APPLICATIONS FOR HDB RENTAL FLATS

APPLICATIONS FOR HDB RENTAL FLATS: 10.

Assoc. Prof. Paulin Tay Straughan asked the Minister for National Development (a) how many applications have been received for HDB rental flats annually in the past three years; (b) what is the demographic profile of such applicants; and (c) if there are plans for the HDB to make available a wider range of rental flats to augment the housing needs of Singaporeans and residents.

The Senior Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): Mr Speaker, Sir, HDB public rental flats cater

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to the needy citizens households who are unable to afford home ownership flats and who have no family support or no alternative housing options. There was an average of 2,700 rental applicants per year registered by HDB in the last three years. In 2010, 83% of these applicants were family households while the remaining 17% were registered under the Joint Singles scheme. Forty-four percent of them earned below $800 a month while 56% earned between $800 and $1,500 a month.

The Government will continue to help those in need. In recent years, HDB has stepped up the building plan for rental flats. The number of rental flats will increase from 45,000 units today to about 50,000 units by 2012. HDB introduced the Interim Rental Housing (IRH) scheme in 2009 to provide temporary housing options to needy families who could not afford open-market rentals. This scheme offers flats at below-market rent to families who need temporary accommodation while waiting for their rental flats, BTO flats, or need more time to build up their finances. Under this scheme, two families share a 3-room flat to keep the rental low. HDB regularly reviews the supply of rental and sold flats to ensure that it caters to the different needs of Singaporean households. It will continue to ensure that HDB flats remain affordable to Singaporeans.

Assoc. Prof. Paulin Tay Straughan (Nominated Member): Thank you, Senior Parliamentary Secretary, for your response. May I follow up with two supplementary questions? First, what is the proportion of applicants who are aged 62 and above – the elderly group? Second, will the HDB consider renting out studio apartments to this group of Singaporeans because there is a gap between being needy and being able to afford open-market purchases? I hope the

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HDB can consider plugging this gap, particularly for the aged Singaporeans.

Dr Mohamad Maliki Bin Osman: Sir, at this point in time, to the question of how many are aged 60 and above, about 15% of the applicants are aged 60 and above. In 2009, we reviewed the eligibility criteria for rental flats applicants to ensure that rental flats are meant for the truly needy. And before that, we noticed that a large proportion of applicants were indeed from the elderly category. In 2009, when we reviewed the eligibility criteria, we put in place one new criterion which is family support. We recognised there are elderly who do have options of living with their children or having children who have the ability to provide alternative housing for the elderly.

To the question of whether the Government can rent out studio apartments to the elderly, at this point in time, studio apartments are actually very popular amongst the elderly. And many elderly do have sufficient CPF savings to do an outright purchase of the studio apartments. We can study this option, to take a look at the extent to which the elderly may have the ability to rent out studio apartments. But at this point in time, as far as the figures show, there are elderly who do have sufficient savings in their CPF retirement account to be able to afford studio apartments.

Mr Zaqy Mohamad: I have a question for the Senior Parliamentary Secretary. Based on the projections of the new rental flats coming up, what is the proportion of rental flats to the total number of home-owned flats being made available? With the increase in the number of rental flats, are we saying that we are encouraging more to rent or is this deviating from our current proposition to Singaporeans that a home ownership means something? Secondly, has there been a study by the HDB on the long-term effects of needy families in rental flats – whether it has

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benefited them, whether it has helped them to get on their feet in the short term? Could the Senior Parliamentary Secretary please enlighten us?

Dr Mohamad Maliki Bin Osman: Sir, indeed, our public housing policy is to encourage Singaporeans to own their own flats. We have made rental flats affordable to even the lowest income families. Today, on average, a first-time home buyer, with an income of less than $1,400, can safely afford a 2-room flat with the additional housing grant. Even those earning about $1,100 can also safely afford a 2-room flat. For those who are earning $1,400, the DSR, what they need to pay in terms of monthly mortgage, is about 16%, which means that they can actually pay their mortgages through their CPF savings without even having to come out with any cash outlay. The critical thing about helping low-income families is really to secure a job to give them CPF savings so that they can afford to pay for their mortgages. True enough, we have looked at rental flat dwellers and there have been studies over time to look at the effects of families living in rental flats. We are consciously attempting to help low-income families particularly the first timers who enter our rental flats to move out and transit into home ownership flats. I think the psychological impact of living in a rental flat is very different from living in a purchased flat. When we talk about living in a purchased flat, we talk about the residents having ownership of the flat, having the pride of the flat belonging to them and the flat will appreciate in value and they actually take advantage of the economic growth of the country when the assets that they have appreciate in value.

On the question of the percentage of rental flats to the total number of flats that HDB has, at this moment in time, it is about 5% to 7%. We want to try to make sure that the number does not expand, if we can continue to convince

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Singaporeans of the flat home ownership policy. We want to continue to encourage Singaporeans to own their flats. The challenge is really when Singaporeans own their flat and when they have their first flat, what do they do with their first flat. Because we have a system where we allow them to sell their flats in the open market, the impact is that some of them make decisions with a lot of repercussions down the road. We want to encourage Singaporeans to be a little bit more prudent when they make decisions on selling their flats.

The trajectory really is for them to have their flats, upgrade to a bigger flat if they can afford it, because their children have grown bigger and subsequently use the flat to monetise when they grow older. It is not about speculation, it is not about churning cash through the sale of the flats. I hope Singaporeans will be able to understand that trajectory so that we will be able to ensure that Singaporeans continue to be home owners and at the same time take advantage of their flats when they increase in value and to monetise them when they grow older.