I was shown a Land Title Deed of a 5 room HDB flat. I was shocked to see that the “owner” of the flat is merely taking out a lease. The Title Deed clearly shows that the owner is not an “owner” of the flat. The Title Deed is given to the owner when all mortgages are paid. However, what is written in the title deed is a reminder that HDB owners do not really own their flat. The Title Deed shows that it is a lease probably because the property is a 99 years leasehold or perhaps HDB flats are tightly regulated government properties. Likely it is due to these two reasons.

So should we rent instead of “buying” a HDB flat since the latter does not make us owners even if all mortgages are paid up? Well, for a 5 room flat it is not too difficult to rent the entire flat for $2000 per month. Assuming a time horizon of 30 years and that the discount rate is the same as inflation, the present value of this rental is the 2000 x 12 x 30 = $720,000! It is possible to buy a 5 room flat at a much cheaper price than this. Thus, “buying” a 5 room flat is still more worth it.

But I still cannot swallow the hard fact that “owners” of HDB flat do not own the flat!