LAND TITLES (STRATA) (AMENDMENT) BILL

Order for Second Reading read.

The Minister for National Development (Mr Lim Hng Kiang): Sir, I beg to move, "That the Bill be now read a Second time."

The primary objective of the Bill is to amend the Land titles (Strata) Act to provide the legal framework to enable the conversion of the leases of flats in designated HUDC estates to strata titles.

This conversion will allow HUDC residents to enjoy the status and advantages of private property owners. It is part of the Government's asset enhancement programme. It will also serve to meet the rising aspirations of Singaporeans for private housing.

Upon privatisation, the HUDC owners will have ownership of their respective strata units and own, as tenants-in-common, the common property such as car parks, open landscaped areas and common parts within the buildings.

This will enable them collectively to upgrade their estates to a standard comparable to private residential estates. The residents will be able to enjoy the status and privileges of private residential owners without having to uproot themselves and move elsewhere.

At the same time, the privatised estates will no longer come under HDB rules and regulations. They will be like any other private property, subject only to the Residential Property Act. Thus, for example, if the building is at least six storeys high, the flats can be sold to foreigners.

The passage of this Bill does not imply automatic privatisation. This Bill is only an enabling legislation.

HDB, as the landlord, will progressively identify which estates are ready for conversion. But it would then be up to the HUDC lessees themselves to obtain at least 75% support for the conversion.

The Government has decided to set this 75% support requirement because the conversion process will entail costs to the lessees. It would thus be fair that a significant majority agree to bear these costs before the conversion can proceed.

The process of legal transfer of title from HDB to HUDC lessees will take up to one and a half years as time is needed for the preparation of strata title survey plans and also the physical conversion works needed to bring the blocks up to the latest standard for the award of strata titles.

Let me now turn to conversion costs. The lessees of HUDC Phase III or IV HUDC estates will have to pay for the conversion costs of around $25,000 each. This sum includes $20,000 for a carpark lot. The lessees should note that this upfront purchase of their car park lots, for which they can now use their CPF funds, will save them from having to pay parking charges over the rest of their lease. Other conversion costs include legal and survey fees, and also construction costs to meet prevailing barrier-free requirements of strata-titled properties. Lessees of HUDC Phases I and II flats will not need to incur the car park cost as they already have a share of the car parks and common areas.

After the conversion, the residents can form management corporations to manage and maintain their estates. The management corporations can carry out improvements without having to seek HDB's consent. They can also build additional facilities, if they desire to do so.

The town councils will work out the portion of their sinking funds which are attributable to the HUDC estates and transfer the amount to the management corporations of the HUDC estates to be converted.

Sir, a pilot project is needed to test the full complexity of the scheme and iron out any problems which may arise. We have thus chosen two Phase III HUDC estates - Pine Grove and Gillman Heights - for the pilot project. If successful, the Government will extend the conversion scheme to other HUDC estates batch by batch.

The Bill also seeks to include two other consequential amendments. One is a house-keeping amendment to the Land Titles (Strata) Act to enable the surrender and re-issue of State leases which would be consistent with the leases HDB has given to the lessees.

The other amendment is to provide for the creation of a charge on the converted flats for which CPF funds had been used. Without this amendment, the lessees will have to go through the process of discharging their CPF debts and re-applying for new CPF mortgage for their strata-titled properties. It would also allow the owners to use CPF funds to pay for the costs, fees and other incidental expenses in the lodgement of the charge.

In summary, the passage of this Bill will allow for the conversion of HUDC flats to strata titles. It will allow the residents the freedom to upgrade their estates if they desire to enhance their assets further. It will be one step further towards meeting the aspirations of Singaporeans to own private property.

Sir, I beg to move.

Question proposed.

Mr Chew Heng Ching: Mr Deputy Speaker, Sir, I rise to support the Bill.

Sir, I have HUDC flats in my constituency along Bedok Reservoir Road and they fall under Phases III and IV of the scheme. Based on feedback I have received directly from many of the residents, they are all in favour of privatisation, but many residents have asked me to seek the following clarifications from the Minister on the Bill.

The first clarification is this. Following the announcement of the Bill, I think a certain sense of ambiguity has prevailed and this pertains to the interpretation of the Private Residential Property Act and the Housing and Development Act. Many of the residents are not sure whether in the interim, pending the announcement of privatisation, they are still subject to the Housing and Development Act. Perhaps the Minister will want to clarify this point. Also many residents have raised the following questions which I am not in a position to answer unless the Minister clarifies.

They have asked me, in the interim, pending privatisation of the estate, will they be allowed to sell their flats to foreigners? And if they are under HDB rules, certainly they are not allowed to. If they are under HDB rules, will they be allowed to apply for another HDB flat and not be bound by the 30-month debarment period, which HUDC lessees are subjected to under Phases I and II? Perhaps the Minister would like to clarify this point.

