ONE- AND TWO-ROOM RENTAL FLATS

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ONE- AND TWO-ROOM RENTAL FLATS:

(Plans to meet pressing need): 12.

Assoc. Prof. Kalyani K Mehta asked the Minister for National Development whether his Ministry has any plans to meet the pressing need for one and two-room rental flats by buying back old flats and renting them out if vacant and providing rental options priced midway between open market and current subsidised rentals as changing circumstances require some flexibility in implementing the Government's housing policies.

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): Mr Speaker, Sir, to meet the pressing need for rental flats, HDB has been converting some of its older unsold flats into rental units. This is in addition to building new rental flats. This year, 930 units of such converted flats at Boon Lay and Woodlands were added to our rental stock. Next year, another 1,900 rental units will become available, of which about half are converted units. In all, about 10,000 new rental flats will be available over the next five years.

As we continue to build more rental flats, we also need to safeguard them for

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the truly needy. HDB is reviewing the eligibility criteria so that we can better sieve out the truly needy from the less deserving cases. In the meantime, for applicants on the current waiting list, HDB will give priority to those with more pressing housing needs.

Our Public Rental Scheme is already calibrated according to the family income of the tenants. For a one-room flat, tenants with income below $800 per month pay a nominal sum of $30 per month;

tenants with income between $800 and $1,500 pay a monthly rent at 30% of market rent; and tenants with income above $1,500 pay a monthly rent of 50% of market rental. The last group, those with income above $1,500 monthly should, strictly speaking, not be eligible for subsidised rental flats, but were allowed to stay on a case-by-case basis.

The larger issue in Prof. Kalyani’s question is whether we should provide rental subsidy for families who do not qualify for Public Rental Flats. These are families:

(1) whose income exceeds $1,500;

(2) who have enjoyed two or more housing subsidies; or

(3) who have sold a HDB flat in the last 30 months.

For the first group of families whose income exceeds $1,500, they are better off owning their own homes. The Government has kept home ownership affordable by providing generous housing subsidies, especially for the lower-income group. For example, a low-income family pays $200 a month in mortgage for a two-room flat.

For a household earning $1,000 per month, this can be fully covered by their CPF contributions. In contrast, it costs $1,000 a month to rent a two-room flat in

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the open market. Given the affordability of home ownership, subsidised rent should only be provided for the truly needy who cannot afford a basic flat even with the generous subsidies.

Mr Speaker, Sir, with your indulgence, can I respond to Mdm Ho's question earlier?

Mr Speaker: Yes.

Dr Mohamad Maliki Bin Osman: Sir, the question is whether home ownership is relevant or not today, given the circumstances that have been described.

Sir, home ownership remains relevant today. Besides providing a roof over one's head and promoting stakeholdership in the country, an ownership flat is also a store of value which appreciates in tandem with the country's economic growth. It allows Singaporeans to share in the fruits of Singapore's progress. When they retire, they are able to monetise their home ownership flats by either subletting a flat, a room or two rooms to earn rental income, or unlock their housing equity by downgrading to a smaller flat, or a studio apartment, or sign a lease buy-back scheme later next year.

Sir, as mentioned earlier, the Government makes home ownership flats affordable for even the low income. In fact, for the lower-income families who are eligible by the Home Ownership Plus Education (HOPE) Scheme stand to benefit another $50,000 in CPF grants which can also be used for housing. So, technically, a low-income family can easily afford to have a two-room flat with monthly contribution of $200 into their mortgage loan. So, for a small group of needy citizens, as mentioned earlier, who cannot afford to buy a rental flat with our housing subsidies, the Government will continue to help them with a heavily subsidised rental flat.

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Mr Zainudin Nordin (Bishan-Toa Payoh): Sir, I hope that MND is aware that the popularity of the smaller three-room flats has gone up, even though the flats were intentionally designed for low-income earners. But the popularity of the flats is such that now a three-room flat can even go to as high as $250,000. If we are going to build small flats and these flats become popular, what does MND intend to do to control the prices of small flats which are for the low-income families?

Dr Mohamad Maliki Bin Osman: Sir, first, we are committed to increase the supply of the smaller flats. We are going to increase the supply of new two-room flats. We are also going to increase the supply of our studio apartments for the elderly to monetise their assets. As mentioned earlier, in this year's COS, we are launching about 240 new two-room flats and more are on-stream.

With regard to maintaining the question of the price, new two-room flats for First-Timers are always subsidised. So, the cost is much lower than the ones in the open market. New flat purchasers can actually access any rental flats. For those who are downgrading and are competing with the lower-income families to get a two-room purchase flat, they actually have to pay a resale levy which will increase the price equivalent to the market rate. With that price mechanism, we are able to control to ensure that the two-room flats continue to be affordable to the lower-income families.

Assoc. Prof. Kalyani K Mehta: Sir, I would like the Parliamentary Secretary to provide some enlightenment on the issue of older people who apply for rental flats and the fact that sometimes there are changing family relationships and circumstances that may push the older couple to want to move out. They may be even abused by their children, and that may be

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one factor to consider as well. Should we not offer a mid-way option?

Dr Mohamad Maliki Bin Osman: Sir, first, on the issue of the elderly and how we treat the elderly who need housing. Often-times, the elderly are not First-Timers. They probably would already have access to Government subsidies and purchased their own flats. They would probably also have already monetised or sold their flats. In that sense, what are the other options? I have mentioned earlier, if they want to come back into the purchase market, they will have to pay the resale levy or they will have to buy in the open market or buy studio apartments. Many a times, they come to us asking for rental flats. When we look at that, I think the fundamental issue is not so much that they need housing from the Government, but what is the kind of housing options that they have. We have to look at the larger picture of what it means for us as a society. We have to look again at the roles of their family members. Yes, Prof. Kalyani Mehta said that perhaps family relations have soured and therefore they cannot live with their children. But that does not mean that the children cannot continue to be responsible or be held responsible for providing housing or support for their elderly parents.

We are already dealing with this issue of rental flats and ensuring that rental flats are designed for the truly needy. We are also dealing with an issue of subsidies. Subsidies are not unlimited. Given the two, we should try to focus our subsidies and resources on the truly needy and allow Singaporeans to begin to think how the elderly housing issue should be better dealt with. I think we have to start asking ourselves what is the role of the family and their children in providing for their elderly parents, even if they do

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not want to live together and cannot live together. We should start asking what their children should do to provide for their elderly parents.