En Bloc SERS. Worth the risk for HDB Loan?

Taking on Expensive HDB Loan for Possible SERS En Bloc Flats: Yes or No?

SERS (Selective En bloc Redevelopment Scheme) or more commonly just known as En Bloc refers to when HDB decides to rejuvenate aging estates by buying back the old blocks of flats from homeowners (often at a premium) and providing grants.

Due to this, some homeowners are not taking the remaining lease into consideration when purchasing a new flat, and some are even willing to take on expensive HDB loan to purchase old flats. Let us explore if that’s true here.

Benefits of Being in the SERS Scheme

Here are a few things you can benefits from being a part of the SERS scheme:

  1. Compensation based on the market value of the flat at the time of the SERS announcement
  2. Reimbursement of reasonable expenses in moving to a new place (e.g. removal fees, stamp, fire insurance and legal etc.)
  3. 100% chance of getting a new flat at HDB’s designated replacement site at a subsidized rate
  4. Higher chance of balloting for new HDB flats outside of designated replacement site as 5% of all BTO are reserved for affected SERS owners.
  5. Rehousing benefits grants of up to $30,000 for first and second-time home owners and more

En Bloc Affects Surrounding Flats too

99.co did a research on whether SERS causes flats around it to go up in value too. And their verdict? Yes, it does bring a uplifting effect most of the time on its surrounding flats.

Their theory is that home owners participating in SERS might not necessary wants to move in to the replacement units that HDB has set aside for them and prefers to buy resale or private properties. Hence causing a surge in demand, and eventually, a surge in price.

You can see how attractive this is to flat owners whom have been staying in a flat for several decades yet don’t have the financial capabilities to move out to newer blocks of flats.

But this is also seen as a potential “investment” for others who knows that they are up for a possible huge pay-out if they were to purchase one of these en bloc flats.

But… that’s not necessarily true.

The famous colorful Rocher Centre up for En Bloc SERS

The famous colorful Rocher Centre up for En Bloc SERS

Your Flat Might Worth Nothing at The End of Its 99 Year Lease

Our National Development Minister Mr Lawrence Wong recently put this rumour to rest in his blog post where he warned home owners to not assume that their flat will be selected as part of the SERS when the lease runs out.

Fun fact: Only 4% of HDB flats have been selected as part of the SERS programme since its 1995 launch.

He also mentioned that there a block of flats has to meet several criteria to be eligible for SERS, and some of these includes:

  • Potential for redevelopment: the flats have to be deem under-utilised by the Government and that its redevelopment will bring value to its surroundings.
  • Replacement sites must be available: there must be suitable land nearby to house the current SERS scheme home owners.
  • Government financials: we would assume the government has a planned budget for this scheme every year and that it’s only sufficient for a small selected group of flats.

“We will continue to maintain this strict selection criteria. So please do not assume that all old HDB flats will be automatically eligible for Sers”, said Mr Lawrence Wong.

In the end, although being part of the SERS scheme can be profitable, there is no telling whether a particular block of flat will be selected.

Hence, it would be better to purchase a flat based its remaining lease and on factors that affect your living condition instead of its potential to be en-bloc.