From SERS to VERS: What Every HDB Owner Needs to Know About the Big Shift
Many years ago – so far back that Stacked didn’t exist yet – I put out an article about how SERS might not be the end-game we were all expecting. This was close to two decades ago, when some of us still held out for the possibility that SERS would be the generous solution to the “99-year time bomb.”
Our hopes diminished further in the past years, when it was made clear that only around five per cent of HDB estates would see SERS. And now, finally, there are officially no more plans for further SERS.
The Voluntary Early Redevelopment Scheme (VERS) is now the way forward, and concrete details could be out before September 2030. This is an untried and, from what we know, a much less generous version of SERS; not so much a windfall as a final escape clause. Here’s how it’s going to change the HDB landscape going forward:
What is VERS?
VERS will be offered for certain HDB projects when they reach the age of 70. At that point, the residents are polled on whether they want to sell back the flats to the government early, or just hold on until, ostensibly, their value reaches zero.
This isn’t a brand new idea; it was first announced around seven years ago, although exact details haven’t been clear. What we do know so far is that:
1. It’s “voluntary” in the sense of being a collective vote.
It’s not that you alone get to volunteer whether to surrender your flat. VERS will only proceed if a majority of the residents involved vote for it. If the vote fails, you keep your flat until the end of its lease. If the vote passes, you need to start looking for somewhere new.
Way back in 2018, it was said that the vote would require a 75 per cent supermajority. The government has said that the vote is similar to how we currently vote for the Home Improvement Programme (HIP).
I suspect, however, that further refinements will need to be made. Voting for a few upgrades to your block is one thing, but voting to have to leave your home, or being forced to keep it with no future exit, is a much more emotionally charged issue. It would be terrible for optics if, say, an 80-year-old senior citizen is forced to move out at that age.
I’ve also seen people literally come to blows and commit vandalism over the en-bloc vote for a condo, and those involve way fewer residents.
Getting 75 per cent consensus in a more populated HDB project, with many more dissenting voices, will be a feat worthy of UN diplomacy, and needing a 75 per cent supermajority could cause a disproportionate number of VERS attempts to fail.
I would also wonder about the outcome of a failed, heated VERS attempt. The government has said that considerations are underway, and residents may receive assistance through schemes like the Silver Upgrading Programme. I think the main concern, though, is this:
Could a failed VERS attempt leave behind a fractured community, with some neighbours becoming lifelong enemies due to the outcome?
From my experience, condo communities fractured by collective sale attempts tend to stay fractured, long after the en-bloc fails.
That said, VERS is actually more representative than SERS, because you do get to vote. SERS was compulsory. Just in case anyone resents compulsorily making a lot of money.
2. Compensation will be less generous than SERS
The government has already signalled that payouts will be more modest, reflecting the remaining lease value rather than market premiums.
The value of the remaining lease is – I speculate – going to be calculated along similar lines as the Lease Buyback Scheme (LBS). For reasons linked to Bala’s Curve and time value, the years at the front of the lease are worth more than the years at the back of the lease.
In any case, VERS is not likely to be the windfall that SERS is, given that the flats are already 70 years old. The big question here is whether the compensation doled out will help in purchasing a replacement home. This will be especially true for older Singaporeans, who will encounter financing difficulties due to age.
3. It may not be universal even upon reaching the 70-year mark
Note that in the news, it says “VERS is offered to selected precincts when flats reach about 70 years of age.”
This suggests that a VERS offering may not be automatic for every HDB project reaching the 70-year mark, and there may be some estates where the endgame is just to go to zero.
Perhaps there will be more clarity on this in future; otherwise, some buyers may speculate which HDB estates will likely have a chance at VERS, and possibly attach a higher value to those. It’s only been a day since the announcement, and I already have neighbours telling me it will “surely” be the “atas” older areas like Tiong Bahru or Marine Parade.
4. The aim is controlled renewal, which is good for everyone in a collective sense
The main policy aim is to avoid having entire towns hit lease expiry at once, like what would happen to Marine Parade or Ang Mo Kio in the 2070s–2080s. I suspect that would be a financial apocalypse for HDB if they had to redevelop whole swathes of expired flats at one go.
