Tuesday, June 21, 2005

HDB owners??

Recent survey shows .... 2.84 million singaporeans live in HDB flats (CNA report 21 june 05, HDB Household Survey). That's up 5.2%. The report does not show how many percent of the Singaporean population is that, but using 4million (2000 survey) as an estimate, it would make it about 71%.

Now the report also says ""buying" beat "renting" hands down - an overwhelming 95.6 percent of households interviewed prefer to own rather than rent a flat. ".

My question now would be:
1) How many of these people actually think that they "own" their 99 year lease hold flat?
2) How many of these people actually know that they are actually "renting" these HDB flats from the government, and not "buying" them?
3) Or are these people voicing their unhappiness that these flats are "leasehold"?

If they fall into (1) and (2), that means they need to be educated about how stupid they are, thinking that they "own" these flats. Thus more than 70% of Singaporeans are not home owners. And if we look upon houses as assets, then 70% of Singaporeans do not own any assets. Gulps ..... that truly sucks ....

Why HDB is a scam?
- They are 99 leaseholds.
- "lease" n. definition: A contract granting use or occupation of property during a specified period in exchange for a specified rent. Go read your HDB contract, you are a "leasee" and HDB is the "leasor".
- Assuming they cost between $200-$300,000 for an average unit, and assuming you are using 0% loan (only assuming) you are paying rent of $210 per month for a unit costing $250,000. In fact there are the new HDBs that costs more than $400,000 to "lease", so the monthly rent is even higher. But hey ... no one lives for 99 years, and in fact, I don;t think anyone even buys a HDB until they are at least married or 35 if you're single. So if u take that into account, the effective rental for the HDB per month goes up even more considering that you live there for only 30 to 40 years!! And at the rate of 30-40 years, the rental rate of a $250,000 zooms up to at least $500!! Assuming you'd still have to pay about $200 per mth for carparking, you're paying more than $700 for rent.
- I pay $500/mth for rental of a condo unit, with free parking and gym and swimming pool facilities. Compare that with the numbers above.
- Oh yes ... you are supposed to pre-pay your 99 year rent to the HDB for "leasing" their unit. I mean, the banks have to lend you the money to pay the HDB for renting their place! If you don't call this a scam I don't know what is?

Wait a minute? ... Isn't this supposed to be government property? And if it is, it is paid for by the tax payers money? So the government basically takes our money, builds some apts and we have to pay to use it somemore?

Food for thoughts ....

18 comments:

Anonymous said...

Hmmm! You're right! I should rent!

Rummybean said...

On the other hand, most people buy flats not just to stay for 30 years...they think they can make a profit if the prices go up.

Anonymous said...

abit simplistic your argument, isn't it?
u pay $500 a month for a condo room.
how to compare w a HDB unit?
ur rent cannot be recovered at any point.
i sell my HDB flat and even if i just break even, i dun lose money (assuming bank loan)
is that a scam or r u reading it wrong?
p/s: i not from HDB & i rent..

Anonymous said...

hdb is a ripoff scam lah. me migrating as soon as i can so no way in hell will i 'buy'.

seowleow said...

fundamental issue of why "subsidised" flats are so expensive is because of the condamn cpf policies and limitations.

with all that money tied up till you're 62(and keeps moving further and further), what do you expect people to do with their cpf funds? buy a "subsidised" flat! need a roof over your head and no money from own pocket sounds ok, right? what a scam!

vandice said...

Hmmm, the only rent you pay for HDB flat is the interest to the bank (Assuming you sell at the same price at purchase) Usually, the flat sells for a profit due to the rebate (for 1st timers) and the "developed" status of the new town. As for the leasee/leasor, one of the reasons is because Mr. LKY (in his foresight) wanted to ensure that no debtor other than the HDB can repossess a person's flat, as opposed to private property which can be seized in any bankruptcy claim.

IMHO, being a HDB owner still has its benefits.

vandice said...

& I don't think one should label people as stupid without getting the facts straight. No, let me retract that. I think it's rude even if one happens to be right.

