Leasehold HDB Flats. Leasehold.

Alvin, the gentleman who hosted our first Singaporean gathering (2 Malaysians joined actually) did a short comparison of housing related costs during our conversation. He was quite detailed and included all fees and bills. The conclusion was that it is about the same costs living in Perth and Singapore.

I'll leave that as that because I have no property in either Singapore or Perth to have the figures to countercheck Alvin's calculations. I pointed out a major flaw in our comparison. He was comparing his 600 over sqm freehold house in Harisdale against a 4-5 room 99 year lease HDB in Singapore. The figures will be a startling difference should we compare Perth government public homes vs the HDB or a private house in Perth vs a private in Singapore.

That was inconsequential because Alvin's point was about checking if we are better or worse off in terms of the expenditure outlay. We need to live somewhere, whether in Perth or Singapore and we took the most common type of housing as comparison. Fair enough. He was right in that sense.

But it is as clear as the sky that for the same dollar we spent, we are getting a lot more value in Perth than Singapore where property is concerned. A lot of Singaporeans are still confused over the 99-leasehold scheme. Or just apathetic towards it because it doesn't affect them. "Who lives for 99 years anyway?" Or they have forgotten how it works.

I have never put that at the back of my mind. To me, a 99 year leasehold flat is a 99 year rental flat. The agreement of lease is simply a contract that allows you to rent the flat for 99 years unless you break some serious rules. It's no difference from a normal rental agreement.

Mind you though, it is a rather cheap form of rental housing if you do the calculations. A S$300,000 new flat will cost you 

300,000 / 99 / 12 = S$252.00 a month. 

The bad news is, if you take a 30 year loan and include interests of the loan, stamp fees, conveyancing fees and caveat registration fee, your total outlay will work out to be closer to S$436,000 based on a 30 year loan on a 2.6% interest rate.

Your new bill works out to be a S$367.00 per month. Still rather cheap right? I knew you would think so. Indeed it is. That was why Mr Mah Bow Tan said it was affordable and everyone agreed.

To make it even more affordable, some MP guy suggested reducing the length of the lease to perhaps 30 or 60 years. Read about it here. MP guy must be in a wild hallucination mode unless he meant to suggest prices of these flats should be really cheaper - and not proportionately reduced. Otherwise what is the use of selling you 10 oranges for $10 and 3 oranges for $3? Is there really a difference?

Oh yes, you pay less no? Don't be fooled. Chances are you don't die fast enough and outlive your 30 year lease. Where are you going to live after that? Take up another flat? Pay more at the price in the year 2042 then.

It is scary to see what the government is trying to do. Our loans have been increased from 15 years to 20 to 25 and now 30. We couldn't possibly take a 40 year loan could we? The government knows that the limit is somewhat reached. The only way is to increase wages.

But no, they are thinking of reducing the length of lease. Classic. Let's do it then. Let's see how low can our lease length go. It's a no brainer this kind of system is not sustainable. Just like increasing our population to boost GDP growth. How many people can we squeeze into the island? If we continue to adopt these push-your-backs-against-the-wall policies, there will be a day when the impending damages are irreversible even if the government realised the folly of their ways.

You ask, "Why am I allowed to sell my flat if I don't own it?" Well you are not selling your flat. You are simply transferring the lease of the flat to another person. HDB does not lose anything. They will have gotten paid the full lease amount by the time that 99 year lease is up. So long as someone is paying that lease monthly till the end, it doesn't bother them a bit. The last guy who left standing when the music stops will get it.

True, there are enbloc schemes going on but if you think it'll happen to you, I wish you luck. When a lot of the older flats run down to the last years of their leases, or rather the last years of their building life (I don't think they are built to last for 99 years anyway), I wonder how many affected people will be relocated new flat with a new lease with nothing to pay for. If that happens, that's as good as a life hack in Singapore. You get freehold housing for the price of a leasehold. Wow. We'll wait and see eh.

Well, "If I am renting the flat, how come I can make money out of it if I sell?" Heh. That's a good one. Have you heard of tenants doing a further subletting of the flat that they rented and actually made money out of it? You're doing exactly the same, on a full 99 lease that is. Before heading to the bank, do remember if you buy a flat for S$300,000 and gotten almost a full 30 year loan on it, you don't make a single cent at the end of the 30 year unless you sell for an amount higher than S$436,000. If you manage to sell for half a million bucks, 

Your profit: 500,000 - 436,000 = 64,000
Your yield: 64,000/436,000 = 14% over 30 years, about 0.5% per annum 
(no compounding included)

Pretty sucky yield. And you better hope you can sell it for S$500,000 or higher. Well at least you get your money back. Meaning you managed to get a rent-free living for 30 years. Half a million bucks is a lot of money to retire by fishing and sleeping on the streets.

