This chapter describes the implementation of housing delivery system in Singapore. There are some countries that adopting BTS system as housing delivery system, which include Australia, Singapore, United Kingdom and other countries. Among these country, housing delivery system in Singapore is chosen to be compared with the housing delivery system in Malaysia because of the location, environment and home-buyers' demand on the houses. Since Singapore is located beside Malaysia, the environment of housing sector is similar as Malaysia. Therefore, the housing delivery system in Singapore is more suitable to be compared with Housing delivery system in Malaysia.
3.1 Brief History
After independence, Singapore was faced with many inadequate to be a viable country since it is only a small island nation with the limitation of land. At the beginning, the country faced many social problems from crime to health issues because of the lacking in good public housing, poor sanitation and high unemployment. In year 1961, the Bukit Ho Swee Squatter Fire, which killed four people and left 16,000 others homeless, is caused by the proliferation of squatter settlements resulted in safety hazards.
To resettle the squatters problems, the Housing and Development Board (HDB) which is set up before independence huge building projects to provide more affordable public housing for the squatters. With the good planning in development of HDB, the majority of the population had been housed in HDB flats (public housing) within a decade. In 1968, the introduction of Central Provident Fund (CPF) Housing Scheme allows residents to use their compulsory savings account to buy HDB flats and caused the increasingly in home ownership in Singapore.
In the 1980s, HDB continued to promote public housing in new towns such as Ang Mo kio. These new housing have bigger and higher-standard than previous housing projects and are served with better amenities. The value of new public housing is increase after the first Mass Rapid Transit (MRT) line began operated in year 1987. This MRT line is connecting between most of the housing estates with the city centre. At the end of 80 century, there are 85% of populations housed in HDB flats. This means that the concept of Home Ownership Scheme employed by HDB achieve their aim and solve the squatter problems.
In 1990s, the government of Singapore is not only continued to provide the new homes to the residents, but they are also put their effort in urban redevelopment strategy.
3.2 Housing and Development Board of Singapore
In Singapore, the Housing and Development Board is the department to manage and control the issue of land management. The Board was established in 1960. The Board had successful built more than 500,000 high density and high rise public housing apartments with necessary facilities before 1985. This achievement of HDB is better than British colonial government's Singapore Improvement Trust which had only completed 23,000 apartments in between 1927 and 1959. From 1974 until 1982, the Board had successful to build and mark the middle-income apartments which become a function after 1982.
Additionally, HDB provided housing estates and associated facilities for more than 80 percent of Singaporeans in 1988. This achievement has been called as urban Singapore's equivalent of "land reform". Since individual ownership would eventually pay for the development while giving them a "stake in Singapore", the Government encouragement of apartment ownership was achieve both economic and "nation building" goal. The HDB also play an active role in promoting the development of construction technology and estate management services. Since the housing industry act as one of the major domestic industries in Singapore, housing development served as an important economic pump primer.
The government had encouraged the home buyers to use their CPF savings to pay for their apartments. The selling prices of HDB flats are determined by building cost, location, ability of the applicants, and the practical limits to government subsidies. Again, the resettlement of housing policies aimed at reasonable payments, minimum readjustment and real improvement in housing conditions. With the consideration of social demand, HDB had paid attention to provide a surrounding to integrating the residents, preserving the traditional Asian family structure, encouraging to society living and encouraging increasing social mobility by providing opportunities for home improvement.
In 1985, the annual capital expenditures of HDB increase to S$4 billion from the starting with capital expenditure of S$10 million in 1960. In the Singapore government's capital budget, there are 40 percent represent the HDB's capital budget that with the funds gained from low-interest government loans. The government determines the selling prices, rent rates, and maintenance charges while the Board expected an annual subsidy of 1 or 2 percent of the government's core operating expenses.
3.3 Housing Delivery System (Housing Programme) in Singapore
In Singapore, the housing matters such as housing planning, construction of public housing, provision of rental units and resale of existing ownership units are managed by HDB. Start from 1960s, majority of Singaporeans chooses to own and live in the public housing. The number of owners of HDB flats is more than tenants since the HDB flats' prices are affordable and it can be purchase by using the CPF. In fact, the tenure of HDB flats is 99 years leasehold, but is not the freehold property.
