Painful truth about Lease Buyback Scheme

LBS is actually quite fair because it properly values an HDB flat. The value of an HDB flat is determined by the unused portion of the 99-year lease. So Lawrence Wong is right when he said that at the end of the lease the value of the flat to the “owner” (lessee) is indeed ZERO because it has to be returned to HDB with no compensation. With the 99-year lease, an HDB flat is a basically a DEPRECIATING asset. THIS IS A FACT. The only reason it was appreciating for so long was due to an UNSUSTAINABLE “property bubble”.

Singaporeans are not opting for LBS because of the greed of sellers and the stupidity of buyers of resale HDB flat. But more and more are starting to realize that the “free lunch” is about to end as shown by the large number of old flats looking for buyers. It will get worse as more and more flats become 30 years old.

Sellers and buyers of resale HDB flat should note what HDB CEO said – “take into account the age of the HDB flat when selling/buying one”. This means an older flat is worthless the than a newer one of the same size in the same area because the remaining lease (therefore its usefulness) is less.

Without a “property bubble,” an HDB flat DEPRECIATES around 1% per year as the remaining lease gets shorter. Therefore, it makes sense to use LBS to get as much CPF money (used to buy the flat) out of the flat asap so it can be put back in CPF where it earns 2.5% per annum instead of depreciating. The longer one waits to use LBS the less CPF money is taken out of the flat. Forget SERS and VERS, this will only slightly and temporarily enhance the value of the flat. These improvements will also depreciate with the flat to zero.

 

The painful TRUTH

 

* Comment first appeared on TRE.

 

 

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23 Responses to “Painful truth about Lease Buyback Scheme”

  • HDB Losers:

    Simple. It is Singaporeans SABO (exploiting) Singaporeans. Greed. Only themselves to blame. Remember the heydays before dafts realised about HDB decaying value, sellers jacked up prices so much that’s beyond genuine buyers’ affordability.
    Now I say to those HDB dwellers. SERVE YOU RIGHT!

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  • Singapore Fooled Again n Again:

    The current HDB inflated prices are mainly due to a few primary reasons.

    (1) Importing 50k to 60k new citizens and PRs a year, whereas PRs are 3 years can buy resale flats so the endless stream of buyers to artificially prop up HDB prices.

    (2) Curbing the supplies of new HDB flats from a peak of over 40,000 new units to around 15,000 units a year.

    Remove these 2 reasons and the price will collapse in no time. It started from Marbok time and remember he say during 2 elections ago that if people don’t vote for him, HDB prices will collapse but immediately after election and he won, he stepped down and Cow took over and now Lawrence Wong

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  • oxygen:

    IS LBS A SHAM or not? On a flat with 68 years residual lease, the LBS will buy the last 30 years. What if the lessee GONE TO TERN SUA never to return before the coming CNY?

    If nobody is buying the residual 38 year lease – past the LBS – who gets to keep the benefit of it yet unexpired of use consumption? HDB or public charity?

    PAPpys is silent on this? Maybe – unlikely though – the real owner (HDB) wants to set out a formula to buy up the balance of 38 years not included yet in the LBS?

    Anyone got any info to add or subtract?

    In this silence, I AM SURE A LOT DON’T WANT TO OPT for LBS. SERS and VERS are just the metaphorical snakes having their last meals of the stupid peasants.

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  • Diabolical exposed:

    Why wasn’t this basic fact revealed during GCT’s tenure? It wouldn’t be revealed nowadays if the flats have not aged wouldn’t it? We’d still be hoodwinked into a greedy reverie of buying and selling wouldn’t we? Swelling resale flat prices to the skies so that the government could justify charging humongous amounts of citizens’ hard earned CPF savings for building new flats…

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  • Simple Philosophy:

    Singaporeans are a ‘GREEDY’ lot. Simple as that. If you’re stupid don’t be greedy. Note to the 69.99%.

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  • opposition dude:

    LBS is Loads of BullShit to me.

    The thing about LBS is that whatever value is being paid out to the dweller is that it isn’t what the flat price is worth at that point in time.

    The sore point is that if you paid $380k for a 35 year old 3 room in a mature estate some 6 years or so ago your asset is depreciating. Even if LBS is offered to flats 40 years and above how much do you think you will get? Definitely nowhere close to even $380k for sure.

