HOUSING AND URBAN DEVELOPMENT COMPANY FLATS (Privatisation)

Mr Chiam See Tong asked the Minister for National Development (a) why is there a need for residents to pay a privatisation fee when their Housing and Urban Development Company flats are privatised and (b) what is the basis for setting the amount payable by the residents.

The Minister of State for National Development (Dr Vivian Balakrishnan) (for the Minister for National Development): First of all, let me thank Mr Chiam for raising a question which has caused some confusion on the ground.

The flats in HUDC Phases III & IV were sold under the Housing and Development Act. Like HDB flat lessees, these lessees own neither the land on which their flats are built, nor the car parks and common areas of their estate. They are thus required to pay about $25,000 per flat for the conversion of their flat leases into strata titles. Most of this cost - about $20,000 per flat - is the cost of purchasing the common property from HDB. The residents have to pay this sum because they did not pay for this common property, such as the car parks, at the point of original purchase. The cost of the common property is computed taking into account the net car park income forgone for the remaining period of the lease. The remaining $5,000 comprises costs incurred by HDB for survey fees, legal fees and construction works necessary to comply with statutory building control and other requirements.

On the other hand, for lessees in HUDC estates in Phases I & II, these are governed by the HUDC Housing Estates Act. I want to emphasise that they were sold on different terms. In particular, these lessees would pay lower conversion costs, because they already own the common areas of the estate. For these lessees, the privatisation process involves mainly the land and strata subdivisions and the transfer of the legal title of the land from HDB to them.

By paying conversion costs, these flat owners would be able to own the common property as tenants-in-common. Through privatisation, they would also enjoy other benefits, such as the autonomy to manage and upgrade their estates according to their needs and aspirations, and will no longer be subject to HDB's restrictions on the use, ownership and resale of their flats.