Saturday, March 10, 2007

Singapore. The HDB rip off. Part 2.

Ladies and Gentlemen,

Let me tell you the ruse that is happening. How the PAP rips you off by giving you a HDB flat.

Almost everybody lives in a HDB flat, which is government built. First Lee tells you that it is subsidised. But when asked for building costs, they are either not provided or the figures are altered. So in fact when Lee tells you that it is subsidised, there is no way, one way or the other that you will know the veracity of that statement. Also the Singapore media is state controlled. It does not engage in investigative journalism. It will not tell you what you should know.

What I am trying to get at is this. These flats are not subsidised. Each time the HDB sells you a flat, Lee's government and all the government linked PAP supportive contractors of his, all make money. At the end, you lose, and Lee wins. He gets your money. You agree to pay between $200,000 to $500,000.00 in instalments to the HDB, the state organ responsible for these flats for 10 to 20 years or more of your life.

Lee Kuan Yew has now got you on a leash. He has got your down payment that you paid and each month, he gets your instalment payments. If you do not pay, you will be thrown out on to the street. No mercy. Each month upon month, he collects your instalments.

Second, these flats are leased on 100 year leases to you. You do not own them. You are merely the lessee. The lessor is Lee Kuan Yew and the HDB. As I said in the last post, this flat is a depreciating asset. Each year passing, the value of the flat decreases with time. The less time left on the lease, the less it is worth. If you want to sell it after about 10 years, it will be worth even less than the time you bought it. After about 20 years, with 80 years remaining, the flat loses even more value.

So if you want to sell it after say 20 years, it may be worth only about half what you have purchased it for. You would have actually paid much more over the years than what you receive at the sale. Again, you are the loser. Lee Kuan Yew has won again. It is after all an item which loses value over time because it is leasehold, not freehold.

It may feel good to receive a lump sum when you sell it. But any way you look at it, you are again the loser. You have to stay somewhere. So you have to purchase another HDB flat. From the proceeds of the sale, which mind you is less than you actually paid for the first flat over the years, you put down the down payment for a new HDB flat, keeping the rest of the money for yourself. Now you find that the prices of HDB flats have risen higher than when you bought your first flat 10 years ago. You sign the lease for your new flat, and you are stuck for another 20 years on the new lease, which price is much higher now than 10 years ago. Now, Lee Kuan Yew and the HDB collects more money each month from you. They profit and you are stuck in a never ending obligation to keep paying even more and more, each month for several years, for your HDB flat.

That is not all. There are various clauses in your HDB lease agreement that gives all sorts of powers to the HDB to re-possess your flat. However unjust or unfair these terms are, which are all in favor of the HDB and against you by the way, there is nothing you can do. All the judges and courts are beholden to Lee Kuan Yew and his government. If you sue them, you will lose. That much is certain. So don't waste your time trying.

What happens in the end is that you never get any financial benefit for having paid so many years for that HDB flat. You will never see any money to speak of and in any case it is a depreciating asset and eventually it will be worthless. The sad news is, no matter how old or how incapacitated you are, you must continue paying Lee Kuan Yew and his HDB for the flat that you are obliged to live in, as other private property is beyond your means anyway.

In the end, the truth is the flat is provided to you for you and your family to live and protect yourself from the elements, merely for shelter, for which you are bound by the force of Lee's law to remain paying money to Lee and the HDB until you die. That is the sad truth of the Singapore housing system. Do not be fooled into believing Lee Kuan Yew when he says that the HDB is a financial asset for you. Not an asset at all my friends. You will get nothing out of it. It is only a place to live as long as you keep paying the instalments.

Elsewhere, a house is a house, a flat is a flat. It is really yours for ever. Not a 100 year revocable lease. It is an appreciable asset. It is the same in UK Australia Canada USA all over the world. All over the world, because of currency losing value over time, real property always increases in value. The house that I purchased some years ago is worth much more than what I purchased it for. Eventually when I retire, which I doubt, it will be worth even more and more. People with excess money can invest in various houses, all appreciating in value over time. This is what is meant by freehold. No one would ever think of buying a house leasehold.

So my dear friends, take Lee's words and those of the Straits Times with a pinch of salt. What they say is, so to speak, double talk. Saying one thing and meaning another. You know what I mean. You gain nothing with the HDB flat you purchase. In fact it is an albatross around your neck until you die. This is not something you will hear from the Straits Times.

Gopalan Nair
39737 Paseo Padre Parkway, Suite A1
Fremont, CA 94538, USA
Tel: 510 657 6107
Fax: 510 657 6914 EMail:


Anonymous said...

Dear Sir,

Excellent article. You forget one point. The value of the HDB flat is at the mercy of the HDB accessors. You are required by law to valuate your rented HDB flat before selling, so your selling price is at their mercy. Even if you were to pay 500k for a flat and spend another 100k on renovations, when it comes time to sell, if the HDB assessors say that your flat is worth 400k, you will not be able to refute that and will be forced to sell at the price. If you choose to sell at the price higher than the valuation, the buyer would have to pay the difference by cash, which makes it extremely inconvenient for the buyer and chances are, you will lose the sale unless you agree to sell at valuation.
At the end of the day, you will lose be you the seller or buyer.

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