    LBS works well if you are one of the lucky ones who bought a flat in the 70s and have lived in it all the way. LBS will not benefit anyone who bought a resale or BTO in the 90s since that was when we all started paying $100k and above for a BTO.

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  • Truths Or Lies:

    The value of old HDB is obtained from the resale value, largely from the land price at that point in time.
    How much the PAP is going to price the new land stolen from old HDB should be the market value of HDB and not what PAP dictates to dafts in VERS.

    Old man is not stupid when he said HDB is an asset, it’s a social compact he committed between PAP and the people. It is implicitly implied that many will unlock this asset value to support their retirement.
    PAP renegaded on this compact, cheated on the people and very soon many will have a difficult retirement.

    Do not demonise the average Sinkies as wanting, is is reasonable that everyone strives to have a better life for themselves and future generations.
    Those HDBs do not come free and cheap, they are being paid for with retirement savings. PAP fleeting policy shifts simply destroyed those values without any sense.

    The property bubble is a direct result of PAP’s policy of artificially inflating the price of land during the era of Woody. PAP made massive gains from overpriced land sales, and now making dafts pay for their mistakes twice, first buying the land then taking it away at zero sum.

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  • sg:

    the government said that the HDB price sold to citizens since a long time ago (10 years or more) included the cost of the land. This means that you oen that piece of land where the block sits( effectively similar to a condo block where all the owner units share the land).
    So is common sense that the HDB must pay back the market price of that piece of land when it expires at 99 years.
    land only expires because of the rule of 99 years lease by law, it does not depreciate to zero. The HDB must compensate the HDB owners the land to be returned and easily would have the market value in millions (condo at $1,000 psf, for a 1000 sqft HDB 4rm flat, the owner can take back $1 million.
    That is why devveloper buy enbloc to re lease the land which they own.
    This is CLEAR that HDB said the price of HDB flat sold to you included the cost of the land.
    I CANNOT UNDERSTAND what is the difficulty to understand that.
    If the HDB did not included the cost of the land when building the HDB, then the building value lease will become zero.
    Simply put; is the land which canmot be zero and HDB owners DID PAY FOR THE LAND WHERE THE BUILDING SITS AND THEREFORE BELONG TO THE OWNERS and can get another lease by paying a fee.

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  • TL Tan:

    It not need be painful if we see HDB for what it is: good quality public housing. It is not meant as an investment due to the declining lease period. Fortunately, most Singaporeans understand this. The HDB is simply a place to live. You are paying 99 years rent in advance, which is why you get a significant discount and have no worry about being evicted. If you pay your rent on a monthly or annual basis, expect to pay much more. In all, HDB has served its purpose. I can’t think of any other country where you can get such good quality public housing at such reasonable rental rates.

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  • rukidding:

    Tell that to Cynical !

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  • LBS: Lease Back Speculation:

    Some people think that LBS is a good service provided by the government. This is not so. It is a pure financial speculation by the government. They fix the price, and likely they will make a big profit. The market value of the last 30-yr lease is likely to be worth much more than what they pay to the HDB-tenant(owner, whatever).

    To make it a real good service, the HDB tenant must have the option of selling his flat on the open market any time before returning it to HDB. This protects any windfall for the tenant instead of being eaten by the government.

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  • Bapoktua And 94 jesters:

    70% out there fooled by Lee Kuan yew…and wasted their life paying for nothing

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  • oxygen:

    @ TL Tan

    YOU MUST BE THE LOWEST GRADE CLUELESS COMMODITIES TRADER who does not even know the basic principle of finance to come up with the oral diarrhoea below.

    TL Tan: It not need be painful if we see HDB for what it is: good quality public housing. It is not meant as an investment due to the declining lease period. Fortunately, most Singaporeans understand this. The HDB is simply a place to live. You are paying 99 years rent in advance, which is why you get a significant discount and have no worry about being evicted. If you pay your rent on a monthly or annual basis, expect to pay much more. In all, HDB has served its purpose. I can’t think of any other country where you can get such good quality public housing at such reasonable rental rates.

    The compelling logic is found in my post comment here.

    http://www.tremeritus.net/2019/01/24/lbs-perspective-of-75-yr-old-retired-technician/

    And as to your naivety of why no other country is offering such public housing deal at such mythical so-called reasonable rental rates. The simple reason is FAKE STUPID ECONOMICS which I explained here.

    http://www.tremeritus.net/2019/01/24/when-your-cpf-is-hollowed-out-with-a-99-year-depreciating-lease/

    You idiot!

