SELECTIVE EN-BLOC REDEVELOPMENT SCHEME IN HILLVIEW ESTATE (Financial assistance and compensation to lessees)

Mr Ang Mong Seng asked the Minister for National Development whether his Ministry will consider assisting those affected under the Selective En-bloc Redevelopment Scheme (SERS), particularly those in Hillview Estate, by (a) granting a higher mortgage loan to them as they had purchased their present resale flats in the Estate from the open market at a high price and still have substantial outstanding loan; and (b) introducing alternative scheme(s) of paying the resale levy by those lessees affected by SERS.

Mr Chiam See Tong asked the Minister for National Development in regard to the compulsory acquisition of the Housing and Development Board flats at Bukit Gombak under the Selective En-bloc Redevelopment Scheme (a) when did the voting by the residents of each block take place; (b) what was the basis of the quantum of compensation; (c) what is the purpose of acquiring those flats; and (d) when did the HDB decide to acquire those flats.

Mr Lim Hng Kiang: Sir, may I have your permission to answer Questions 10 and 11 together?

Mr Speaker: Yes.

Mr Lim Hng Kiang: Sir, the Selective En-bloc Redevelopment Scheme (SERS) is implemented in sites that have potential for more intensive redevelopment. As the redevelopment of such sites would benefit the country as a whole, HDB flats affected by SERS are acquired under the Land Acquisition Act. Voting is not used to decide whether a site will undergo SERS.

Affected flat lessees are compensated for their existing flats at the prevailing market values as at the date of the announcement of SERS. In addition, they are assured allocation of new replacement flats at subsidised prices, frozen as at the date of the announcement of the SERS, plus a 20% price discount up to a maximum of $30,000, if they are eligible to buy a flat directly from the HDB.

Blocks 1 to 8, 10 and 12 to 14 of Hillview Avenue were announced for redevelopment under SERS on 21st March 1999.

HDB conducts a survey among the affected lessees immediately after the announcement of each SERS site to obtain their feedback. The survey also serves to ascertain the lessees' preferred rehousing options so that the HDB can plan and build the new flats at the replacement site taking into account their preferences.

SERS has been well received by the affected lessees in those precincts that have been announced for redevelopment under the Scheme. For the 29 SERS sites announced from August 1995 to end 1998, the average support level from affected lessees is about 94%. Even for the Hillview Avenue site, 84% of the residents who have returned their survey forms so far supported the scheme.

The MP for Bukit Gombak has requested for a higher mortgage loan to be granted for SERS lessees in Hillview Estate who have bought their existing flats from the open market at a high price and who still have substantial outstanding mortgage loans. As it is, HDB already grants mortgager loans of up to 90% to those lessees who have opted for 4-room new replacement flats and whose available CPF monies in the ordinary account and balance compensation are insufficient to meet the downpayment and the stamp and conveyancing fees for the new flats. This will include cases where the compensation is not sufficient to pay for the outstanding mortgage loans of the affected SERS flats.

If there are specific cases of existing 5-roomers having problems purchasing 5-room replacement flats, HDB is prepared to take a look at how to help them on a case-by-case basis.

Lessees under SERS are also exempted from the payment of resale levy, unless they have previously sold their first subsidised HDB flats elsewhere and have opted to pay resale premium or levy on the next direct purchase flat from HDB. The amount of resale premium or levy to be paid will depend on when their first subsidised flats were sold. According to HDB's record, 87% of the lessees at Hillview Estate will not be required to pay any resale premium or levy.

For the small group of lessees who need to pay resale premium or levy, they have currently a few options to choose from:

1. They can pay the resale premium together with the selling price of the replacement flat. This can then be paid using CPF or through the mortgage loan taken from HDB.

2. They can re-opt to pay the graded resale levy based on the lower percentages prevailing at the time of resale (plus the 5% interest since then), instead of the current higher percentages of resale.

