Flats with 99-year lease are enough to house two generations

I refer to the letter, "Spare a thought for older homeowners when reviewing issue of expiring lease of public flats" (May 20).

While the writer's request appears reasonable, it should be carefully evaluated against the objective of our public housing policy, which is to enable Singaporeans to have a roof over their heads.

Measured against the average lifespan of the population, a 99-year lease for a government-built flat is more than adequate to meet this objective.

In a typical scenario, couples who marry after the age of 25 and buy a new four-room flat with a 99-year lease, for instance, will still have 55 years of lease left when they are 69.

If their household income meets criteria and they apply for the Lease Buyback Scheme from the housing authority, they will still be able to receive a stream of income in their retirement years.

Furthermore, if the flat's value appreciates at 2 per cent real term per annum (a conservative estimate adjusted for inflation), its value will have slightly more than doubled in more than 40 years. So if they choose instead to sell the flat and downsize, they can still get some money.

The group that will not be able to get the maximum benefit will be those who buy resale flats with a shorter lease balance.

However, those buying resale flats get a greater choice of locations. A person who pays more for a resale flat is paying for the benefits of this choice, meaning the convenience of living near to their workplace, a mature town with more amenities, having greater connectivity, etc.

If they choose to spend more on housing for these benefits and have fewer financial resources in retirement, then that is a choice they make. It will not be equitable for the Government to extend the lease and indirectly subsidise their retirement.