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  • Lee MunkYi:

    They have to kenna jialat jialat like minbonds then can wakeup.
    Main reason is FEAR.
    Other reason is the majority that support them are diehard.
    And many suckup PLP.

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  • Tan Hong Yi:

    Being a rich man son, I dun need a lease buy back scheme cos I am a millionaire (actually billionaire) when I was born. My father if die I inherit his loots.

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  • apek:

    Its all very simple. Pap exists to make us rich. If they don’t they are out. So they caused the problem and let them think. There are many solutions , so make us rich or else….

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  • Smelly Ponzi and Ostriches:

    If it smell like a Ponzi, walk like a Ponzi, quack like a Ponzi, it is a Ponzi.
    Only the 70% ostriches like to bury their heads in the sand AND WANT to believe their lying politicians.

    They cannot handle the truth!

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  • HDB 99 yrs:

    Really, What is the solution for HDB 99 yr lease problem?

    Why all the land in prime and the fringes of prime areas are all sold to private developers? PAP is determine to PUSH and KICK OUT all true blue born and bred Singaporeans from those areas? WHY NO new HDB flats? Why all the new HDB flats are on the outskirts of these prime and fringes of prime areas?

    Are Singaporeans not worthy of living in prime and fringes of prime areas? Why all the hot areas are sold to private developers? Why?

    Very soon, in 20 years all Sennett Estate – Potong Pasir areas are going to kick out ordinary Singaporeans and SELL the land the ULTRA ULTRA SUPER SUPER F****** private developers for TRILLIONS OF DOLLARS!

    Lets thank the stupid 70% for this situation.

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  • HDB 99 yrs:

    @TL Tan – NO I cannot understand! If it’s a leasehold, it should be cheaper and I would paid my “rent” for a flat with my salary while working. My extra cash, I will invest throughout my life and continue to pay the “rent” to HDB with the interest I earn from my PRINCIPAL money. This means my money will continue to grow while I just pay rent.

    Also, in so many western countries, their citizens pay subsidized rent for their leasehold properties. One thing is their leasehold flats are not as nice as our HDB or even their private condos.

    Singaporeans are paying too much “rent” to HDB all in the name of being an owner of the 99 leasehold flat.

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  • @HDB 99 yrs:

    That’s not true. Don’t forget the new Bidahari HDB estate coming up alongside. AS for 70% stupid, I agree.

    HDB 99 yrs: Very soon, in 20 years all Sennett Estate – Potong Pasir areas are going to kick out ordinary Singaporeans and SELL the land the ULTRA ULTRA SUPER SUPER F****** private developers for TRILLIONS OF DOLLARS!
    Lets thank the stupid 70% for this situation.

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  • @HDB 99 yrs:

    Don’t forget also Potong Pasir used to be an opposition stronghold.
    Who voted for it? Who to blame?

    HDB 99 yrs: Very soon, in 20 years all Sennett Estate – Potong Pasir areas are going to kick out ordinary Singaporeans and SELL the land the ULTRA ULTRA SUPER SUPER F****** private developers for TRILLIONS OF DOLLARS!
    Lets thank the stupid 70% for this situation.

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  • PAP.GUARANTEE.WIN.GE2019:

    sg: the government said that the HDB price sold to citizens since a long time ago (10 years or more) included the cost of the land.

    Sorry…PAP did not say that…

    Please prove that PAP say that land cost was included in HDB price else we PAP will sue you till your pant drop.

    PAP.GUARANTEE.WIN.GE2019

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  • oxygen:

    @ PAP.GUARANTEE.WIN.GE2019

    OI OI OI, RUBBER TAPPER from Bohlehland. Me thought you gone to TERN SUA never to return in this extended silence of absence.

    You got the choice here – do your own research into Parliamentary records or buy yourself a new brain.

    Silly boy farting gas, your usual.

    No one is doing your research for you.

    PAP.GUARANTEE.WIN.GE2019: Sorry…PAP did not say that…

    Please prove that PAP say that land cost was included in HDB price else we PAP will sue you till your pant drop.

    PAP.GUARANTEE.WIN.GE2019

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