Normally, these public housings are located in housing estates with schools, hypermarkets, clinics and other necessary facilities. HDB flats can classified into varies types with different layout such as three-room, four-room, five room and executive flats while the living room is considered as one room.
In other countries such as Australia, the public housing is considered as lower standards housing. However, the public housing is different with other countries because the prices of smallest HDB houses can be expensive than privately owned and developed standalone properties. Therefore, although most of Singaporeans live in public housing, but there are very less people situated below the poverty line.
The public housing in Singapore can be delivered in 4 ways, which include:
Build-To-Oder
Design, Build and Sell Scheme
Selective En bloc Redevelopment Scheme
Combined Balloting / Walk-In System
3.3.1 Build-To-Order System
The Build-To-Order (BTO) system is an allocation system of HDB flats which offering a more flexibility in location and timing for flats buyers. This system was introduced to Singapore Housing industry in year 2001. Now, the potential buyers can apply the apartments in where they preferred from specified site launched. However, only the potential buyers who fulfil all the requirements can shift into new HDB apartments. Under the BTO system, the construction will only start to be bided after most of the apartments (65 percent to 70 percent) have been booked.
The BTO system is difference with the previous housing programme implemented in Singapore, which is Registration for Flat System (RFS) or Build-To-Sell mode. Before the implementation of BTO, HDB flats are sold under RFS. However, since the queue of households under RFS did not reflect the real demand on HDB flats, the BTO system was introduced to replace RFS. When the Asian Financial Crisis hit, the queue for HDB flats suddenly disappeared and cause the HDB was left around 20,000 unsold flats during that time. This criteria cause HDB bear the loss and housing industry faced with the downturn during that period.
Nowadays, the BTO system only allow the construction of HDB flats to be built according to real demand (the development started after majority of flats are booked) and respond flexibly to the needs of flat buyers. This can avoid the problem of over-supply of HDB flats and decrease the risk of HDB to bear the loss of over-supply. In other words, the BTO will provide the flats according to real housing market in Singapore. When the demand is higher, the new flats will be constructed more; while the demand is lower the HDB will scale back the flats.
Compare to RFS, BTO will provide the HDB flats in a shorter time. In old RFS, the buyers need to wait 6 to 7 years at its peak period, but now the buyers can getting their flats within 4 years. For the eligible buyers in urgent case, the new quarterly or half yearly sale system allow them to purchase a new-ready-flat with a short period.
Under the BTO system, the eligible buyers can settle the payment of HDB flats with Staggered Downpayment Scheme. The buyers are allowed to pay 10% first when they signing the Sales and Purchase Agreement, and pay 10% of the payment after they get the key. This BTO system is almost similar as 10:90 System implemented in Malaysia, which is also paid 10% payment first when order the house and signing Sales and Purchase Agreement.
The stages of application of BTO system is shown as below:
Figure 3.1 Application Process of Build-To-Order System
(Source: Housing and Development Board, Singapore)
The descriptions of every stages of BTO system is summarised as the table below:
Table 3.1: Descriptions of Build-To-Order system process
(Source: Housing and Development Board, Singapore)
To attract more citizens to buy HDB flats under BTO scheme, there are a lot of unique features introduced by BTO scheme. These features cause a strong demand of HDB flats. The unique features of BTO scheme are shown as Table 3.2.
Features
Descriptions
Assure 3
5 years warranty covering ceiling leakage
5 years warranty of external water seepage
10 years warranty on spalling concrete
In the past, the purchasers are offered a standard 1 years warranties of HDB flats. During this period, any defects of the building are free for repaired.
Materials used
Premium apartment
4, 4A and 5 rooms with the internal area of 90 - 96 sq. m, 101 - 103 sq m and 111 - 120 sq. m respectively are provided with:
Solid timber doors for all bedrooms
Semi-solid timber doors for bathrooms
Polished homogeneous tiles and timber-strip for living room and bedrooms.
Standard apartment
2, 3, 4 and 5 rooms with the internal area of 35 - 45 sq. m, 65 sq. m, 90 - 94 sq m and 110 sq. m respectively are provided with:
Semi-solid timber doors for all rooms
Glazed ceramic tiles for living room and bedrooms (optional).
Optional Component Scheme (OCS)
There are more flexibility and choices for the purchasers to have floor finishes and internal timber doors installed. The opt-in basic are 20% - 30% cheaper due to bulk purchases and less labour charges. However, if the purchaser requires variety of timber or bi-fold door design and better homogeneous tiles or timber skirting, it can opt-out the schemes.
