to the selling price to HDB middle income owners for said - $600,000 and HDB owners will have to pay $400,000 out-of-pocket from CPF or HDB loans for 20 years.

iii. Lower income group - Even higher government subsidy or grant higher than normal HDB flats should be granted - that make it comparable to the normal HDB 5-room, 4-room and 3-room flat.

5. *Preventing* HDB owners from undertaking *speculative activities* - by reselling for huge profit once they are allowed to sell after 5 years (like any other HDB flats).

a. Allow reselling only after *10 years as the MOP* (Mandatory Occupation Period).

b. HDB owners upon reselling the flats in prime location - *must repay the subsidy and grants to the Government* (with exception to the High Income group - who pay using its own pocket with no government grant).

Taking the earlier example, HDB owners will have to repay grants or subsidy of $600,000 to the Government.

c. At the end of the lease of 99 years, Government reclaim the land - and there are no lost to the Government as the Government can resell the land again.

6. *Beefing up Government financial reserves* to finance higher HDB subsidy and grants in designated prime location.

a. By carving up and allocating land spaces to private property developers to build condo, landed properties, malls and other commercial projects - by *selling these designated prime location for commercial development at market rates*.

b. Government *sell to property developers* - to build HDB flat at prime location *at market price*.

Eg. 1 plot of land to build 3 HDB blocks in other location - Government can sell to the property developer at say $500 million.

But at prime location, the Government can sell it at $1 billion to property developers.

Thus with $500 million (extra premium) earn by the Government from selling the land at prime location, $500 million / $600,000 (grant) = 833 household can be used as Government grant or subsidy to household.

Government can thus subsidise (30 floor x 10 household unit = 300 household per block === approximately 3 HDB blocks of household with $600,000 grant).

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*Solution 2 - By *time-slicing the lease* for HDB and price it at an affordable price* (As proposed by my close friend)

This is not workable. It creates a lottery effect that people one to strike it and make money. 

Is it fair to the rest of population that they help to subsidise? And few people make lots of money? 

Schemes like EC, Duxton all have the same problem. Many people subsidizing very small number of people. Only very small number of people happy at the expense of large group of people. Where is the fairness? And equity? Singapore is very tiny, make every estate prime should be the goal but of course it may take another 50 years. In the mean time, make it affordable by slicing up the lease tenure.

Today a new bto flat is 99years the enough to let 2 and 2 half generations stay. Papa buys and stay with grandpa and children. Papa passed down to son and son and live with grandchildren. So thats 2 and 2 half generations.

If we time slice the tenure to 49 years or 30 years for hdb flats in such prime location, then we can make them more affordable without unfairly unsubsidising and creating a lottery effect. And by time slicing, we are also allowing more Singaporeans a chance to live there.

So a young couple may choose to live in prime location, during their prime days. And move out and retire to heartland area later prt of their life. Let new young couple move in. If the lease is shorten to get 30 years, we will allow 3 times more people to enjoy the prime location. We will also limit the lottery effect as the leasehold is short.

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My comments :-

1. *Time slicing of the lease for HDB prime location* is particularly useful for *Elderly* - 60 years and above.

2. As the theme of the discussion - is to embrace "diversity" and "inclusiveness" - by allocating HDB in prime location to Elderly will meet this objective.

3. Elderly at 60 years and above - with time-slicing into 40 years will be useful - as this will means Elderly will have a runway of a roof over their head in prime location up to 100 years of age.

4. Government will not need to provide "hefty" Government grant or subsidy to Elderly household - as the lease is a short lease of 40 years and the price of the HDB flat should be kept affordable to the Elderly.

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Further comments on Solution 2 - from my close friend :-

Make those who didn't get it feel less unjust. And that's the majority of the population.

If need to elaborated, here's more elaboration:

- today's hdb flats are no longer just about providing affordable housing needs. It has morph into an asset where one can encash it amidst rising property prices and use the money for old age; sell the remaining lease back to gov; buy a big flat when one has non plan to live with elderly nor even want children and in times of need rent out a room etc.

- as the meaning of HDB flats to singaporeans evolve, we can still stay with that for the vast majority. But flats in prime locations are very special and extremely few in numbers. So why not focus back on first principle for such prize projects - for affordable living? Then some things have to go. 

- for private condos, it is not uncommon that price per sqft is 3 times more for exclusive locations. But if gov were to subsidize at this rate, is gov sure that the quiet majority feels happy about it? Public housing is subsidized, people can understand and have accepted but overly subsidizing creates unhappiness. So slicing up the 99 year tenure into  3 slices of say 33 years each can make the flat affordable without unjustifiable huge grants. 

- then what buyers will start to adjust their life plan. Which phase of my life do I want to live there? Where do I go after 33 years? So for fresh graduates who are getting married. Say they are allocated a unit in their mid to late twenties. Their stay will expire by late fifties, semi retired phase? They have 33 yrs to plan for their retirement and their children will know beforehand they cannot inherit the flat.

- there may be an option for them to extend the lease for another 33 yrs. But if gov wants to upkeep such prime locations. It is more likely to take back the blocks, refurbish or rebuild to preserve a pristine look after 33 years. Buildings age very fast and facilities many of the facilities need overhaul anyway.  Otherwise, if they were 99 yr tenure, gov is obliged to offer the owners alternatives to move out and heavily subsidize them again! 

- Singapore is very tiny, in the long run make every estate very accessible by public transport so everyone feels they are living in prime locations