Now that the voting is over, and the “result” is out, I think it’s a fair time for me to say what I have to say about the LUP, hopefully without anoying any of my neighbour’s feelings.
For the uninitiated, LUP stands for Lift Upgrading Programme. If I can quote a very respected friend, who happens to be a veteran PR in Singapore, “LUP is the greatest money robbing activity by the Singapore Government on the PRs”, as it overshadows any kind of subsidy differentiation between the Singapore Citizens and Permanent Residents. Although I have much less data points (he’s already feeling the pinch for having 4 Singapore born children and being the sole bread winner of his household), I don’t disagree how the LUP can throw a middle class HDB owner financially off balance, especially if they are not prepared. But of course, the model answer narrative is a bit nicer, that the government is “subsidizing” the lift upgrades for the citizens.
For more background, why not hear it straight from the horse’s mouth? The following letter explains how it works plainly. If you’re buying a flat that hasn’t been upgraded, read every word:
The letter comes with the following attachment:
Scary isn’t it. It took one week from the letter (11/5) to the demo and polling (19/5) and in about 2 weeks the “decision” is sealed.
As a Singapore Citizen, there’s no stopping the tide – you know most of your neighbours are going to say yes. It’s a no-brainer decision in the first place – there’s a 93% subsidy so you end up paying somewhere in the ballpark of $1k to $3k. But the appreciation of the property will include such cost of the lift (or whatever depreciated value of it), which is worth something if you ever monetize your “investment in HDB”. Oxymorons aside, the token balance payable by each household is probably to get buy in and commitment for the annoyance for the next 2 years – making the residents say YES themselves puts the residents into an ownership position.
As a PR however, who in the first place did not enjoy the property appreciation or grant (as most would have acquired the flat at a resale price, especially including the ridiculous COV (cash-over-valuation) that has to be forked out as cash), this sudden ‘tax’ on them is really harsh. First, you can’t vote. Secondly, you can’t decide _when_ this happens so that you can plan for it financially (this hit me the hardest coz I am already planning to move into a matrimonial flat which will only be ready much later). Third, you can’t loan money except from the government to pay for their own debt (i.e. you pay CPF rates *AND* GST). Fourth, you can’t verify IF there’s actually 75% of the resident citizens who voted Yes for the upgrading – shouldn’t all PRs of the affected blocks be invited to do vote counting together to prevent fraud? Fifth, by HDB contract you can’t complain/sue – HDB is literally forcing you to sell your flat if you can’t afford this sudden tax on you (unless you betray your country, which I understand Singaporeans don’t do themselves, so why force on others?). Sixth, you can’t be funny, for example have the lift skip your floor.
Most importantly, see how the letter is written: It’s not even about the lift. It’s naturalization. Its strong language and unabashed conditional instruction on how to get back your money blows me away.
Lim Ah-Hiat (AMK HDB GM) says: HDB will reimburse the upgrading subsidy to your household if you or any co-owners becomes a Singapore Citizen within one year from the billing date, provided you are still the owner of the flat.
I must give credit to the people who came up with this scheme. It is written at a time where the Singapore civil servants and political masters still believes in “protecting” their own people, getting out of somewhat a “mistake” earlier of having no lifts to every floor for most early flats by paying their way out. It was written at a time where naturalizing foreigners (such as Malaysian Chinese) with financial capabilities (to own property) was a plus, with a previous generation of PRs getting annual brochures sent to their homes to encourage them to convert. Say all your want about PAP using LUP for political gain/loss, the fundamentals have since changed. Ever since China opened up, things have been different, things like the 532,000 strong PR’s nationality/racial make up, owners of properties and Singapore’s attractiveness/strategies. And some of these policies need to be re-thinked.
Who is the “we”? Who is the “they”? Why 93% difference when, in education, healthcare, etc. the difference is smaller (and transport is none)? If this treatment is right and the others are wrong (e.g. schools fees should have been 93% higher for PRs), then why bother with the PR scheme? What exactly do you want? You want people to stay and work or only if the employer seriously needs the person (similar to US’a H1B visa situation)? You want rich people to just come park money and live here or you want middle to lower class people to fill up the jobs that either locals can’t do or don’t want to do? Don’t you want these PR to bear the next generation’s army? The rental market went crazy thanks to the lack of regulation – so people are putting down money to buy instead, why penalize the stayers?
Mind you, the $30,000 difference blows many things away. By depleting $30,000 off a regular HDB income level household, it could mean delaying having children, or pinching on elder care, or taking up a second job, or more borrowing from friends and families. Or, it could be a quick exit, whether it’s the property or the country. In my case it is the delaying of entrepreneurship, which I’m sure the country sorely miss?
But then what is the solution, if all 3 goals of (i) naturalization, (ii) perceived citizenship privilege, (iii) cost containment for lifts where to be realized together? Here are my suggestions:
1. Make lift access to homes an unalienable constitutional right in the country.
It’s no one’s fault that we have to live in high rise buildings. By making it a constitutional right rather than a commercial convenience for HDB, there’s no need to decide whether to upgrade lifts, but only WHEN. This is important – because the goal should be 100% lift access coverage.
We already do that to public spaces, why not homes?
2. Let naturalization be a pull factor not a push.
Singapore is already doing very well in providing the suitable infrastructure, security and convenience for an urban foreigner to live, work and play. If one is convince that this is the place to stay, one would just convert and be done with it. Those who are not convinced are simply not ready, and untimely coercion in the form of a HDB LUP letter will only sour the relationship.
Corollary: involve the PRs in the LUP decision making process. PRs pay taxes like Citizens (usually more), the more you make them feel empowered on how to spend the tax payer’s money, the more they will contribute to the society.
Aside: I disagree with the argument that PRs get “complacent” about their privilege and do not want to take the extra step to be a citizen because of the benefit. You and I know it’s the dual citizenship issue. I bet you $10 if dual citizenship is allowed, say, between Malaysia and Singapore, All Malaysian born Singaporeans will apply for Malaysian citizenship and vice versa.
3. Don’t make it an investment decision for the resident, make it a service from the government.
Granted 1 and 2 is true, the simplest way to achieve the same effect (of having the upgrading at a random time, collect just as much money, and provide the citizen privileged difference) is to park the lifts as assets of the town council instead of capitalizing it into the flat’s value.
One way is to funnel the money back is as to increase town council maintenance fees, for providing the lift as a service. This is the classic capex to opex conversion technique to cushion impact while achieving a long term effect on the constituents, noting that citizens gets subsidized for LIVING in HDB flats, every day, every hour. On the contrary, every PR will pay slight more monthly, but only for the period of time they are living in the flat, and not the suay PR who kena LUP and maybe have to move out after paying the extra $30,000. That way every PR will keep the naturalization option in mind as well.
This also creates another desirable effect of not ballooning the HDB prices (which will then not include the lift) unnecessarily. By suggestion 1, town councils cannot avoid upgrading – they must commit to a timeline for everyone. By suggestion 2, all PRs will be willing to pay a marginally higher “tax” for living on public property, and thus will be hungrier and produce more to build more cash flow into their household.
That said, I might be rambling rubbish here – the programme has been in place for time immemorial, so it’s probably hard to wind back the clock.
Wishing everyone a successful and worry free lift upgrading (especially to my neighbours who voted Yes – who knew?)
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