Speech by SMS Sim Ann on Adjournment motion "Selective En Bloc Redevelopment Scheme at Ang Mo Kio Avenue"

Jan 9, 2023

Mr Speaker, Sir, Mr Leong has raised the issue of the Ang Mo Kio SERS by submitting a Petition to the Public Petitions Committee, and MND as well as HDB had replied to the issues that he has raised and have also sent memoranda to the Public Petitions Committee several times. He has raised some issues again and I would like to take this opportunity to recap what has transpired in the case of the Ang Mo Kio SERS.

First of all, SERS compensation has never been intentionally pegged to the price of a new flat of similar size, in a similar location, on a fresh 99-year lease. It has not been pegged or designed this way, although in his speech, Mr Leong has sought to make it so.

How does it come about that a flat that has, say, 70 years left on its lease can be worth more than a similar flat, in terms of size and location, with a full 99 years to run?

This is largely because the new flat on a 99-year lease comes with Government subsidies, which are so substantive that after netting off some additional financial support from the SERS grant and the payment of reasonable expenses by HDB, eligible buyers can actually pay less than what a similar flat with 70 years left would fetch on the resale market.

During earlier SERS exercises, the flats that were acquired were generally younger, such that most unit owners would be able to afford a subsidised replacement flat of similar attributes on a fresh 99-year lease.

The compensation framework was based on independent assessment, which in turn was based on market value. It was not pegged to the subsidised price of new flats, nor designed to create a windfall. It so happened, during past SERS exercises, that the outcome was quite advantageous for most flat owners, because the age of their flats was not so old.

A different outcome would occur if the age of the flats involved in SERS were older. Because a flat with, say, 57 years left, would fetch a lower value on the resale market than one with 70 years left. And this was what happened in the case of the Ang Mo Kio SERS exercise; and would, in fact, be the case in future SERS exercises if the flats involved are of similar vintage.

What did Government do in this case?

First, the Government has maintained consistency in our approach with previous exercises. This is quite in contrast with the picture that Mr Leong was trying to paint which is that somehow, an epochal moment was made possible without the Government admitting so. I am afraid Mr Leong is painting quite an incorrect picture here.

In addition, the Government also listened to the residents and once we heard their key concerns, we introduced flexibility to meet their needs by offering more options, such as the 50-year leases, as well as the Lease Buyback Scheme for seniors and allowing flexibility to apply for the residents to apply for a site, that is different than the original designated replacement site at Central Weave at Ang Mo Kio.

So, we reject the characterisation of lack of empathy. We have been walking the ground and we have also been listening to residents. While we have maintained our approach towards the valuation of flats, we have also introduced flexibility after listening from the residents and also the representations of their representative, Ms Nadia Samdin.

And as a result of that, 99% of flat owners need not top up to purchase a similar type flat with a full 99-year lease or a similar size flat on a 50-year lease. I feel that we need to repeat this. Ninety-nine percent of the flat owners who were involved in the Ang Mo Kio SERS exercise do not need to top-up to purchase a similar type flat with a full 99-year lease or a similar size flat on a 50-year lease.

So, the Government, in determining the compensation for SERS flats has been consistent in applying valuation principles that are well-established. In addition, we have been giving our SERS households considerable support. All these have been enumerated in our public communications and I feel that it is not necessary for us to repeat that here.

Mr Leong then goes on to characterise what has happened in the Ang Mo Kio SERS case as one that is due to an effect of diminishing leases and then to use that to shape certain expectations of the public of the VERS scheme. I feel that it is important for us to make very clear here.

I have explained why residents need to top up when they swop a 57-year lease for a new 99-year lease. This was also made clear during our public communications with our residents in Ang Mo Kio but as well as in response to the public Petition. And I believe that Mr Leong acknowledges that.

However, it seems that he does not prefer this outcome. That does not make it an unfair one.

SERS is not meant to extend a decaying lease for free to 99 years. I have mentioned that. That is not the basis upon which SERS compensation is determined. It is determined by a fair, independent assessment and that, it turn takes reference from market value.

Nor is VERS. VERS, like SERS, is not meant to extend a diminishing lease for free to 99 years. The alternative to SERS or VERS is for the residents to stay in place until their lease runs out, at which point they would have to find a new flat on a new lease.

So, I believe what Mr Leong is doing here, is to shape certain ungrounded expectations of VERS which are at odds with what we have shared so far.

The details of VERS have yet to be announced but the Government has already made clear that the terms for VERS will not be as generous as for SERS and that there are no replacement flats. So, I think if we examine what Mr Leong has been doing, I think he has been reshaping people's expectations of the scheme and I cannot help but wonder why he is doing so.

Be that as it may, it does not seem very inconsistent with what Mr Leong has been doing because, as I have explained the SERS scheme compensation was not designed for flat owners to be able to purchase a same size flat on a fresh 99-year lease in a very similar location. But Mr Leong has painted it as the objective. In his speech, he characterises what has happened in Ang Mo Kio as some threshold having been crossed. And I think what Mr Leong is doing here is blurring the distinction between a market expectation and a policy commitment.

We can understand in the case of SERS that residents or flat owners may hope for more compensation. We can understand if they have formed these expectations based on the experiences of previous flat owners who have gone through the SERS exercises.

But this cannot be the case for all SERS exercises and we have explained that.

So, I think that far from the Government being disingenuous, far from the Government having been non-transparent or non-empathetic to ground concerns, I would put it, Mr Speaker, to the House that it is Mr Leong who is being disingenuous in blurring the distinction between a market expectation and a policy commitment, and also shaping expectations of a policy whose parameters we have given some outline to, but he has shaped it the other way. And I can only wonder at his purpose for doing this, Mr Speaker.

I am mindful that Mr Leong has been making various arguments – in our opinion erroneous arguments – outside of the House with regard to the valuation and the pricing of BTO flats and also by extension, the proper use of national reserves. I also believe that we will have an opportunity to debate fully in this House on these matters.

But I hope that instead of conflating issues, confusing issues or quite deliberately misleading the public by shaping ungrounded expectations of schemes, creating goalposts as it were, I hope that Mr Leong will engage in the upcoming debate responsibly. To do otherwise makes it harder, not easier, for us collectively to balance the needs of Singaporeans and I am talking about the current generation as well as the future generations.