Monetising your property at retirement
For many people, building wealth steadily and preparing for a comfortable retirement are the two most important financial goals in their lives...
More time is needed to fine-tune the details of the newly-announced Voluntary Early Redevelopment Scheme (VERS) for HDB flats such as the price to be offered by the government and whether all public housing will qualify for it, National Development Minister Lawrence Wong told Channel NewsAsia on Tuesday (21 Aug 21).
“It would be rash to rush into details now when some of these things can only happen decades from now. Let’s not get too excited about what is going to be in the VERS package or which flats will get it or speculate unnecessarily,” he said.
On Sunday (19 Aug), Prime Minister Lee Hsien Loong announced several new initiatives for HDB flats. Among them is VERS, which will allow homeowners to vote on whether to sell their HDB flats to the government once the lease nears its end.
Residents can then expect to utilise the proceeds to fund the purchase of a new home, but the scheme will only commence in around 20 years time, once the age of an HDB block hits 70 years.
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“Obviously there is a lot of interest in the details but this is a very long-term commitment and we will have to study how the implementation is to be done in a way that is financially sustainable,” Mr Wong explained.
He revealed the government’s reason for announcing VERS early, even though its particulars are still being deliberated, is to alleviate the worries of some homeowners on the issue declining lease of HDB flats.
“If we were to hold back and only reveal or announce VERS when the details are ready, that might be 15 years from now, so people might be living with 15 years of uncertainty.”
He is also disclosed that the government has been looking into this issue over the last two years.
Queried on whether the authorities will ask the President to use some of the accumulated reserves to finance the scheme, Wong only said that VERS needs to be financially feasible.
“It is a significant fiscal expense and whatever we do we will have to make sure that fiscal arrangements for VERS are sustainable, and do not put a heavier burden on the next generation. So those are part of the details that we are working on.”
More: Can you afford an HDB flat? Check your affordability now.
On the proposal to allow CPF monies to be used when buying HDB flats with remaining leasehold tenure of 30 years, he said the CPF Board needs to complete the study on this first.
Currently, the authorities disallow CPF monies to be used for purchasing HDB units with such tenures, while there are limits on the amount that can be used if the remaining lease is below 60 years.
“I’m sure Singaporeans know that there is balance to be struck (with retirement adequacy) so we are taking in all the considerations and seeing how best the rules can be updated,” Mr Wong added.