The second clarification pertains to the valuation of the car park lots. The residents are of the view that Pine Grove HUDC flats are comparable to flats in districts 9, 10 and 11. And $20,000 per car park lot is probably well justified. For an HUDC estate in a remote area like Bedok Reservoir Road, they think that the cost of a car park lot should not be equivalent to the cost of a car park lot in Pine Grove HUDC estate. Perhaps the Minister would want to clarify and explain the basis for computing the $20,000 car park lot.

The third clarification. Presently, HUDC flats in Bedok eservoir Road are actually immersed in an HDB estate. As a result, common facilities like car parks and children playgrounds are shared. If we were to privatise the HUDC estate, how do we demarcate and split the common facilities? I think the residents want to know about this. This feedback came from the RCs.

The last question is that there are about 12 blocks of HUDC flats in Bedok Reservoir Road and many of the residents have asked me when will HDB privatise this estate. They want to know in advance so that they can plan whether to retain, upgrade or to sell their flats.

Sir, would the Minister provide answers to these clarifications?

Mr Lim Hng Kiang: Sir, let me first thank Mr Chew Heng Ching for his support of the Bill and for raising the queries to give me the opportunity to clarify.

As I said earlier, the amendment to the Bill does not mean an automatic conversion of all the estates. We will take them batch by batch and this requires the residents to get together and sign on a form to say that they are in support of the conversion. When we get 75% yes to that form, HDB will assist them in lodging that form with the Registrar of Titles.

Upon that, there will be the issue of subsidiary strata titles. With the issue of subsidiary strata titles, that will define the legal conversion from HDB flats to strata title flats. So we will take that as the legal date of conversion. Anything before that date will be treated as sold under Housing and Development Act, Part IV. Anything after that date, they will be under the Land Titles (Strata) Act. So that legal conversion date is quite clear in the Act.

Under the Housing and Development Act, the residents are not allowed to sell their flats to foreigners. That is quite clear. Under the Housing and Development Act, they are also not allowed to apply for HDB flats until 30 months have lapsed after they have sold their first flat. This is a little bit anomalous.

Let me try and explain. Under the Housing and Development Act, all HDB flat owners can apply for another HDB flat provided they pay a levy or a premium on the second flat. In the HUDC Phases III and IV, we have not imposed this levy or premium for them to apply for a second flat. This was unsatisfactory. So when we looked at the conversion exercise, we felt that we should try and streamline the position. There were two options: one, we could put HUDC Phases III and IV on the same basis and impose a levy, in which case, we will have to set a new levy and a new premium. Alternatively, we could treat them like HUDC Phases I and II where they are not allowed to apply for another HDB flat until 30 months after they have disposed of their flat. In looking at the two options, we decided to go for the second option, ie, for purposes of applying for a second flat, we treat them in the same way as we treat HUDC Phases I and II. This means that they can only apply for a flat 30 months after they have disposed of their first flat.

As regards the valuation of car park lots, this is done by the valuers. They look at many factors. One approach is to look at market comparables. The second approach is to take the stream of car park revenue and bring it to net present value. If we take the second approach because car park charges are the same for Pine Grove, Gillman or Bedok Reservoir Road, then the market value of the car park remains the same. The third approach is, of course, to look at replacement cost to determine the market value.

The valuers have looked at these three values of the car parks. They estimate that around $20,000 is a fair market value of a car park lot.

Sir, I believe I have answered all his questions.

Mr Chew Heng Ching: The third clarification pertains to the sharing of common facilities between the HUDC and HDB flats now. Following the privatisation, how do we split the common facilities?

The last question is: when will Bedok Reservoir HUDC flats be privatised?

Mr Lim Hng Kiang: I am very sorry. In the Member's case, it is a slightly peculiar configuration, because the HUDC flats in Bedok Reservoir Road are in two groups with few blocks of Executive flats in between. HDB has, in fact, submitted a development control plan to URA to allow for the conversion of the HUDC blocks into two separate estates. So it will not interfere with the future conversion into strata titles. The Executive flats will be excised out. There will be a footpath for the Executive flats to Bedok Reservoir Road. The Executive flats will not be affected. The HUDC estates in the Member's constituency will be treated as two separate groupings.

As regards timing, let us take this step by step. There are many individual issues pertaining to each individual estate. Let us get through the pilot project over the next four months in Pine Grove and Gillman estates. Once we are au fait with all the complexities and they are settled, then we will bring in the future batches one at a time. We will announce the next batch in the early part of next year.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Lim Hng Kiang].

Bill considered in Committee; reported without amendment; read a Third time and passed.