What rights do you have as a HDB homeowner at the end of the 99 years lease? Most HDB homeowners presume that all old flats will be automatically eligible for the Selective En-bloc Redevelopment Scheme (SERS)… until 2018’s National Day Rally, when it was announced otherwise…
So what happens when your HDB lease ends? It’s simple. The land will be returned to the state upon lease expiry.
This means your 99-year leasehold HDB flat may potentially depreciate to zero-value at the end of the lease.
What should you do today to avoid this ticking time bomb?
For 1st Time Home Buyers
If you have intentions to buy a resale HDB flat, ensure that the remaining lease is able to cover you and your spouse to the age of 95.
For Existing HDB Homeowners with Cash-flow Constraints
If you are a 1st-time HDB homeowner, you can choose to reset your lease back to 99 years. You will also be eligible for a 2nd-time CPF housing grant.
Your cash flow might be a constraint but you can also mitigate this issue by purchasing a new BTO flat or resale flat (with an extended leasehold tenure).
If Your Sale Proceeds Comfortably Allows an Upgrade to a Private Condominium
You may not be aware that your sale proceeds of your HDB flat may allow you to upgrade your living situation. All you need to do is to work on a meticulous financial check and make a sensible purchase within your means.
There are plenty of affordable low quantum resale condominiums in the market today, where you neither have to compromise on the size nor be too concerned that the monthly mortgage servicing might overwhelm you. Importance should be stressed on the right quantum entry price that is suitable for you and your family.
Do Not Rely On Your HDB Flat For Retirement
This was common in the past. Many HDB homeowners like yourself may be placing emphasis on the sale proceeds of your flat to fund your retirement. However, after the announcement in 2018’s National Day rally that HDB flats will be returned to the state when the lease ends, resale value of shorter lease flats have declined significantly.
Plan Ahead of Time
Be objective and plan ahead of time. Whether you’re a homeowner to be, an existing homeowner, a retiree looking for alternatives, or a young couple looking to build your wealth using real estate, you will need to plan in advance for your short-term and long-term financial wellbeing.
My name is Jen Tan, don’t be afraid to ask me any questions! I would love to hear from you soon.