Response by SMS Sim to Mr Leong Mun Wai's motion for adjournment on "Selective En-Bloc Redevelopment Scheme at Ang Mo Kio Ave 3" on 9 Jan
Jan 9, 2023
Mr Speaker, Sir.
2 Mr Leong:
a. Questioned the valuation method used by HDB in the SERS exercise. He claims that as a result of the method of valuation by HDB of the SERS site and the replacement site, many of the affected residents are expected to pay for large top ups for their new replacement flats
b. Asked for a waiver of the Resale Levy and full reimbursement of stamp and legal fees for the affected residents;
c. Asked for an ex-gratia payment to affected residents to help defray renovation costs and for such a sum to be adjusted for inflation and other factors; and
d. Asked for a moratorium on SERS until such a time that a review on SERS is conducted and the findings and recommendations be made for the Parliament to be deliberated
3 SERS was introduced in 1995. Under SERS, the Government acquires selected HDB blocks with higher redevelopment potential and compensates them based on the market value of their flat as at the time of the SERS announcement.
4 The valuation process for flats acquired under SERS is transparent and independent.
a. The market compensation is assessed independently by licensed private valuers in accordance with well-established property valuation principles.
b. Flat owners who disagree with the valuation have recourse to neutral adjudication. To date, none of the flat owners have lodged an appeal with the Appeals Board (Land Acquisition).
5 Whether residents need to top up depends on the attributes of their existing flat and the attributes of the replacement flat they choose. This is not the first time residents in a SERS exercise need to top up to buy a replacement flat of same type. For example, in the West Coast SERS exercise in 2016, residents choosing the replacement flat at Clementi Avenue 1 had to top-up for same-type flats.
6 However, the key difference for the AMK SERS exercise is that the existing flats acquired in this exercise are generally older than those of past SERS exercises.
a. For past SERS exercises, the flats were generally younger at the point of SERS announcement, with around 70 years of lease remaining.
b. In comparison, the flats for the Ang Mo Kio Ave 3 SERS exercise only have around 57 years left on their lease as at SERS announcement.
7 Even so, residents affected by SERS are given additional help in several ways.
a Eligible households buying a replacement flat will receive a SERS grant of up to $30,000.
b. SERS flat owners will also receive payment for reasonable expenses, comprising a removal allowance of $10,000 and payment for stamp and legal fees for buying a replacement flat equivalent in value to the SERS flat
c. Flat owners have various possible rehousing options.
i. They can purchase a new flat at the designated replacement site nearby at Ang Mo Kio Drive, at a subsidised price frozen at the time of the SERS announcement, or apply for a subsidised flat under the Build- To-Order (BTO) or Sale of Balance Flats (SBF) exercises with priority, or open booking of flats.
8. The Government has listened to feedback from AMK residents and exercised further flexibility to meet their needs
a. HDB offered Ang Mo Kio SERS residents the option to apply for a BTO flat at Central Weave @ AMK with their SERS benefits and enjoy 10% priority allocation, though the Delivery Possession Date (DPD) for Central Weave @ AMK is later than that of the SERS replacement flats.
b. For this exercise, we have also made available additional options for seniors.
i. Those aged 45 years and above at the point of the SERS announcement have the option to purchase a new flat at the designated replacement site on a 50-year lease option.
ii. Seniors aged 65 and above have an additional option of taking up the Lease Buyback Scheme (LBS) on their existing flat, and buying a new replacement flat of the same flat type on a short-lease.
c. As a result, an overwhelming majority of the residents in this exercise do not need to top up for a similar type, 99-year lease flat that is slightly smaller, or a similar size flat with a 50-year lease.
9 On top of the resale levy concessions, SERS flat owners receive a sum of money to offset the stamp duty and legal fees for the purchase of a replacement flat equivalent in value to their SERS flat.
10 HDB reviews the entire benefits package of each SERS site holistically to make sure the policies and benefits remain relevant, meet the needs of residents, and take into consideration the prevailing circumstances.
11 The Government prices flats based on affordability, not based on cost. HDB assesses the market valuation of each flat, and applies generous subsidies to ensure that the flat is affordable.
12 HDB’s development losses increase when subsidies are higher, as HDB collects less proceeds from the sale of new flats. HDB’s development losses are funded through the annual Budget, via revenue sources including taxes and the Net Investment Returns Contribution (NIRC). Ultimately, higher development losses have to be funded by either taxpayers or from our investment returns. Again, Mr Leong’s calls to draw on more of the reserves would mean less investment returns for the future, or increasing the tax burden for future generations.
13 By objective measures, we have kept BTOs affordable for buyers. And we will continue to do so.
14 We understand that SERS residents are involuntarily displaced, and that for some, the intangible value that flat owners have for their homes may not be captured in the fair market value compensation.
15 We have listened to the affected residents in AMK, through direct channels as well as through the Honourable Member Ms Nadia Samdin. We have set out new options, in response to their needs, with the result that 99% of residents no longer need to top-up. This seeks to achieve an equitable balance between fiscal sustainability, helping to safeguard resources for future generations, while addressing the concerns of the SERS flat owners.
16 Residents have seen the compensations for their flats, and are currently considering the rehousing options to best suit their needs. About 1 in 5 have already applied for a new flat with priority, while others may apply for a new replacement flat with assured allocation at Ang Mo Kio Drive.
17 We know from our interactions with AMK flat owners that some wish the compensation was higher. We can understand if they had formed their expectations based on the experiences of flat owners in earlier SERS exercises. I have explained why not all of these expectations can be met, and how HDB has sought to address ground needs.
18 What Mr Leong is trying to do is to blur the distinction between a market expectation and a policy commitment, to reinforce erroneous arguments he has been making outside this House about housing affordability and the use of the Reserves.
19 Mr Leong’s claims are not borne out by the AMK SERS experience. It is not the case that:
a. affected residents are compelled to pay for large top-ups for equivalent replacement flats; or that
b. HDB has valued or priced flats unfairly or unreasonably
20 I hope that Mr Leong will marshal his case better when we engage in a full debate in this House on housing affordability and the proper use of our National Reserves.