Renewal and the decision to leave
Mr Speaker, I support the principle of lower collective-sale thresholds for older developments. Owners facing rising maintenance costs and major repairs should have a workable route to renewal.
However, lowering the threshold also allows a smaller majority, through the statutory process, to require unwilling owners to sell their homes. Parliament must therefore consider the safeguards that should accompany that change.
Last September, I raised questions around issues of voting fairness and replacement housing under the forthcoming Voluntary Early Redevelopment Scheme, or VERS. The decisions we make on this Bill will in all likelihood also inform how we approach similar questions in public housing too.
What renewal will the change deliver?
First, the Government should explain what renewal it expects these lower thresholds to deliver.
The Bill lowers the consent threshold to 70% for developments from 40 to under 60 years old, and to 65% from 60 years onwards. What evidence supports these figures, and which developments are likely to be affected?
The recent debate over Maju and Gilman forests has shown how much Singaporeans care about the natural spaces around them. The proposed western island has raised concerns about our marine habitats too. As we plan for growth, we should examine how much more we can accommodate on land we have already developed, before accepting the loss of places that would be difficult to replace.
That gives us a strong reason to make urban renewal work. Redeveloping ageing developments can provide more homes where infrastructure already exists and may ease pressure to develop other land. But securing enough signatures is only part of the task; an estate still needs a purchaser willing to proceed on acceptable terms.
Has the Government assessed how far lower consent thresholds alone can encourage urban renewal? Increasing plot ratios or building smaller units may help make a redevelopment viable, but there are limits to the density our neighbourhoods can accommodate and how small we should expect homes to become.
New private homes are already launching at eye-watering prices per square foot, even well outside the central region. How much further can we expect homebuyers to stretch to make redevelopment viable?
Where a project needs selling prices that buyers cannot afford, developers may offer existing owners less or decline to bid altogether. What wider approach does the Government envisage for ageing estates that cannot attract a viable redevelopment? Will this include support for major refurbishment where rebuilding is unsuitable?
The cost of moving
Second, a successful sale can still leave a household struggling to afford the move.
Owners may have good reasons to support a sale, whether they want to avoid major repairs, move to a more manageable home or realise the value of their property.
Under the existing safeguards, owners approve the collective sale agreement, including the reserve price and apportionment of proceeds. The process includes public tender or auction, an independent valuation at tender close and scrutiny of good faith. Objectors also have protections against statutory financial loss or being unable to redeem a mortgage or charge.
However, because the financial-loss test is principally tied to the original acquisition cost, an owner may clear that test and the mortgage yet have too little left for suitable replacement accommodation. For an older owner, making up the shortfall could mean drawing further on retirement savings. A younger family with limited savings may need substantial new borrowing, if it can obtain it.
For a household that opposes a collective sale, it may still have to bear these costs despite wishing to remain in its home. I therefore ask whether the Government has assessed how many affected owners could clear the existing financial-loss and mortgage tests yet still face such difficulties? What safeguards does it consider adequate for them?
The Bill also expands the aggregate pool available for certain adjustments to sale proceeds, raising the percentage component from 0.25% to 0.5% while retaining the $2,000 alternative. How was this increase calibrated, and what does experience with the existing mechanism tell us about the difficulties it can address? Does the increase go far enough to address the legitimate concerns of objecting households?
Information before commitment
I ask the Government to consider requiring a standardised disclosure of the likely financial and rehousing consequences before owners sign the collective sale agreement.
Owners should see indicative net proceeds based on the reserve price and apportionment method, with sale costs and relevant mortgage and CPF implications explained. Realistic replacement-housing scenarios should show possible top-ups and the financing or eligibility conditions that affect their options.
Owners also need the relevant maintenance and planned-work costs to compare selling with staying. Since management corporations already hold much of this information, including sinking-fund records, the disclosure should draw on those records to avoid the expense of duplicating work.
The collective sale committee and its advisers could prepare the disclosure using a prescribed format, obtaining independent input on material assumptions where needed. The Government should keep the scope proportionate and examine the additional cost before deciding what to require.
The figures would begin as estimates, which the committee and its advisers should update when an actual offer becomes available. Owners should be able to seek advice independent of the bidder about how those figures apply to their circumstances, while keeping their household finances confidential.
With this information, owners could reconsider the reserve price, seek more time to move or decide against launching a sale.
There will also be households whose difficulties require support beyond better information. My colleague Ms He Ting Ru will develop that issue and its implications for urban renewal.
The implications for VERS
Mr Speaker, when I asked about VERS last September, I raised the position of seniors who expected to remain in their flats for life. How would we protect those who might have to draw on retirement savings for replacement accommodation? How would the needs of residents who disagreed be met if a majority voted to proceed?
The Minister for National Development agreed that voting required careful consideration because the stakes were higher than in an upgrading exercise, and said that relocation options were being studied.
The Bill before us puts a closely related decision in Parliament’s hands: how far to lower the barrier to renewal, and what safeguards should accompany the greater power of a majority to require others to leave.
VERS will involve public funding, housing subsidy and state land, so this Bill does not settle its eventual rules, as there are different considerations at play. But the principles we accept here will nevertheless be instructive when we consider that scheme.
In particular, the concern I raised last September about affording a replacement home also arises under this Bill. A majority may favour renewal while some of the households required to move face substantial new debt or a draw on retirement savings. How we address that difficulty here will help establish what Singaporeans can expect of future renewal schemes.
Parliament should therefore scrutinise these lower thresholds together with the protections for affected households, conscious that our decisions will have implications beyond the private developments covered by this Bill.
Conclusion
Mr Speaker, I ask the Government to explain whether the safeguards accompanying these lower thresholds adequately protect unwilling homeowners, and to consider the disclosure requirement I have outlined.
As Singapore’s housing estates age, and as more competing demands for limited land and the needs of the environment come to the fore, we will face more decisions about renewal and the people it requires to move. We should take care now to establish a fair approach that can guide those decisions, including when we return to VERS in the coming years.