Universal Design (UD)
It including the ramps at main entrance, wider internal corridors, wheelchair-accessible, levelled floors throughout the flats, bedroom and toilet doors, space provision for future installation of grab bars in all toilets, as well as easily accessible switch sockets, telephone outlets and TV outlets.
Ferrolite wall
HDB new patented wall is using ferrocement (similar to concrete but uses less sand) as it contains a steel wire mesh.
A ferrolite wall uses 20% less sand than concrete cement. It is less susceptible to cracking and heat from the sun. It has better sound-insulation capabilities.
Table 3.2: The Unique Features of Build-To-Order Scheme
(Source: Housing and Development Board, Singapore)
The introduction of BTO system brings a strong demand on the HDB flats and making the market of housing development become active in Singapore. Nowadays, the HDB has announced many BTO sites to support the demand of housing. The housing developments in Singapore which adopted Build-To-Order System are shown as Table 3.3. However, the table is only show some of the housing development held under BTO scheme.
3.3.2 Design, Build and Sell Scheme
In the past, the housing development in Singapore is only provided by Housing and Development Board. Start in March 2005, the Design, Build and Sell Scheme (DBSS) was introduced to Housing development sector to permit private developer to develop public housing and create more choices for flat seekers. While preserving most of characterises of public housing, the private developers are allowed introducing innovation in the building and design of multi-storey flats.
Under DBSS, private developers not only involve in construction of public housing, but they also have responsibility to bid the land for the development, designing the flats and the landscape of surrounding, and sell it to eligible purchasers. They can decide the plan, finish, size and unit of arrangement of the flats, and sell it at any comparable price according to market value without any limitation. However, the public housing under this scheme will maintain by HDB after construction.
To encourage Singaporeans to buy their own dream houses, the HDB offers housing loan and conveyance services to eligible flats purchasers in buying houses. To apply the HDB Loan Eligibility (HLE) for DBSS flats, the applicants need to fulfil the requirements which include:-
One of the purchaser should be a Singaporean;
The monthly income of household should not exceeding S$8,000;
never taken two or more HDB concessionary interest rate loans;
have formerly taken one HDB concessionary interest rate loan and one housing subsidy and buying a larger flat type than current flat or the flat last owned (if presently do not own HDB flat);
have formerly taken one HDB concessionary interest rate loan and one housing subsidy and the residential property last disposed off should not a private property;
do not own any private property either in Singapore or overseas;
have not sell any private property within 30 months before date of application for HLE.
Do not own more than one hawker stall or commercial or industrial property in Singapore or overseas;
Operate self-business by own one hawker stall or commercial or industrial property.
According to HDB, the maximum of the loan are determined based on:
Maximum Repayment Period, which is 65 years deduct by the purchaser's age or 30 years, whichever is shorter.
Monthly instalment restricted at 40% of gross monthly income.
Charged at interest rate which will be revised from time to time.
Maximum loan at 90% of purchase price.
After reserve the money to pay registration, stamp and conveyancing fee and CPF Home Protection Insurance Premium, the purchasers can use the available saving in their CPF Ordinary Account to pay all amount of the Valuation Limit (VL) of the DBSS flats.
To encourage potential purchasers to buy flats under DBSS, the flats under this scheme has its unique features, as well as BTO scheme features. The features of DBSS flats are described in Table 3.4.
Feature
Descriptions
Assure 3
5 year warranty scheme covering leakage.
5 years warranty on external water seepage
10 years warranty on spalling concrete
Universal Design (UD)
Include levelled floors throughout the flat, ramps at main entrance, internal wide of corridors, toilet and bedroom doors, wheelchair-accessible common toilet, space provision for future installation of grab bars in all toilets, as well as easily accessible switch sockets, telephone outlet and TV outlets.
Condominium unique design finishing for 2, 3, 4 and 5 rooms
All bedrooms are provided with air-conditioning system.
Living room is polished with homogeneous tiles.
Timber strips flooring for all bedrooms
All bedrooms are provided with floor-to-ceiling build-in wardrobes
All bedrooms are provided with solid timber doors
Stylish build-in kitchen cabinets and fittings
All bedrooms are provided with vanity cabinets and sanitary fittings.