I prefer freehold land for the same price here. At least when I'm down and out, I can built my tent on it without risking being evicted by NParks Rangers. Hey yeah, I can live entirely on the vegetables grown on it as well, good for days when I can't catch any fishes.


  1. To compare housing related costs, we have to compare apple to apple. It is not relevant to compare the price of a 99 yrs HDB (government subsidised, or so they claim), with a freehold property, wherever it may be in the world.
    But if you were to just compare the fees and bills, HDB cost will be lower.
    For instance, the conservation fees (coorect me if i'm wrong) is about S100-150/mth, utilies maybe $150/mth. Down under, we have to pay a quarterly management fees and water conservancy fees of close to A$1.5-2kk (for apartments), excluding water usage and waste disposals. Just taking this alone, the housing related cost down under is definitely higher.
    But again, this is a comparison between public and private housing.
    If you were to compare private to private, well I pay S$400/mth(which is high as my estate is small) to management here, so the housing related cost is actually not too far.
    Oh, Mr Tharman just commented that we can afford a HDB with S1k/mth income... wonder how??

    1. @ Peck,
      I agree on your views wholeheartedly and have the same opinion that comparing a public housing in Singapore versus a freehold property are poles apart.

      Generally speaking, public housing tend to have lower fees incurred as there are many families in a whole block or several units sharing a common property where the fees you mentioned are equally split.

      Let's not forget that there are also strata fees (if applicable) in properties here in Australia as well which could be similar (or not) to the ones paid in Singapore.

      If discussing on rental of a flat, Australia has a more complicated due to negative gearing, which is currently being debated whether it should be abolished.

      And again, if we sell the property here, the capital gains tax will have a more adverse effect (again, depending on the property and the list of conditions stated by ATO).

      Of course, there are two sides to a coin and I agree that we are all sardine packed in Singapore, it is a very nice change that we have our own sense of space.

      Disclaimer: I am certainly no expert in this and I am not siding the Australian property rules or the HDB. Just my two cents' worth.

    2. Just FYI - There is no property gains tax on your primary residential property. Capital gain tax is only applied on second investment property.

    3. @Alvin, do you know what's the property gain tax for a property owned by a foreigner? Does it depend on which state? Tks

    4. Foreigner as in not residing in Australia or Foreigner as in PR/TR and living in the property?

      Foreigner as PR or TR living in the property as primary residence - No Tax.

      Foreigner as owning the property and renting it out while living outside Australia - Tax for sure. Rate not sure, but you can check from the ATO website.

    5. @Den:

      There are 3 sides of the coin and you are on the third side. I'm on the side that tilts heavily to Perth (note: not Australia but Perth).

      There is no question about it.

      Leasehold vs Freehold.
      A landed space vs a space in the air.
      A big space vs a small one for the same price

      Singapore's public housing will never be value for money against Perth housing no matter which angle I look at it from. Very clear cut

      Negative gearing is not for your first home. It's irrelevant to me now and probably for a very long time. The same goes for tax for capital gain, not crucial for a first home unless I am planning to move elsewhere to return to Singapore.

    6. @ Peck:

      If we want to compare apple to apple, there is no contest. I am comparing what the majority of migrants are dealing with. Housing here vs HDB.

      Bear in mind, I consider leasehold as RENT.
      If we want to compare apple to apple, I'll compare costs of renting a house here in Perth vs the leasehold in Singapore. Water bills for a start, is usually covered by the landlords here in Perth. It'll be a tough fight.

  2. cant compare lal, ours is micky mouse house leh....RM500,000 you can buy a big big house there, here? haiz....i still need to worry can a king size bed can fit in anot.

    ah pooh

  3. seems like you have taken into account the accrued interest in CPF, i.e. interest being slapped on you for using your own money to pay HDB.


    1. I believe i did. based on 2.6%

    2. the 2.6% is what HDB is charging you for the loan of your flat. every cent that you pay HDB using your CPF is also charged interest.

      You can find out more from this thread:

  4. sorry i meant have not.