Anonymous said...

You're not a HDB "owner", if you lease it. You are not a home "owner", if u lease it.

Sylvia said...

As said, it is still a good compromise between a million $ property, and rented property. You can sell it and make a profit if you are lucky. If not, it is a risked investment against inflation, regarding your savings and CPF.

There are intangibles. A house is not a home, especially a rented place. You won't be able to paint your living room your favorite shade of purple, remodel your kitchen, keep ten terriers if you are renting.

kitten said...

your arguments sounds overly simplistic, i feel. If the arrangements were not made this way, in a land-deprived country like ours, a typical FREEHOLD 3-room unit should cost something like a bungalow in district 10 and most people can't afford to have their own place.

Garan said...

you can't possibly rent for long. if u lease from hdb, u can be assured of leasing it for 99 yrs. And sylvia is right, would the land lord allow you to renovate their property the way you like it?

a financially savvy friend of mine refuses to buy any property in SG. but he doesn't mind shifting around, to date he has shifted 6 times for the past 15 yrs.

So, it depends. If you're single and a rolling stone, rent away. Or have plans to migrate in the near future.

Yee-Wei Chai said...

woah!! ... didn't realise that by saying what a bad deal HDB is has garnered so much comments. ... ahhahahha ... awesome ... I love Bloggin ....

Well the situation with HDB is that they've basically dug themselves into this hole they can't recover. By setting the flats to be 99 leasehold, they hope to keep the prices of the flats in control. But they never expected that the prices would still rise in the market place so much, that eventually they had to implement the "cannot sell within 3 years" law to artifically prevent the market from rolling itself out of control. And now that market forces (over supply+ bad economy) has caused the prices of freehold condos down, suddenly you see a problem with HDB being not such a good deal anymore conpared to the slightly more expensive condo but "perceptually" better deal (becos it is freehold, u actually own it). So HDB is now seen as a "bad deal" and who is to blame? No one but themselves. Don't blame the market forces for making you look bad. This is the invisible hands of the economy, and HDB should learn to try to compete. Improve the terms, or succumb to the market pressures.

Anonymous said...

another clueless over simplistic arguement, just because you don't like or ever lived in an HDB. Adequate housing for all isn't that simplistic.

Dorian Alexi said...

One of the funniest things I encountered when I first came here, the HDB scam.

Now, Singapore is not the only country that's implementing this. England, especially London, has lease programs like this too. But the only thing is, NOBODY ASKS QUESTIONS HERE! Nobody has ever bothered to question the government on why they have to pay so fricken much for a leased property. Hell the thing is not even yours. Might as well save up a little bit more and try buying condos. At least the parking is free. And to think that you can't even park at the place you paid for for free. Hmph, so funny man.

It will do much good for Singapore if it's people start to find their voice and actually have the guts to VOICE it against an almost communist government.

jefftrent said...

Dare I mention that HDB flats suck. They are essentially cement boxes with toilet pipes on the inside. They are what you might find as dormitory housing in the West.

jefftrent said...

BTW, in case you don't know...
A dormitory is basically housing for college or university students.
http://en.wikipedia.org/wiki/Dormitory

danny said...

I think the HDB system provides affordable and decent level of housing for millions of Singaporeans.

A 4 room flat can still be purchased or 'leased' directly from the gahmen for $250k, for 99 year use.

Singapore is a unique country with a unique situation. Considering that, the gahmen has done tremendously well. The HDB system is sound and good overall in terms of meeting the general population's housing needs.

If you think this is a scam, I suggest to do a more detailed study into the situation and evaluate what you are getting in return. If then, you are still convinced it's a scam, then don't buy a HDB. For me I can't wait to get my own.

Anonymous said...

think this is an old post and not sure if anyone is reading this. Anyway, since we are all lessee (i.e. tenants), why do we have to pay propety tax when the HDB flats that we 'lease' actually belongs to the government? So shouldn't HDB be paying to IRAS instead?