Residents' support, compensation will be key to VERS success, experts say

CNA

2 days ago

SINGAPORE: Winning over residents will be a key challenge as the government develops the framework for the Voluntary Early Redevelopment Scheme (VERS), experts said.
While the scheme is a proactive step in addressing the issue of decaying public housing leases, they noted that its success may be hindered by the varied needs and concerns of residents.
The analysts were reacting to comments by National Development Minister Chee Hong Tat, who on Sunday (Aug 10) laid out a timeline for the development and implementation of VERS.
In an interview with the local media, Mr Chee said the government aims to work out details of VERS – such as how to identify potential sites, ensure enough homes are ready in time and offer 'fair' packages for affected residents – within its current term.
Once policy parameters are in place, VERS will be piloted at 'a few selected' sites, likely from the first half of the next decade, he said.
VERS, announced in 2018 by then-Prime Minister Lee Hsien Loong, allows the government to buy back Housing and Development Board (HDB) flats nearing the end of their 99-year leases, compensate residents and redevelop the land.
The scheme is offered to selected precincts when flats are about 70 years old. Unlike the Selective En bloc Redevelopment Scheme (SERS), which is compulsory, VERS requires residents to vote. And as the flats will be older, VERS may have 'less financial upside' for residents, Mr Chee said.
SECURING RESIDENTS' BUY-IN A CHALLENGE
Professor Sing Tien Foo, provost's chair professor of real estate at the National University of Singapore's (NUS) Business School, said: 'VERS could help alleviate lease decay issues, especially when leases are shortened and it becomes difficult to find interested buyers.'
The scheme offers home owners a way out of this dilemma, he added.
However, Prof Sing noted that not all residents may support the scheme, which depends on collective approval.
'The collective action to secure buy-ins will be harder to organise when more residents are involved. Striking a balance and making trade-offs will be crucial at the policy formulation stage for those evaluating policy design,' he said.
Dr Lee Nai Jia, head of real intelligence at PropertyGuru Group, said past SERS exercises showed that relocation can stir strong emotions. 'Even with substantial financial incentives, not all are willing to move, and with lower incentives, securing broad agreement may be more challenging.'
Older home owners may face greater difficulty relocating and need higher compensation, while newer home owners may be reluctant to leave because of emotional or financial investments in their homes. Others may embrace the opportunity for a new flat with modern amenities.
Dr Lee added that a framework may be needed to mediate and balance these differing views, given the diversity of home owner profiles in mature estates.
ERA's key executive officer Eugene Lim raised concerns about lower compensation compared to SERS. 'Some older owners may worry about being priced out of replacement homes and, as a result, may be reluctant to participate in VERS, potentially leading to unsuccessful exercises,' he said.
'VERS is important in addressing the impact of lease decay, but its execution is an uphill task given the need to meet the diverse needs of all owners. As such, we may not see a high success rate,' said Mr Lim.
To improve uptake, Mr Lim suggested giving residents priority in selecting replacement homes within their current neighbourhoods.
Mr Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc, said that attractive compensation packages, clear redevelopment timelines and transparent rehousing options would be key.
'Communication will be key as residents need clarity on the benefits and trade-offs to make informed decisions,' he added.
BTO CHANGES MAY BE GRADUAL
In his first sit-down interview with the media since taking over the national development portfolio in May, Mr Chee said the government is also reviewing the eligibility age for singles to buy Build-to-Order (BTO) flats, along with income ceilings.
Changes will be introduced at an 'appropriate time', with supply readiness being a key factor.
Singapore plans to launch around 55,000 BTO flats from 2025 to 2027 – 10 per cent more than the earlier target of 50,000. Over a 10 to 15-year horizon, at least 80,000 new public and private homes will be built, according to the Draft Master Plan 2025.
Currently, the BTO income ceiling stands at S$14,000 (US$10,877) for families and married couples. Singles can only purchase BTO or resale flats from age 35.
Experts said a review is timely, as the income ceiling was last adjusted in 2019 and both incomes and home prices have since risen.
Dr Lee from PropertyGuru Group noted that first-time home owners are more likely to exceed income limits due to later marriages, and many singles now wish to live independently.
The government's review reflects an effort to align housing policies with changing demographic patterns and aspirations, said analysts. 'These potential changes signal the government's willingness to adapt policies in line with social needs, while balancing affordability and equitable access,' said Mr Sandrasegeran.
HOUSING SUPPLY STABILISING
Experts said tweaks to eligibility rules are more feasible now, given stabilising housing demand. NUS' Prof Sing pointed to the fall in median first-time application rates for three-room and larger flats – now at 1.4 times in the July BTO exercise, down from 4 to 5 times during the pandemic.
The government is also ramping up supply of BTO flats with shorter wait times. About 4,500 such units will be launched this year, up from 2,800 in 2024. From 2026, around 4,000 flats with shorter waits will be released annually – one-third more than the original target.
Dr Lee said the move helps establish a steady pipeline to meet demand from both couples and singles.
Still, any policy shift will likely be gradual. 'The government is aware that this will lead to higher demand for BTO flats and may calibrate the changes based on how much supply it can introduce in the short term,' said Mr Lim.
On the possibility of lowering the BTO eligibility age for singles, Huttons Asia senior director of data analytics Lee Sze Teck said it may not happen soon, given recent changes already made to singles' access to public housing.
Since October, singles have been allowed to buy two-room flexi flats in any location. In July, they were also included in an enhanced Family Care Scheme, which prioritises applicants seeking to live with or near parents.
These changes have already led to strong demand for two-room flexi flats, said Mr Lee. 'I think a bit more time will be needed to let the application rates stabilise before they review further changes,' he said.
Prof Sing added that any easing of the minimum age could be done in phases to ensure affordability. He also suggested exploring policy options that make it easier for singles who marry later to upgrade to larger flats.
'The policy should not be seen as a barrier to family formation. Some individuals would still aspire to find their partners and get married, but the decisions were delayed due to various reasons,' he said.