Movement for change Why is HDB a mess and how can it be fixed
I have described the HDB as a mess. Let me explain why it is a mess and how it can be fixed.

HDB is a mess for the following reasons:

a) It is now costly and takes a large portion of the earnings of working people.

b) It has many complicated rules on eligibility, pricing, access to grants and use of CPF savings. Most owners do not understand the rules and have to reply on the staff of HDB or the property agents to advise them.

c) A HDB flat used to be a good asset that appreciates over the years. It is no longer the case. It is now a depreciating asset. Furthermore, the depreciation is erratic and can fall sharply after the flat reaches 40 years.

What can be done to fix the mess?

I suggest the following approach:

a) Give people the choice of renting a flat on a yearly basis or to lease the flat for 5 to 30 years.  This will reduce the cost of a home. The same subsidy and grant should be applied to these flats similar to what is now given for 99 year lease flats.

b) Allow CPF to be used to pay for rental or for a short lease. This will allow the older property to get a fair market value, rather than suffer a depressed value due to restriction on the use of CPF. 

c) Allowing expiring leases to be renewed for 5 or 10 years by paying a premium for the extension. This will ensure that the flat will still have a value at the end of the lease.

If these changes are adopted, the existing complications on the use of CPF and the eligibility for a grant will be eliminated. The cost of a home to live in will be transparent and fair. People can make their choice on the size and location of a flat to suit their needs and pair an appropriate rental or lease payment. 

The rental and sale price (for long and short term lease) should be based on the cost of construction and an appropriate value for the land (rather then the inflated market value). This will keep the flats affordable to tenants or lessees.

The HDB can issue bonds to finance the building of the flats. These bonds will offer a guaranteed return, which should be higher than inflation. Rather than invest in the flat to get a speculative return, the occupiers can invest in the bonds.

This approach will allow HDB to return to its original purpose of providing affordable housing to the people.

Tan Kin Lian

Vote - do you agree with this approach to return HDB back to its original purpose?
 

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