Public rental flats stole the spotlight in a recent Parliament session, when Minister for National Development Khaw Boon Wan let on that the Housing Development Board (HDB) may exercise flexibility, after revealing that while 1,100 rental flats lowered their rates a separate 5,100 flats had their rents increased in the past two years.  His announcement was in response to Tanjong Pagar GRC MP Dr Lily Neo’s query about the adjustments made to HDB rents and the number of people affected. In 2009, the Board tightened eligibility criteria for heavily subsidised rental flats such that a tenant’s assets (including savings and car ownership) were included into consideration beside income.
Said Khaw, “HDB rentals are adjusted at the time of tenancy renewal, if the income of the tenants has changed. The percentage increase in rental rate will depend on the extent of the increase in household income.”
He stressed that the logic behind charging higher rents for those with a higher income is “sound” and ensures tenants who earn less benefit from higher subsidised rents. The policy simultaneously encourages those enjoying financial increments to aspire towards purchasing a home of their own.
Thus the rental policy not only frees up rental units for families truly in need, but also promotes the government’s stand on wider home ownership. “My objective will always be for permanent ownership rather than permanent tenancy because tenancy… is consumption rather than investment in a property,” said the minister.
Rental flats operate on two-year leases, and charge a monthly rent of $26-275. There are currently 46,000 flats under the scheme.
When MP for Nee Soon GRC Associate Professor Muhammad Faishal Ibrahim further questioned if anything was being done to help those unable to cope with higher rents, Khaw said the HDB “would always be sympathetic”, and promised to work something out for this group of affected families.
The National Development minister also repeated that government’s focus of helping those under the rental scheme eventually become home owners, and backed his explanation with calculations to show that those earning $1,500 a month can afford a two-room Build-To-Order (BTO) unit with a government grant, and can cover their monthly instalments using only savings from their Central Provident Funds.
However, as other MPs expressed concern on this issue, it seems likely that HDB might be more flexible when putting rental policies into action.
Despite Minister Khaw insisting that the $1,500 income ceiling adequately covers the lowest 20% of households when Sengkang West MP Dr Lam Pin Min called for a review of said income ceiling, he revealed that the Board already practises a degree of flexibility – there is precedent of households who earn above the $1,500-mark obtaining rental units. Of course, they are special cases when the families in question are unable to purchase an HDB flat, or have no family support or other housing options.
When probed by Workers’ Party MP Pritam Singh (Aljunied GRC) for details of this flexibility, Khaw simply replied that because circumstances surrounding different families, “it is not uncommon to have households earning more than $1,500 and living in our rental flats.”
Interestingly, when fellow Workers’ Party MP Gerald Giam asked if the Board would consider implementing a formula for those earning more than $1,500 to obtain a rental unit at a higher tier of rental, the National Development minister agreed to consider the idea, saying “it is something we can take a look [at]”.
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