Sers no longer viewed as a guaranteed ‘windfall’ after Ang Mo Kio episode

Residents in the Ang Mo Kio Sers exercise were faced with having to fork out up to $100,000 for a replacement flat. ST PHOTO: CHONG JUN LIANG

SINGAPORE – Being picked for the Selective En bloc Redevelopment Scheme (Sers) used to be great news for Housing Board dwellers, akin to striking the lottery or gaining a windfall.

This was because Sers owners could essentially upgrade from an ageing flat to a new flat with a fresh 99-year lease at little to no extra cost.

But that changed with the Ang Mo Kio Sers exercise, where residents were faced with having to fork out up to $100,000 for a similarly sized replacement flat.

Backlash was swift when the matter came to light.

Ang Mok Kio residents and netizens alike said making owners pick between topping up money for a similarly sized flat, or downsizing to a smaller – and hence cheaper unit – is inherently unfair when they are being forcibly uprooted.

The furore suggests a shift in public opinion towards the scheme, which was introduced in 1995.

How did the impression of Sers change from being viewed as a windfall, to becoming – at least for some – a burden?

Since their inception, Sers flats have been coveted by many but owned by few. This is because only 5 per cent of all HDB flats are suitable for redevelopment under Sers. The Government has also said most of such projects with high redevelopment potential have already been selected.

Through the scheme, HDB identifies and acquires precincts in older estates as part of its strategy to renew estates.

Affected owners are offered a new 99-year lease on new flats built nearby at a designated replacement site as well as given monetary compensation.

In previous years, it was not unheard of for some people to pay a premium to buy a well-located flat earmarked for Sers, in order to reap the benefits. They were banking on the guarantee of a new unit at an equally desirable replacement site.

That was the case in June 2014, during the Tanglin Halt Sers exercise.

Within nine months of the announcement, at least 40 units changed hands on the resale market, The Straits Times reported in March 2015.

These newly minted Sers owners presumably went on to buy replacement flats at the designated Dawson estate, also in Queenstown.

That estate has since spawned a number of million-dollar resale transactions.

In 2017, then National Development Minister Lawrence Wong stepped in to caution buyers against such speculative buying.

He warned that not all old HDB flats will automatically be eligible for Sers, after a number of HDB flats with short remaining leases changed hands for high prices in the resale market.

When the Ang Mo Kio Sers exercise was announced on April 7 this year, one resident told this reporter that his phone was buzzing non-stop with congratulatory texts from well-meaning friends and family members.

He said he did not know how to respond, as he was not sure if getting picked for Sers was a good thing.

His reservations were not unfounded, as some residents, upon comparing their estimated compensation amount and the selling price of similar-sized replacement flats, vented their frustration at having to fork out more money.

An artist’s impression of the new replacement blocks in Ang Mo Kio Drive for residents affected by Sers. PHOTO: HDB

In response to their concerns, HDB on July 2 announced two new rehousing options to address the top-up concerns.

First, a shorter 50-year lease, which makes the replacement flats more affordable.

Second, seniors could take up the lease buyback scheme for their existing flats and buy a short-lease replacement flat after.

With these new options, nearly all of the 540 Ang Mo Kio Sers residents aged 45 years and up will not have to top up any money to move into a similarly sized replacement flat, National Development Minister Desmond Lee told Parliament last week.

He also said the Government “had been studying variations of shorter term ownership options for older home owners involved in Sers exercises and have decided to offer this option now to better address the needs of older residents from this Sers exercise onwards”.

If the two options were already being studied, why were they not offered from the start, on the day of the Sers announcement, to assuage residents’ concerns?

Did the Government not foresee that residents would take issue with having to top up money?

As it stands, the public perception now seems to be that the Government was caught off-guard and the two options were put together as a response to the uproar at Ang Mo Kio.

Besides the top-up, another pain point on the ground was that some residents felt the estimated valuation of their existing units was unfair or too low, resulting in the price disparity between the compensation amount and the selling price of the replacement unit.

To that, Mr Lee said the basis of determining the compensation for Ang Mo Kio Sers flats is the same as past exercises.

The key difference, he added, is that the Ang Mo Kio flats are older – with a balance lease of about 57 years at the point of the announcement – compared with about 70 years in past Sers exercises.

Residents will be told of their actual compensation in the fourth quarter of this year. However, the unhappiness over flat valuation raises the question of whether the way that flat valuation is done should be relooked.

And while the two new rehousing options help address residents’ concerns about ageing Sers flats, they will add a further layer of complexity to an already complicated housing scheme.

For instance, having a mix of flats with varying leases – some 50 years, some 99 – in one HDB block could potentially create price distortion when flats hit the resale market after the mandatory five-year minimum occupation period.

In response to queries from local media outlet Today, the Ministry of National Development had also said it will “carefully study” if a lease extension can be provided for those who might wish to extend their lease in future.

If allowed, a lease extension could add to the chaotic mix of leases in one block.

In the event that a lease extension is not allowed, what would happen to flats that run out of their 50-year leases, while the rest of the block still has another 49 years left? Will these units sit empty? Or will they be put to other uses, such as rental housing?

The Ang Mo Kio Sers exercise also raises questions about what will happen in future with the Voluntary Early Redevelopment Scheme (Vers), which is expected to kick in when flats reach 70 years or older.

With remaining leases of 29 years or less, these flats will have an even lower market value. The owners will also likely be much older, with lesser disposable income to cash in on new units.

While Sers flats are few and far between now, there will likely be future sites beyond the Ang Mo Kio one.

Each exercise is bound to be an emotional undertaking for affected residents.

The planning for future Sers exercises will have to take in lessons learnt from this episode, to better consider residents’ concerns against Singapore’s redevelopment needs.

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