HUDC CONDOMINIUM AT BEDOK RESERVOIR (Privatisation process)

Mdm Cynthia Phua asked the Minister for National Development, (a) whether the privatisation process for the HUDC condominium at Bedok Reservoir (now called Waterfront) was carried out in accordance with the Land Titles (Strata) Act; (b) what course of action is open to the residents of Waterfront who are unhappy about the privatisation; (c) what was the role of the pro-tem committee and whether its members carried out their work properly; and (d) whether there were $20 million worth of defects which the Housing and Development Board did not make good on.

The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, first, let me explain the privatisation process. Privatisation converts the HDB leases into strata titles under the Land Titles (Strata) Act (LTSA). This changes the status of these flats from public to private housing. With privatisation, flat owners will no longer be subject to HDB's restrictions on the use, ownership and resale of their flats. They can sublet their flat wholly, purchase HDB resale flats and sell their flats to a wider group of potential buyers. Flat owners will own the common property as tenants-in-common and have the autonomy to manage and upgrade their estate, according to their needs and aspirations.

The privatisation of the former Bedok Reservoir HUDC Estate was carried out in accordance with the provisions of the Land Titles (Strata) Act (LTSA). The relevant provisions of the LTSA allow for such a conversion if, at least 75% of the lessees of the total number of flats apply to do so, and the proprietor of the land agrees to transfer the land to them. Privatisation is therefore the choice of flat owners. HDB cannot and does not compel the flat owners to privatise their estates unless the majority wish to do so.

HDB has explained its position with regard to the privatisation process in its letters of 30th April 2002 and 5th October 2002 to Waterfront View residents, and in a letter published in the Forum Page of The Straits Times on 11th May 2002. The application to convert the HDB flat leases to strata titles was submitted under the relevant provisions of the LTSA and the documents (including the written consents signed by more than 75% of the lessees of the Estate) were lodged with the Singapore Land Authority (SLA) on 3rd December 2001.

The written consents of the lessees were signed over a period of time prior to the submission of the documents to SLA. There is no requirement in the LTSA that the 75% mandate must be obtained in a single day.

On 6th December 2001, the SLA posted a notice in The Straits Times and Lianhe Zaobao providing for written objections to privatisation to be lodged within six weeks. It also sent a copy of the notice by registered post to all the individual flat owners on 10th December 2001. No objections were received. As the application was in order, the SLA registered the Strata Title Plan on 1st February 2002, ie, the estate was privatised on 1st February 2002. The certificate of constitution of the Management Corporation Strata Title (MCST) Plan No. 2625 was issued by SLA on 2nd February 2002.

I believe that only a small proportion of the residents of Waterfront View were not in favour of privatisation. These residents should accept that the majority of the residents had wanted privatisation. Unfortunately, some of these residents have taken the matter to court and have sued some members of the Pro-tem Committee ("PC") and the law firm that had been selected by the PC to assist them. The Court will determine if those residents who have sued have a genuine case.

The Role of the Pro-tem Committee

HDB had, pursuant to its procedure for privatisation, encouraged the residents of the former Bedok Reservoir HUDC Estate to form a Pro-tem Committee (PC) with the help of the Member of Parliament. This was done in 1996 by the MP of the area at that time, Mr Chew Heng Ching, under the auspices of the relevant grassroots organisation. The members of the PC were subsequently endorsed in 1997 by the Kampong Kembangan Community Centre Secretariat and by the new MP for the area, BG George Yeo.

The role of the PC was to facilitate the process of privatisation. The members of the PC were all volunteers who worked as the liaison between the residents, the lawyers selected by the PC to conduct the privatisation process, HDB and the other relevant authorities on privatisation matters.

I understand that the PC had kept the residents fully informed throughout the privatisation exercise. From October 1996 to April 2002, the PC issued 16 newsletters to the residents, updating them on the various issues of privatisation, such as the conversion cost, progress of the various works carried out in the estate and inviting more volunteers to serve in the PC. They consulted the residents on the fencing and re-naming of the estate after privatisation.

The PC acted according to HDB's guidelines, and has, in HDB's view, discharged its roles diligently and acted bona fide in the interest of the residents.

Alleged defects in the estate

It is not true that there are widespread defects existing in Waterfront View which would cost $20 million to rectify. HDB has, consequent to receiving a survey report commissioned by the MCST and which purports to set out the extent of the alleged defects, made a preliminary assessment of these defects. HDB has discovered that these "defects" were generally due to fair wear and tear. This is not surprising, given that the former Bedok Reservoir HUDC estate was built more than 18 years ago. In any case, the rectification cost of $20 million for these wear and tear items is greatly exaggerated.

