Lease tenures are one of the core factors to consider when it comes to sussing out if a property is worth the purchase. With HDB resale flats growing in popularity due to younger homeowners not willing to wait as long for a BTO, we’ve seen an uptake in the sale of older HDB flats with the likes of executive maisonettes and jumbo flats sold at high prices, even with as little as under 60 years left of the lease.
That leads us home HDB homeowners to the next question: I love my forever home, but what happens when the lease runs out?
What happens when your HDB lease runs out?
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In theory, we all know that at the end of your HDB lease, you’ll have to “surrender” your flat back to HDB, resetting the value of your flat to zero. While most homeowners bank on Selective En-bloc Redevelopment Scheme (SERS) to help them profit off of their investment, there is no actual guarantee that your property will be selected for SERS. Furthermore, HDB is technically not obliged to provide homeowners with any sort of compensation when this happens.
If you’re wondering what happens to your precious flat, it will probably get demolished and reconstructed into a newer BTO development somewhere down the line.
What is the Voluntary Early Redevelopment Scheme?
Image credit: TheSmartLocal
This brings us to the next best thing for homeowners to look to: the Voluntary Early Redevelopment Scheme (VERS). VERS is an initiative announced by the government in 2018 to allow homeowners to address the problem of lease decay for HDB homeowners. Homeowners are basically allowed to “sell” their flats back to the government ahead of the end of their leases to allow them to make alternative living arrangements.
VERS vs SERS
While easily confused with SERS, the main difference between SERS and VERS is the fact that SERS is compulsory, but VERS is voluntary, where homeowners opt in. What we know at present is that the scheme will likely only take effect closer to the year 2038, and it will be offered to flats that are aged 70 years and above. Most of the details of VERS are still being ironed out by the government.
Read more about SERS here.
Which HDB estates have the oldest flats with the shortest leases?
Image credit: TheSmartLocal
As HDB was only developed in the 1960s, no HDB development has reached the end of its lease tenure as of 2024. With that said, here are a list of HDB estates that house some of the oldest HDB flats available in Singapore today:
- Queenstown
- Toa Payoh
- Ang Mo Kio
- Bedok
- Geylang
Should you buy an ageing HDB flat?
The main factor dissuading many from purchasing an ageing HDB flat lies in the uncertainty of returns on investment. For one, each flat’s value will continue to depreciate the longer the lease goes on.
This depreciation is exacerbated by potentially higher renovation and maintenance costs associated with older properties. Additionally, While SERS and VERS offer the possibility of compensation, they are not guaranteed.
Despite this, ageing HDBs are attractive as they tend to offer established amenities, as well as potentially larger-sized flats. Those interested in purchasing an aging HDB flat have to consider that it’s a high-risk, high-reward decision.
Read our other articles here:
- What DBSS flats are and where you can find them
- Everything you need to know about ‘99-to-1’ loophole
- The housing you can buy with S$500K overseas
Cover image adapted from: Getty Images
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