Fill Me In
Ever come across the notion that HDB flats is basically useless after 99 years? The subject has been cause for unending price disputes for HDB properties in Singapore. And in recent times, property investment educators and real estate agents have been using the 99-year leasehold of HDB properties to goad people into attending investment courses.
Just one of these courses can set you back thousands of dollars. Most of them come with telltale signs. Like the deep, dark hole of many seminar-style investment courses, they almost all start with a free trial. Property investment educators have been amongst the Imrans, Dominics, and other wealth gurus of Youtube advertising, using convincing tactics to drive conversion and seminar sign-ups.
Authorities warn against “irresponsible” scare tactics
A report by Straits Times noted that property investment educators and real estate agents have both been projecting the notion that “HDB flats will become worthless after 99 years” on social media. As a result, they benefit from two key things: property owners signing up for their investment webinars, or better still, property owners selling their HDB flats in order to invest in commercial or private properties.
The Council of Estate Agencies (CEA) has therefore warned real estate agents against the use of “inaccurate, false and misleading claims” to pressure HDB owners into selling their flats while looking to make a quick, sizable buck off of commission.
One of the marketing videos recently uploaded onto YouTube by a property education company interviewed numerous Singaporeans to test their awareness on their property value depreciating as the years pass. Another video featured a clip of several workers in Singapore sharing that they had to work for very long hours, paired with an interview segment on the same subject matter.
In an economy hurt by COVID-19, HDB resales are unfazed
The call to action for these marketing initiatives is in urging viewers to sign up for free webinars in order to educate themselves better and to be eased of their woes. A surge in such practices could be an implicit reason for HDB resale transactions having soared 127.3% in Q3 2020.
In a joint statement to The Sunday Times, spokesmen for the Ministry of National Development (MND) and the Monetary Authority of Singapore (MAS) said that, “It is inappropriate for any company to play up fears and uncertainties to attract people to sign up for its property investment courses.”
Rogue agent? Make a report
In the event that you encounter rogue agents who try to press you into purchasing a sales package or the like, CEA calls on you to report it. There is substantial evidence that points towards companies’ seminars directly translating to property sales.
In fact, CEA’s statement comes a month after a report by The Sunday Times’ Invest which underscored the trend of property educator companies offering courses to people on how to invest in properties and enjoy the results of a good rental income. The report also highlighted how attendees of these courses may have little to no cash to spare.
In order to substantiate its claims, the report even presented past course participants who acquired properties in mere days after attending “property mastery” courses. According to these courses, participants can then wait on “massive capital appreciation”.
Is there truth to these companies’ claims?
You be the judge. Typically, land in Singapore comes with three main leasehold types, namely freehold, 99-year, and 999-year. HDB properties all possess 99-year leaseholds. At the end of their tenure after 99 years, the land goes back to being the property of the Singapore state. With over 82 percent of Singaporeans living in HDB homes, one could argue that 99-year leases are simply ticking time bombs.
However, it remains a fact that no HDB property in Singapore has ever reached the end of its 99-year lease. Through means of the Selective En-Bloc Redevelopment Scheme (SERS), the government has always intervened with en bloc measures before homes become of zero value.
And since the implementation of SERS in 1995, the local government has renewed housing leases for close to 25 years now, with more than 80 locations have been reclaimed under the programme. A 2014 statistic shows that SERS often rolls out for HDB homes at their 40-year mark, which is not even halfway toward the end of a 99-year leasehold.
On one hand, SERS provides somewhat of a fallback plan for most Singaporeans, some of whom will not live to see the end of their homes’ leases anyway. On the other, there is no firm guarantee that SERS will happen, especially since targeted locations are not disclosed in order to prevent speculation. The worry may be especially pressing for homeowners who have bought resale HDB homes with fewer years left on their lease. Where do you stand?