3. They can sell the existing flat together with the rehousing benefits in the open market to eligible buyers, instead of taking up a replacement flat themselves. In this way, they will not be required to pay the resale premium or levy. With the sale proceeds that would include a premium fetched for the rehousing benefits, they can buy an equivalent resale flat from the open market with some cash balance.

4. They can transfer the existing flat to eligible persons, eg, family members. The rehousing benefits will then be based on the transferor or the transferee's eligibility, whichever is more restrictive.

Notwithstanding these measures, I have asked my Ministry officials to take a look at how this group of lessees can be further assisted if they still have problems paying the resale premium or levy.

Mr Chiam See Tong: Sir, the Minister has not answered the other parts of my question, ie, (b) what was the basis of the quantum of compensation; (c) what is the purpose of acquiring those flats; and (d) when did the HDB decide to acquire those flats. I have got a further supplementary question. Will the HDB consider giving a waiver for third-time buyers of HDB flats requiring them to borrow at market interest rates?

Mr Lim Hng Kiang: Mr Speaker, Sir, I thought I have answered the questions. What was the basis of the quantum of compensation? It is on market value as at the date of the announcement. What is the purpose of acquiring these flats? We acquire them because these sites show potential for higher intensity development. When did the HDB decide to acquire those flats? We announced this on 21st March 1999. On his fourth question of whether we would grant a waiver to third-time buyers, our policy so far is that every Singaporean family will enjoy two concessionary mortgage loans. The third loan will have to be at market interest rate.

Mr Chiam See Tong: Sir, does intensive development mean building condominiums there?

Mr Lim Hng Kiang: Intensive development would cover both more intensive public housing as well as higher value private housing. This means that the site reflects higher potential for redevelopment, and we acquire these sites. We redevelop them for the interest of the country and we share the benefits with the lessees. We pay the lessees market price for their existing flats. We assure them a new flat in the vicinity at a price which is subsidised, and we give them an extra 20% discount. So the benefits of the redevelopment are shared between the lessees and the country.

Mr Ang Mong Seng (Bukit Gombak): (In Mandarin): Mr Speaker, I would like to thank the Minister for his answer.

On the resale premium, I would like to inform the Minister that about 15% of the residents will have to pay the premium, and they have sold their flats five or 10 years ago. If they have not been affected by the SERS scheme, they may not have to pay the resale levy or premium. I would ask the Minister whether he would consider waiving the levy payment.

Mr Lim Hng Kiang: Sir, let me explain the situation of these cases who are required to pay resale premium or levy. Basically, they have already enjoyed a subsidised flat from the Government. They bought a subsidised flat from the Government many years ago. They sold away this flat. At the point of selling the flat, you have to decide whether to pay a levy on the flat that you sell or that you pay a premium on the next flat that you buy from the Government. So when these people sold their flats, they had to opt. Either they decide to pay the levy or they decide to pay the premium. Many of them decide to pay the premium. When they sold their first flat, they have already made an undertaking that when they buy the next flat from the Government, they will pay a 10% or 20% premium. Now, when they are buying this flat from the Government, we are asking them to pay the premium. So this is part of what they have decided, because if they have paid the levy, now they would not have to pay the premium. So you cannot say that just because they have opted to pay the premium, now they should be excused.

Then what happens to all those people who have paid the levy when they sold off their first flats? It is not fair to the other group. So we say that for these people who are affected by the premium that they have paid, we are prepared to back-track the decision, go back to the original date when they sell their flat, pay the premium as what the others have done, plus the 5% interest since then, which is very fair. If a lessee cannot pay, he can sell his flat to somebody and he does not have to pay the premium. The flat that he sells today in Hillview Estate to another person in the open market attracts a higher price because it comes with the option to buy another brand new flat in the Bukit Gombak area with a discount and all the benefits associated with SERS. So if he is not happy with buying a new flat from the HDB, he can sell his existing flat which will fetch a higher price than the current market value. Why? This is because it comes with a rehousing option. With the price that he gets from his present flat, he can buy back the same type of flat, the same remaining lease and still have some cash balance in his pocket. So it is eminently fair. They have so many options that they can choose.