HDB structural engineers inspected the blocks in the estate in April/May 1997 and again in April 2001. The buildings were found to be structurally sound. The competent authorities, namely, the Fire Safety and Shelter Bureau and the Building and Construction Authority, have issued the Fire Safety Certificate (on 21st January 2003) and the Certificates of Statutory Completion (on 7th March and 13th March 2003) accordingly for the estate.

Prior to privatisation, the estate maintenance works were undertaken by the Aljunied Town Council. With privatisation, the MCST has taken over the unexpended funds of more than $1 million from the Town Council, being an accrual of the monthly service and conservancy charges the flat owners had paid to the Town Council. This is one of the highest amongst all the HUDC estates privatised so far. The MCST has the autonomy to decide on the types of repair and improvement works, and the amount of maintenance fees to be collected from the residents. It follows that the rectification of defects is largely the responsibility of the MCST.

Let me conclude by reiterating three points with regard to the privatisation of the former Bedok Reservoir HUDC Estate. Firstly, the privatisation was carried out in accordance with the procedures set out in the LTSA. Since 1st February 2002, the estate is a private condominium under the ambit of the LTSA. Secondly, the PC acted according to HDB's guidelines on HUDC estate privatisation. It has, in HDB's view, discharged its duties diligently and acted bona fide in the interest of residents. Lastly, the $20 million cost of rectifying the said "defects" in the estate is greatly exaggerated. The blocks in the estate were certified to be structurally sound during HDB's inspections in April/May 1997 and in April 2001. With privatisation, the maintenance and management of the estate are the responsibility of the MCST.

Mdm Cynthia Phua (Aljunied): Two supplementary questions, Sir. Some residents are concerned that their apartment values have dropped because of the bad publicity. Would the Minister agree to goodwill repairs of some of the defects? After all, in response to repeated requests by BG George Yeo and the Pro-tem Committee before privatisation, HDB did agree to carry out goodwill repairs at the end of 2001.

Second question: after privatisation, some residents have been led to believe that under the HUDC Act, the residents of Waterfront View should have been required to pay only $1, instead of about $20,000 for the privatisation. Can the Minister clarify this, please?

Mr Mah Bow Tan: Sir, it is correct that HDB had, arising from some strong representations made by the MP for the area, BG George Yeo, as well as the PC - this was sometime in March and April 2002 - to carry out some goodwill repairs to the aprons at some of the blocks in his estate. This was, notwithstanding the fact that, as I said earlier, the maintenance and the upkeep of the common areas and the aprons were under the responsibility of the MCST by then. However, with the commencement of the law suit by some residents on the privatisation process, it is best for HDB to wait for the outcome of the law suit before taking any further action. Any goodwill repairs would, of course, have to be considered in the light of the recent complaint of defects by the MCST.

As for the MP's second query about the payment of the conversion fee, whether it should be $1 or more, let me clarify that there are two kinds of HUDC estates. The first type of HUDC estates are the estates that were built under Phase 1 and Phase 2 of the HUDC programme. The second type would be under the next phases, Phases 3 and 4. The HUDC Housing Estates Act applies to flats in HUDC Phases 1 and 2 estates. These estates were built and sold in the 1970s by the former Housing and Urban Development Company (HUDC) Private Limited. Under this Act, the flat lessees own the common property as tenants-in-common.

Waterfront View is one of the HUDC Phases 3 and 4 estates, and these estates were sold by HDB in the mid-1980s under Part IV of the Housing and Development Act (or H&D Act), which is different from the HUDC Housing Estates Act. The HUDC Housing Estates Act does not apply to Waterfront View. The residents of Waterfront View did not own the common property before privatisation. So, as part of the privatisation exercise, the residents have purchased the common property from HDB and they now own it as tenants-in-common. The cost of this transfer of common property at Waterfront View is not at the nominal sum of $1, as provided in the HUDC Act. It is $18,992.65 per flat, inclusive of stamp duty. Residents of the estates will also have to pay other costs that are associated with privatisation, such as processing fees, which will bring the total cost of conversion to about $20,000. This, I must add, is lower than the estimated cost of $25,000 which the residents were informed of at the commencement of the privatisation exercise.