Options limited as 99-year leases shorten, but homeowners not in rush to sell
SINGAPORE — In three years’ time, the apartment in People’s Park Complex that Mr Goh Boon Teck and his wife and son have been living in since 1980 would be at the mid-point of its 99-year lease.
Although he intends to sell the unit, the 68-year-old shop owner is not rushing into letting go of the place on the cheap. What matters is pocketing a good profit from the S$400,000 he forked out in buying the unit, he said.
“There is a lot of interest from foreigners in this area, who don’t exactly need bank loans,” Mr Goh said, referring to buyers’ difficulty in securing loans for properties that have less than 60 years’ lease remaining.
“And even if I don’t manage to sell, I will have no problems renting it out.”
In contrast, Lakeview Estate resident Teo Kee Eng, 64, is less sanguine about the prospects of holding out for a good price for her unit because of the loan regulations.
The 99-year lease for the Housing and Urban Development Company property in the Upper Thomson area began in 1977, which means the unit would be 50 years old in 10 years.
“I’m definitely motivated to sell my place within the next 10 years, if not five. But I’m still hoping for an en bloc sale, actually,” she said.
The options that owners of ageing leasehold properties face have come under the spotlight after the Singapore Land Authority confirmed last week that there will be no compensation for the owners of the 191 private terrace houses at Geylang Lorong 3 when their leases expire in 2020.
The 2ha residential plot will be the first here to have its lease run out.
Across the island, there are 48 developments that are currently more than 30 years old, or around one-third through their 99-year leases, data from the Urban Redevelopment Authority shows. Of these, 13 will have less than 50 years left in 10 years’ time.
Homeowners at four such ageing properties — People’s Park Complex, Lakeview Estate, Sherwood Towers and Neptune Court — said their options are limited as the leases shorten, because selling would become harder.
Some, like Mr Goh and Madam Teo, hope to monetise their units by finding tenants or accepting lower prices. Others said they intend to live out the rest of their lives in the same place, leaving their children to do as they please with the unit after they are no longer around. Some noted that many of their neighbours sold their apartments earlier, knowing there would be constraints brought about by the lease running down.
But they also said their properties seem to be enjoying a revival of sorts because prices of ageing units have become more accessible to younger buyers.
Madam Lily Chan, who is in her 40s and living in Neptune Court with her mother, is of the mind to sell the place in the near future.
“The place is getting very old and too big for the two of us. In fact, many of my neighbours have moved out in the past 10 years, as they know it’s a 99-year lease only,” she said.
But she hopes to sell only if she can get a good price for the property — located in East Coast and with sea views — which her mother paid S$50,000 for in the 1970s.
Recent transactions on property listings site PropertyGuru showed that a 1,270 sq ft unit went for S$870,000 in June.
However, a 76-year-old retiree, known only as Mr Chen, is one of those looking to live in his Sherwood Towers home for the rest of his life. He had considered selling the place, but changed his mind after finding today’s property prices beyond his reach.
“Anyway, the 99-year lease won’t affect me but my children. They can choose to live here, or rent it out. It is up to them,” he said.
He noted that the Bukit Timah property, completed in 1979, seems to be attracting some new buyers in their 30s and 40s recently, as they are “not very expensive”, considering their relatively big sizes.
A check on PropertyGuru found that a 1,657 sq ft unit, for instance, was listed for S$1.15 million — or about S$694 psf. In contrast, freehold properties or newer ones with 99-year leases are going for around S$1,000 psf.
This observation was echoed by 35-year-old finance professional Shaun Lee, who is living with his wife and parents-in-law at Lakeview Estate. There are still new residents, he noted, as it is a lot cheaper compared with other properties in the area. A 1,615 sq ft unit was listed for S$1.2 million on PropertyGuru.
With three generations living under one roof, what to do with the property is most likely their two toddlers’ decision to make in the future.
But Mr Lee is not too concerned. “They can buy their own homes when they grow up,” he said.