By staggering VERS precincts over 20 to 30 years, the government can spread construction, relocation, and rehousing in a more manageable way. Of course, all of this is a pleasant abstraction to someone forced to stay or leave.
How might all of this change the HDB market in the years to come?
- The end of the “hope premium,” even in high-demand older neighbourhoods
- 70 might become the new 99
- Extra financial planning is needed when buying in older estates
- There might be a knock-on effect for HIPII
1. The end of the “hope premium,” even in high-demand older neighbourhoods
Even when we were told SERS would only target a small number of hotspots, there was still a “hope premium” for certain areas. I know quite a few people who insisted that Tiong Bahru, or some older flats in Queenstown, were sure to be selected for SERS.
As of now, unless SERS is revived, they’ve all been proven wrong. And now, with no SERS incoming even in these super-mature neighbourhoods, we may see an effect on flat prices there. The lack of SERS won’t deter an older Singaporean who is genuinely buying to stay, and for whom the remaining lease (even if it’s just to 70 years now) will still be sufficient.
But it will curb the more reckless buyers, who are overconfident about these old flats’ ability to retain their value. As such, we might even see prices moderating in these areas, as the years plod on. It’s almost as if some entity is trying to discourage more million-dollar flats in these old, pricey estates.
2. 70 might become the new 99
As mentioned earlier, VERS is no windfall; it’s more like an orderly exit with a polite handshake. If you’re forced to move at the 70-year mark, it could be a painful inconvenience at best, or even a financial loss if you’ve poured money into renovations you now can’t recoup.
This changes buyer behaviour. Anyone looking at an older flat might now treat 70 years, not 99, as the new deadline. And if we don’t know which estates will actually get a VERS offer, every older estate carries that uncertainty. In the worst case, you could be relocating nearly three decades earlier than you thought.
If enough precincts do end up going through VERS, the 70-year mark could also stop being a technical policy detail and become something far more powerful: the hard stop in the public imagination.
In future decades, we might even get used to the idea of shorter leases when we start thinking of 70 years as the deadline.
3. Extra financial planning is needed when buying in older estates
This is quite straightforward. If there’s a chance that VERS happens when you’re 70 years old, and you’re now moving out three decades earlier than expected, you need to have the financial means to do so.
It’s quite probable that the government and HDB have plans to help in these situations; but it doesn’t change the fact that more forward planning is needed. The possibility of having to move at the 70-year mark affects every decision from how much you’ll pay for the ageing flat, to how much to spend on renovations, to how much of an emergency fund you’ll need if the expected relocation happens.
4. There might be a knock-on effect for HIPII
The government has said that HIP II – the second round of the Home Improvement Programme, done around the 60–70-year mark – will still go ahead regardless of VERS.
But let’s think about this for a minute. If a precinct ends up taking VERS soon after, that could mean major upgrades get enjoyed for only a few years before the flats are torn down.
From a resident’s perspective, that’s wasted money if they make any co-payments. From a policy perspective, it also raises the question: will HIP II be prioritised for flats less likely to get a VERS offer?
Back when SERS was still around, a coffee-shop rumour was that HIP was a “kiss of death” for HDB projects – the theory was that the government would never waste money on such an initiative if they were going to tear it down and redevelop it for SERS. There’s a good chance that now, the government will need to address similar rumours, but just in regard to VERS rather than SERS prospects.
Ultimately though, we’re still in the dark for now
For all the speculation, we’re still missing key details: the exact voting threshold, how flats will be chosen, what the compensation formula will look like, etc. Depending on how these turn out, the likely impact can be very different.
As of now though, what is apparent is that the end of SERS – and the coming of VERS – will change the psychological landscape. Even before we see the first successful VERS, whenever that may be, the possibility of the new 70-year mark can alter how buyers and sellers look at older flats.
Once the framework is made public, likely before 2030, we can expect significant adjustments in the HDB market. For more on the situation as it unfolds, because I’ll still be doing this until 2030 – count on it – follow us on Stacked. If you’d like to get in touch for a more in-depth consultation, you can do so here.