Perks
The eligible first-timer applicants can apply for a CPF housing Grant with the amount $40,000.
No resale levy for second time homebuyers if they are sold at market prices
Construction time is about 3 years.
Table 3.4: The Unique Features of Design, Build and Sell Scheme
(Source: Housing and Development Board, Singapore)
Since DBSS is a new introduced system to Singaporeans, the demand on DBSS is not yet bring a high demand to Singapore's housing industry. However, it is believe that the demand on DBSS flats will be increasing in the near future. Presently, there are only six projects are held under DBSS whereby the DBSS projects are listed in the Table 3.5.
3.3.3 Selective En bloc Redevelopment Scheme
To maintain and upgrade public housing flats in older estates, the Selective En bloc Redevelopment Scheme (SERS) is introduced to Singapore's housing development industry. This urban redevelopment strategy, which was launched in August 1995, involves a small selection of specific precincts in older estates which experience demolition and redevelopment. Currently, there are 56 sites have been announced while 34 of them were completed redevelop. The Housing and Development Board was stated that:
"Under SERS, selected old sold flats are redeveloped to optimise land use. SERS offers residents a unique opportunity to upgrade to new and better flats nearby with fresh 99-year lease. Residents can remain close to their familiar surroundings and preserve the strong community ties built over the years. The scheme also attracts young families to move in to live in the rejuvenated mature estates."
The process of SERS is shown as the Figure 3.2 while the descriptions of the process are shown in Table 3.6
Figure 3.2: Process of Selective En bloc Redevelopment Scheme
(Source: Housing and Development Board, Singapore)
Process
Descriptions
Receive from HDB
SERS information package
Name of private valuer
Assessment of Re-housing Benefits
Receive letter from HDB on redevelopment benefits eligible
Assessment of Market Valuer
Private valuer inspects SERS flat to estimate market value
Acquisition Proceedings
SERS flats gazetted according to Land Acquisition Act
Attend collector's inquiry
Receive notice of actual compensation
Registration
Receive application form from HDB
Return completed form to HDB
Receive invitation letter to select replacement flat
Select replacement flat
Completion
Invitation to collect keys to replacement flat
Move from SERS flat to replacement flat
Table 3.6 Description of Process of Design, Build and Sell Scheme
(Source: Housing and Development Board, Singapore)
3.3.4 Balloting / Walk-In System
Started from April 2007, a combined balloting / walk-in sales system was introduced to replace Walk-In Selection (WIS) system for remaining flats. Under this system, the stock of remaining 4-room and larger flats will be grouped into 3 sectors according to towns or estates as the follows:-
Sector A - towns / estates in the North and North and West zones
Sector B - Towns / estates in the North-east zone
Sector C - mature / established towns / estates
The unsold flats of each sector will be launched for sale on the 10th day of even months, on a bi-monthly basis. Started on 10 April 2007, the first exercise for flats in Sector A was held under this system while the exercise for Sector B and Sector C are launched on 11 Jun 2007 and 10 August 2007 respectively. For every half of year, the sales exercise of unsold flats in each sector will be launched.
During the initial one-week of application period, any purchasers who interested with the system launched can submit their applications to HDB. The order of selection will then be determined by a computer ballot and the applicants will be given an appointment in booking a flat. While appointments after the final balloted position will be given to the applicants who apply after the initial one-week period. The lasting flats will be available for booking on a walk-in basis after all scheduled appointments have been processed. The sales procedure of Ballot / Walk-in system is shown as Figure 3.3 while the descriptions of the procedure are discussed in Table 3.7.
Figure 3.3: The Sale Procedures of Ballot / Walk-In System
(Source: Housing and Development Board, Singapore)
Table 3.7: The Descriptions of Procedure of Ballot / Walk-in System
(Source: Housing and Development Board, Singapore)
3.3 Summary
As a conclusion, four of the housing delivery systems implemented in Singapore are selling the existing flats units. The first two systems which are BTO and DBSS system are the housing delivery systems based on the concept of "build first and sell it later" while the other systems are redevelopment the housing in old areas and reselling the unsold units respectively.
For BTO and DBSS system, the concept is almost similar as partial BTS system introduced in Malaysia whereby the purchasers will order the units first before the construction started. However, since the environment in Singapore and Malaysia are different, the implementation of BTS system is still not feasible as in Singapore.
