VALUATION FOR SELECTIVE EN BLOC REDEVELOPMENT SCHEME (SERS): A FAIR COMPENSATION FOR HOMEOWNERS?

Abstract

Due to the scarcity of land in Singapore, land acquisition is an inevitable aspect of the nation's development and progress. Most of the land acquisitions in Singapore are governed by the Land Acquisition Act (Chapter 152) (LAA). In the public housing context, acquisition for redevelopment is carried out through the Selective En Bloc Redevelopment Scheme (SERS) introduced in August 1995. In addition to a comprehensive rehousing package, affected lessees are compensated at market value assessed by a private valuer in accordance with the provisions in the LAA. Under the provisions of the LAA, the compensation due to an affected lessee is likely to be lower than the open market value. This study tests this hypothesis by comparing the compensation due to the homeowners with their flats' potential value in the resale market. In addition, this study examines the homeowners' knowledge and perception of the scheme, determines whether the compensation and other benefits are fair and equitable, and looks into the levels of satisfaction of the homeowners. Using data from 77 households which are affected by SERS, the study reveals that the homeowners are in favour of the scheme when it is first announced. Generally, owners also feel that the compensation awarded is a fair one. However, they have little knowledge of the LAA, which governs the scheme. Survey results also show that the compensation awarded to the homeowners, consisting of the collector's award and the ex gratia payment, is lower than what their flats would have been able to fetch in the resale market. Although the relocation package can make up for this shortchange, this is a variable package which varies between owners and households. This suggests that homeowners may not be awarded fair compensation as a result of the scheme.