berthahenson

The flat is old – but gold to me

In News Reports on May 14, 2018 at 11:47 pm

I will be moving back into my mother’s flat soon. It is a five-room HDB flat, where I had spent most of my growing-up years. It is also more than 40 years old, one of among 7 per cent of all flats here.

When I brought renovation contractors to the house, they wondered at the pristine condition of the walls and floor tiles. They advised me not to replace the original terrazzo flooring, because such tiles weren’t available anymore. They even suggested retaining the more than 20-year old carpentry works in the three bedrooms, again, because you can’t find such high-quality work anymore. I almost wondered if they wanted my business.

It helps that my mother is a house-proud neat freak, possessive of every single item in the flat. Many people have urged her to sell, especially some years ago when such big flats in mature estates commanded a hefty premium. She used to show me flyers from real estate agents on how much flats like hers had sold for, and who among the neighbours had made a killing selling their flats.

I have never taken her suggestion to sell seriously, even as she painted visions of moving into a smaller flat which would be easier to house-keep. I didn’t think she would be comfortable in a different neighbourhood at this late stage of her life. She is, after all, the doyen of the block, an original resident who had moved in as soon as the flat was ready for occupation in the 70s.

Of course, my mother now grumbles about how the flat price is going down and evinces some regret at not moving out earlier and buying a second, new, BTO flat. After all, that’s how most people are “rolling’’ their HDB homes.

Flat prices are a big theme in Singapore now, as people wake up to the fact that a 99-year lease isn’t forever and that such homes would lose their asset value or even be seen as an encumbrance in the upgrading race.

I wondered at all the angst that surrounded the March announcement that not all old HDB blocks would undergo the selective enbloc resale (SERS) process to be torn down and rebuilt. Only 4 per cent or 80 sites have been picked so far, we’re told, and the G has warned people not to buy old flats with the expectation of getting a windfall under Sers – and a new replacement flat in the same area.

It is the HDB version of speculators who buy units in condominiums with enbloc potential, except that while these speculators can actually start the ball rolling with sales committees and so forth, the HDB speculators are at the mercy of the G.

I laughed when I read about how people peruse maps to locate possible blocks which could undergo Sers as an investment opportunity. Did they think this is like one of those HDB programmes where there is a commitment that blocks will have a lift that stops on every floor, or upgraded toilets? It is not an automatic programme, not even for three-room flats.

Methinks there is too much confusion surrounding the concept of a home in Singapore.  In the early days, we were told that a home-owning society will have more reason to care for the shelter they possess and hence, the land. We’ve more or less succeeded in that objective.

But very soon after, home ownership became an investment asset, to be sold after the five-year moratorium to afford its owners some extra money to jump to the next bigger, subsidized flat or into private property.

Then came the upgrading programmes which we’re told would increase the asset value of our homes. In the meantime, there were the former HUDC flats which meant another windfall for residents who banded together to sell en bloc. Prices went up and up.  In 1995, Sers came along.

The home is such an asset that it can be pledged as part of the CPF minimum sum. More recently, the call has been to the elderly to unlock the value of their flat by downgrading or selling back part of the remaining lease to the HDB – which won’t garner much income if they have been living in the same place all their lives.

Singapore University of Social Sciences labour economist Walter Theseira was reported in ST  as suggesting a halt in the use of CPF savings for home purchases. It caused a furore but it transpired that what he had suggested was a re-calibration, with a greater focus on health and retirement needs.

Then yesterday, the issue became the main plank of an MP who spoke in response to the President’s Address in Parliament. People’s Action Party’s Cheryl Chan, whose Fengshan ward is full of old flats, suggested that flat valuation be based not on comparing past market transactions but on “its remaining lease, length of time occupied by current owner, and its right-sizing potential”. This will enable older homeowners to unlock their cash, right-size (or downsize) to a smaller unit, and move nearer to their children if they prefer.

She also suggested that the loan structure using CPF, now available to members up to age 55, be reviewed.

Stopping the use of CPF for housing would be politically controversial, to put it mildly. But re-designing the loan system, shortening the loan period or capping the amount that could be drawn from CPF are ideas to be explored. The final result may mean more time must pass before a household owns a home but I doubt there are many other countries where residents get to be home owners when they are only in their 20s, or when they get married. We’re lucky that way.

Here’s a thought: besides systemic changes, we might want to build a culture where the house is not seen as an investment opportunity but as a home. This might come about if home ownership is not so easy to achieve. Renting shouldn’t be a bad word, especially in the early years of working life. We might treasure a property more if we took longer to get it. (I will now take cover…)

These days, you see all sorts of advice online on when to sell your flat before it loses its value and which old flats are still commanding high prices. Young people balk at buying old flats now because of their low resale value. Older folk wonder if the flat will be as good an inheritance to leave for their children as they had thought.

The schemes to unlock the home, like the lease buyback, applies to three-room and smaller flats, allowing people to age “in place’’. This doesn’t apply to my mother’s five-room flat, but she can opt for a smaller flat and get a Silver Housing bonus or she can rent out a room.

I persuaded my mother that neither option worked. She would have to give away precious possessions collected over 40 years if she moved into a smaller place. And she would be uncomfortable with a tenant in the house.

Besides, I wanted the flat for myself.

It’s old, yes, but it’s in a neighbourhood I grew up in and it’s bigger than my own flat. In any case, the lease would outlive me and whoever I leave the flat to shouldn’t look a gift horse in the mouth.

Still, I wait to see what the G will say to the problem of old flats, like whether we can hope for an increase in value. Then I can thumb my nose at those who think I’m throwing away good money after bad by spending on renovations.

But even if nothing happens, it’s still home to me.

That’s the most important thing.

 

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