HUDC Housing Estates (Amendment) Bill 2012

 

1. Allow me to give some background on HUDC estates and the HUDC privatisation programme before I go through the Amendment Bill. HUDC Estates and Privatisation

2. HUDC flats were built in the 1970s and 1980s to provide a more affordable alternative to private homes, to meet the housing aspirations of middle-income households. HUDC estates were developed under two different frameworks – Phases I & II and Phases III & IV.

3. The Phases I & II HUDC estates were built and sold by the former Housing & Urban Development Company (or HUDC in short) in the mid-1970s. In 1982, HDB assumed the responsibility for the development and management of these HUDC estates. In 1984, the HUDC Housing Estates Act, which we are now proposing to amend, was enacted to allow the Phases I & II HUDC flat owners to take over the maintenance and management of their estates.

4. The Phases III & IV HUDC estates were built and sold by HDB in the 1980s under a different Act, the Housing & Development Act. Like HDB flats, these estates are maintained by the Town Councils.

5. In 1995, HDB announced the privatisation programme for HUDC estates. This was to meet HUDC residents’ aspiration to own private housing and have control over the management and maintenance of their estates. Under this programme, HDB converts the existing flat leases to strata titles under the legal framework of the Land Titles (Strata) Act. HUDC estates must obtain 75% support level before HDB can proceed with the privatisation works.

6. To-date, 17 out of 18 HUDC estates have been offered the privatisation programme. The only exception is the Braddell View Estate.

Braddell View HUDC Estate

7. The Braddell View Estate is one of the six Phases I & II HUDC estates developed in the late 1970s. It was the only estate to be completed in two phases, on two land parcels under two leases each with different expiry dates. The flat owners of both land parcels share common facilities such as swimming pool, tennis courts and a clubhouse. The estate is self-managing under the HUDC Housing Estates Act; there is a corporation (which the Act calls a body corporate) managing and maintaining Braddell View Estate.

8. Unlike all other HUDC estate residents, the residents of Braddell View Estate do not have the easy option of privatisation under existing law because of the different expiry dates in the leases for their estate. Three options were explored. The first is to privatise Braddell View as two separate estates based on the two leases. The second is to reduce the lease tenure of the land parcel with the longer lease to align with that of the land parcel with the shorter lease. The third option is to do the reverse: top-up the lease tenure of the land parcel with the shorter lease to align with the longer one.

9. Over the last few years, HDB has explored all three options with the Braddell View Estate body corporate’s management committee and residents. The first option – to privatise the estate as two separate estates – is not feasible because there are shared facilities straddling both land parcels, and dividing these facilities, as well as shared financial accounts, will be highly challenging. The second option is not attractive because all the owners on the land parcel with the longer lease have to agree to reduce their lease tenure without compensation. The most feasible is thus the third option.

10. To implement this option, the Braddell View residents will need to pay a premium to top up the lease term for the land parcel with the shorter lease so as to align its terminal date with the lease of the other parcel. The Chief Valuer will assess this lease top-up premium. The privatisation of the Braddell View Estate can then be effected through the transfer of the common property and its residual interest in the housing estate by HDB to the owners of all flats in the Braddell View Estate after the HDB obtains a topping-up of the lease for the Estate. Process-wise, the Braddell View body corporate will levy contributions on the flat owners who are the sub-lessees of HDB to cover the lease top-up premium, and pay over to HDB, being the lessor under head State leases, as part of the costs for privatisation before the legal documentation for the estate’s privatisation are lodged with the Land Registry.

11. Currently, the HUDC Housing Estates Act only empowers the Braddell View body corporate to levy contributions from residents based on their respective share values. The Braddell View body corporate’s management committee, representing the residents, has approached HDB to amend the Act, so that the Braddell View body corporate has the flexibility to vary the basis of levying contributions for the levelling-up of lease tenure. Braddell View residents need to have the autonomy to decide how best to apportion the cost amongst themselves, taking into account the potential benefits of privatisation, particularly between residents on the land parcel with the longer lease vis-à-vis residents on the land parcel with the shorter one.

12. The Bill before you today is in response to this request, so that Braddell View residents, like all other HUDC residents, can have the option of privatisation, should they decide to. At this point, I would like to acknowledge the efforts of the current and previous Advisers and management committees of Braddell View body corporate in working with HDB to explore ways to resolve the issue and helping to get the process to where it is today.

13. Sir, I will now move on to the Amendment Bill.

The HUDC Housing Estates (Amendment) Bill

Levying of Contributions and Consensus Level

14. Clause 2 of the Bill amends Section 8 of the HUDC Housing Estates Act to allow the Braddell View body corporate to levy contributions on the flat owners in order to pay HDB the lease top-up premium.

15. Clause 3 amends Section 13(1) to empower the Braddell View body corporate to convene a general meeting to determine the apportionment of the contribution among the respective flat owners for the lease top-up premium. The decision is to be made by way of special resolution. This means a resolution passed at a general meeting against which not more than 25% of the owners of all the flats in the housing estate concerned have cast their votes.

Collection of Premium Before Privatisation

16. The new Sections 13(4), (5) and (6) provide that the Braddell View body corporate must pay HDB the lease top-up premium it has collected and the related expenditure incurred by HDB. Payment must be made within 30 days of HDB’s written request for payment, or within such extended time as HDB may allow, but before the legal documentation for the estate’s privatisation are lodged with the Land Registry. Any sum unpaid by the due date will attract interest.

Conclusion

17. The amendment of the HUDC Housing Estates Act will facilitate the harmonisation of the tenure in the two leases of Braddell View Estate, so that its residents, like all other HUDB estate residents, can have the option of privatisation, if they choose to. Braddell View Estate is the only HUDC estate left governed by the HUDC Housing Estates Act. The amendment has no impact on other HUDC estates. The HUDC Housing Estates Act will be repealed only if Braddell View Estate is privatised.

Martin Koh : +65-86666 944 
Sherry Tang: +65-9844 4400
KEO/ Director
Email: asianprimeproperties@gmail.com
Website: www.asianprimeproperties.com

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