New HDB 2-room scheme will give buyers greater flexibility: Analysts

SINGAPORE — The new 2-room Flexi scheme was welcomed by property analysts for offering a range of leases to meet different needs, which many have called for, but some flagged issues that could emerge down the road as the Republic’s population continues to age.

Mr Chris Koh, director of property firm Chris International said the Housing and Development Board scheme will offer homeowners a greater sense of security. Currently, Studio Apartments (SA) are only available on a 30-year lease, which may worry some older homeowners. But the new scheme offers short-term leases of up to 45 years, he noted.

Mr Koh pointed out that the scheme will also allow for a good mix of different housing types in a housing estate. “If you’ve a good mix of people from young to old then you will also have infrastructure built for both young and old (in a housing estate),” he added.

SLP International Property Consultants’ executive director Nicholas Mak said more of such flats would likely be sold by the HDB as the population ages over the years.

“Therefore, in the future, the Government would need to set aside growing amount of funds to buy back some of these two-room flats. Generally, this should not be a problem if the future government of the day were to budget for such expenses in advance. Otherwise, it could be a burden on the taxpayers in the future,” he said.

While the scheme provides more leasing options for older home buyers, Mr Ku Swee Yong, chief executive of property firm Century 21, felt renting flats to the elderly would be a better option. “For the old folks… (they have) an under determinable pass away date,” said Mr Ku. It would be better to guarantee them an option where they pay monthly rentals till their dying day, he felt.

Chief executive officer of PropNex Realty Ismail Gafoor said the scheme provides more options for seniors to choose from, but those who buy the short-lease flats will not be able to sell them in the open market. “(This) means that the buyer will not be able to enjoy the possible capital appreciation in future,” he said.

Mr Mak said this could be because the Government wants to emphasise such short-lease flats as homes, rather than assets.

“By keeping this restriction, it would also reduce the differences between the existing SA and the new 2-room Flexi flats. If the differences are too wide, it could lead to growing unhappiness among the existing owners of SAs,” he added.

Mr Eugene Lim, key executive officer at ERA, noted the “minimal impact” on prospective buyers of two-room flats on a 99-year lease, as the procedures and conditions remained unchanged. However, he felt that some aspects of the scheme could be made clearer, such as the methodology for determining the price of flats with shorter leases.