The answer is actually straight forward.
The property or land goes back to the land owner; which is usually the government.
For the Tiong Bahru properties, since the land belongs to The Housing Development Board (HDB), the properties will be returned to the HDB when the lease runs out.
Interestingly, most buyers had mistakenly assumed our government will compensate the home owners with a replacement flat or through some cash payout at the end of the lease.
That is a wrong perception.
There is no residual value after the lease runs out.
Our government is not obligated to pay anyone anything after the lease expires.
If our government so decides to compensate these owners, it is really their prerogative and it is not an obligation on their part.
The lease system works somewhat like a Tenancy Agreement.
After the Tenancy Agreement ends, other than returning the security deposit back to the tenant, the Landlord is not obligated to pay or incentivise the tenants to move out.
Our government tends to favour leasehold land or property titles as it gives them the flexibility in re-allocating land to meet socio-economic needs.
Not all leases run its due course.
Some leases get topped up mid way before it expires.
Others are not so fortunate.
The New Paper reported some pockets of properties within Singapore with very short leases left and it seems that they will never get topped up at all.
We are living on borrowed time
Hard to get bank loan
Residential (landed) leases rarely extended
As a Tiong Bahru resident reading the above report, it was as if I’ve time travelled into the year 2054.
Some on the problems highlighted in “We are living on borrowed time” may eventually replicate itself here at the future Tiong Bahru.
Just imagine, 40% of our conserved buildings will be used as temples, the other 40% will be used as workers’ quarters while only the remaining 20% are owner occupied.
Before you get too pessimistic about the fate of Tiong Bahru, hold your horses first!
If you have read the report carefully, you would have noticed the difference.
Tiong Bahru is a low rise conserved apartment while those in the reports are “landed” houses. (It is the landed type of properties that are seldom renewed)
So there might be some opportunity for the lease to be topped up sometime down the road.
So how can we start the ball rolling in the right direction?
Will this top up lease exercise be a government led initiative or will it be a resident led initiative?
Since the lease may be extended only if the proposed use and tenure are aligned with the Government's planning intention, what can the residents of Tiong Bahru Estate do to increase the probability of getting the lease topped up sooner?
Do we really need to change for the sake of changing so that the lease will be topped up?
Can't a lease be topped up just by staying the same?
I’ve got so many questions with no answers at all.
However, I remain hopeful that residents in Tiong Bahru could be the wave makers in our leasehold landscaped country.
We will eventually figure out something and pave a way for other leasehold properties to follow.