What is VERS?
The VERS is a new scheme which allows more HDB households to benefit from redevelopment before the 99-year leases on their apartments expire. It is part of a long-term plan to allow the government to progressively redevelop precincts.
Though it sounds similar to the Selective En-Block Redevelopment Scheme (SERS), the terms are less generous as there will also be ‘less financial upside’.
How does it work?
This scheme is voluntary, and residents will have to vote for VERS just like they do for the Home Improvement Programme (HIP). If the residents vote for it, only then will the government but back the flats and redevelop it while the residents can use their proceeds to help pay for another flat.
However, the Government still needs time to work out the details of the scheme, so it will not begin for another 20 years.
Is the government buy-back price worth it?
People are inclined to turn down the offer if the pricing is not attractive enough or if they feel that they won’t be able to afford their next purchase with the proceeds. This buyback might be costly on the government as unlike the SERS, these flats are not going to be resold to private redevelopment at good prices. Thus, even our PM used the term ‘less financial upside’.
Can you sell your older HDB flat at a better rate in the open market?
It really depends. People are generally averse to buying a left with less than 25 years of lease left. Furthermore, you can’t use your CPF to purchase such a flat. Older flats in older estates may not be as attractive to younger buyers. However, you should evaluate the demand for such flats with a property consultant. Another way to determine is to find out if your neighbours are for or against the VERS.
The price point offered by the government may also act as a reference point when you’re trying to sell your house in the open market. Do your research before voting for the VERS.
We still have another 20 years to debate if this is scheme is worth it overall, or not.