Keep HDB owners outliving leases to a minimum, as VERS likely to affect seniors more: Chee Hong Tat

SINGAPORE: As a large majority of flat owners selected for the Voluntary Early Redevelopment Scheme (VERS) are likely to be seniors, it is important for the authorities to keep ensuring that people buy homes with leases that can outlive them, said National Development Minister Chee Hong Tat in parliament on Wednesday (Sep 23).

He was responding to a question from Workers’ Party Non-Constituency Member of Parliament Andre Low on the scheme, which allows the government to buy back Housing and Development Board (HDB) flats nearing the end of their 99-year leases, compensate residents and redevelop the land. VERS is offered to selected precincts when flats are about 70 years old.

Noting that those selected for the scheme will likely be seniors who have paid off their home mortgages, Mr Low said these owners might have expected to live in their flats until they die.

He then wanted to know if the authorities will ensure that these elderly homeowners are not left with outstanding mortgages that the compensation amount cannot cover or be forced to deplete their retirement savings to secure another home.

In his response, Mr Chee said: “If we can maintain the gatekeeping for people to buy homes that can last them for life … by the time the flats reach the time (for) VERS, which would be at least 70 years or more, we would expect that most of the residents staying in these older flats will be seniors, and hopefully they would have already paid off their mortgages.

“That's why we feel that it's important to have that upfront gatekeeping to ensure that when people buy homes, we keep the number of people who cannot stay in these homes till the end of their lives to be as small as possible.”

Currently, about 2.5 per cent of HDB households do not own flats that cover the owners till they are at least 95 years old, said Mr Chee in an earlier speech.

He added that the current median lifespan of Singaporeans is 84, which means that almost all HDB households own flats with leases that can cover their owners for life.

“We will continue to closely monitor the proportion of HDB households who do not own flats with sufficient duration of leases that can cover the owners to their end of life, and keep this number as small as possible,” said the minister.

VERS SHOULD NOT CREATE “LOTTERY EFFECT”

VERS was first announced in 2018 by then-Prime Minister Lee Hsien Loong.

The terms of VERS have yet been finalised, and the government is aiming to work out details of the scheme in its current term of government, Mr Chee said in a media interview last month.

After establishing the policy parameters, VERS will kick off with a “few selected” sites and likely from the first half of the next decade.

Mr Chee reiterated these in a speech responding to parliamentary questions from Mr Low and MP Foo Cexiang (PAP-Tanjong Pagar), where he also laid out the primary purpose of VERS – that is to facilitate the orderly redevelopment of towns where many older flats were built within short periods of time.

“Based on this approach, it is not necessary for every older flat to go through VERS, as we are mindful of the disruption to our residents who need to relocate when their flats undergo VERS,” said Mr Chee.

Mr Chee also agreed that VERS should not create a “lottery effect” or end up becoming a wealth-generating programme, noting the original parliamentary questions from Mr Low and Mr Foo had raised concerns on that.

“Based on the questions from Mr Foo and Mr Low, I note there is broad agreement from both sides of the House that VERS should not create a ‘lottery effect’ or end up becoming a ‘wealth generating’ programme. I agree with these views from both members.”

The minister noted that the compensation packages for VERS will be lower than those offered under the Selective En bloc Redevelopment Scheme (SERS).

SERS, introduced in 1995, also allows the government to buy back HDB flats before their 99-year leases run out. However, SERS is highly selective and limited to precincts with high redevelopment potential.

The last SERS project was in Ang Mo Kio Avenue 3, announced in April 2022.

Unlike VERS, which requires residents to vote, SERS is compulsory and residents are compensated based on the market value of their flats at the time of announcement.

As flats offered VERS will have shorter remaining leases compared to those under the SERS programme, the overall compensation would be lower, said Mr Chee.

“MND is working out the details of the compensation package. Just as how the valuation of flats varies today, the compensation amount would similarly vary across different VERS sites and flats,” he added.

The ministry is also studying details, such as the voting process and how to support the various demographic groups across different VERS sites with relocation options.

In response to another question from Mr Low on whether the voting process will be done at an estate or block level, Mr Chee said this is an important matter to look at to ensure fairness to different stakeholders, and details will be shared when “carefully considered”.

“But if you think back on the objectives of VERS, which is to facilitate (an) orderly redevelopment of older towns … I think you do need to implement some of these redevelopments, not block by block, but at least a cluster of a few blocks, so that it would be a more orderly process,” he added.

ENSURING AGEING HOMES REMAIN LIVEABLE

Mr Foo then asked about the levers to ensure a certain amount of success in the voting process to ensure an orderly redevelopment process, and providing help for those who do not go through VERS.

“I would say that while we are firming up the policy parameters and details of VERS, it shouldn't stop us from being clear that … there will be residents who do not go through VERS,” replied Mr Chee.

“Either because they are not offered VERS or because they voted not to proceed with VERS collectively. We will have to make sure that their flats and estates can remain liveable, safe and vibrant.”

One initiative is the Home Improvement Programme (II), which gives all HDB flats a second round of upgrading when they reach the 60 to 70-year mark.

More details on this will be shared when ready, said Mr Chee.

“We are quite clear that regardless of what the package for VERS is, this objective of upgrading our older flats to keep them liveable, safe, (and upgrading) our estates to keep our estates vibrant and liveable, that is something that we will do,” he told the House.

On top of that, the government also needs to think through the parameters of VERS to ensure it meets its objective of an orderly redevelopment.

“So that's something we will have to think through and to strike a careful balance so that we are fair to both the existing land owners, but also to future generations and keep this sustainable,” said Mr Chee.