When a 99-year HDB lease runs out, the flat reverts back to the Housing and Development Board (HDB) . The flat will be practically worthless, and you will no longer have the right to live in it.
What Happens to the Flat?
– HDB will surrender the land back to the state. The flat will be demolished, and the land will be used for new HDB flats for future Singaporeans .
– You will no longer be able to live in the flat. You will need to have already moved out by the time the lease expires.
What are Your Options?
– Sell your flat before the lease expires. This is the most common option, as it allows you to recoup some of your investment . However, it can be difficult to find a buyer for a flat with a short lease remaining .
– The Selective En Bloc Redevelopment Scheme (SERS). This scheme allows the government to redevelop older HDB estates. If your flat is selected for SERS, you will receive compensation based on the market value of your flat, and you will be offered a new flat in the vicinity . However, SERS is a highly selective scheme, and only a small percentage of HDB flats are chosen.
– Buy a new HDB flat. You can sell your existing flat and use the proceeds to buy a new HDB flat with a fresh 99-year lease . However, there is a resale levy that you will need to pay if you sell your subsidized flat and buy another subsidized flat.
Important Considerations
– The value of your flat will depreciate as the lease expires. This is especially true in the last few decades of the lease.
– CPF restrictions and bank loan limitations apply to flats with a short lease remaining. This can make it difficult to sell your flat or to buy a new one .
– It is important to plan ahead and consider your options. Don’t wait until the lease is about to expire to start thinking about what you will do.
In conclusion, the 99-year lease on HDB flats is a significant factor to consider when buying or selling a flat. It is important to understand the implications of the lease and to plan ahead for the future. While the lease does eventually expire, there are options available to homeowners to avoid being left without a roof over their heads.
Should you sell while you still can?
Everyone’s scenarios is different. If you have some time, let’s chat.
On the curve, the value of leasehold land is expressed as a percentage of the land value were it freehold. For example, consider a property that would be worth S$1 million as a freehold:
At the start of a fresh 99-year lease, the value of a property is 96% of its freehold value. So if it would hypothetically be worth S$1 million as a freehold property, the actual value of the leasehold property, in reality, is S$960,000.
When there are 60 years left on the lease, it is worth 80% of its freehold value—so S$800,000 as a leasehold
When there are 30 years left on the lease, it is valued at 60% of its freehold value, or S$600,000
