FAMILIES LIVING IN A TENT AND LORRY

FAMILIES LIVING IN A TENT AND LORRY: 2.

Dr Muhammad Faishal Ibrahim asked the Minister for National Development in

Column: 1115

light of reports on the plight of families living in a tent and lorry, (a) what are the facts and circumstances of their inability to obtain public housing; and (b) what steps has HDB taken to resolve these cases.

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): **** Mr Speaker, Sir, the two cases referred to by Dr Faishal were reported in the Berita Harian in late November and early December last year.

Let me highlight the key facts. Both of these cases have received housing subsidies in the past. One had made substantial profits through the sale of two subsidised flats - the most recent being in March 2005. His application for a subsidised HDB rental flat was rejected because he could not meet the eligibility conditions. There were no grounds to give him any special consideration. He and his foreign wife subsequently shifted to a relative's flat. The other case had defaulted on his mortgage payments on his flat, which he had purchased from the open market with a housing grant. When the bank repossessed his flat, he applied to HDB for a subsidised rental flat. His application was also rejected because he could not meet the eligibility conditions. As he is actually eligible for a HDB concessionary loan and will have some proceeds from the sale of his repossessed flat, HDB advised him to consider buying a smaller flat. He could also consider staying with his siblings or at temporary shelters run by VWOs. He declined to take up any of these suggestions.

Based on these facts, Sir, I believe you will agree with me that these two cases were homeless by choice, rather than due to circumstances beyond their control. The individuals may have spent their sale proceeds irresponsibly or decided that the

Column: 1116

other housing options are not sufficiently attractive to them.

As I have stated on various occasions in this House, HDB is prepared to help genuinely needy cases to rent or buy a flat from HDB. However, such appeals need to be carefully scrutinised to ensure that our limited housing subsidies are fairly distributed to those that need them most and are not abused. Individual homeowners must understand the implications of their decision to buy and sell their flats and take personal responsibility for these decisions. Although social services may also be offered to those genuinely in need, on a temporary basis, the Government cannot repeatedly provide assistance and subsidies to bail out financially irresponsible households, as it will only encourage such behaviour and deprive deserving families of help.

On its part, HDB will also provide financial counselling to help potential flat buyers better understand the long-term financial implications of their flat purchases. Starting from this year, HDB will require those applying for HDB loans to obtain a Home Loan Eligibility letter before they commit to a flat purchase. This is another measure by HDB to inculcate financial prudence and forward planning among flat buyers.

Dr Muhammad Faishal Ibrahim (Marine Parade): Sir, besides the measures highlighted by the Parliamentary Secretary, Dr Mohamad Maliki Osman, I am wondering whether the Ministry could also consider providing timely alternative public housing options to residents or families facing such circumstances, so that they can act as a buffer for them in facing the effects, in particular their children. Such measures would also help them to face the effects and at the same time, help them to rise again in the near future.

Column: 1117

Dr Mohamad Maliki Bin Osman: Sir, we recognise that when families are faced with such crisis situation, they need support. Often times, it is very difficult to make a decision on the kind of support that is to be given to such families. As far as options are available, I think there are several options that are already in place. Certainly one is the subsidised rental flats that are available. And we look at the eligibility criteria and conditions of the family to see whether they are eligible or we can waive some of these conditions to help them. Secondly, it is the market rate rental that is available to some of these families. But the third option, which is an option that very few families tend to fall back on, is really the option of their own extended families. We have to recognise the fact that, at the end of the day, if, as a society, we want to uphold the policy or the value that the family is the first line of defence, we must take a look at where the families are in supporting some of these households who are actually in need at the point in time. Often times, when we look at the individual cases, there is family support that is available and we explore with them, but they tend to not want to go back to the family for support. It is not easy to actually give support at that point in time because there are a lot of conditions that we have to look at and there are a lot of issues that we have to address.

So, I think, what is more important also at the end of the day is to look at upstream measures to try to prevent some of these families from getting into such difficulties. One of the issues we realise is that families do not respond early enough when the banks start coming to them for payments. They often wait till the very end before they respond. We need to try to educate some of these families to make sure that they acknowledge the problems that they face and come forward when the banks start taking action against them. Secondly, it is to ensure that families are aware of implications of the

Column: 1118

actions that they take. When they take loans from the banks, for example, they must be aware of the financial policies that these banks operate in. We need to try to make sure that they understand the implications of this action that they take. Often times, most of these families take the bank loans without understanding what it means, when the rates will go up, and what happens after that. More importantly, what we are trying to do now is for HDB to try to educate these families at the onset of purchase. HDB officers will come forward and try to explain to these families that they actually understand what it means for them to take a bank loan and what it means for them should rates go up and, at the same time, HDB is working very closely with the banks to make sure that cases which are at risk of having their flats being repossessed are identified early, so that MCYS and other agencies can come forward to try to help these families.

Mr Inderjit Singh (Ang Mo Kio): Mr Speaker, Sir, the Parliamentary Secretary mentioned quite generally just now that many of these residents facing this situation were those who sold their flats and then used the proceeds not responsibly. Does the Parliamentary Secretary realise that there are also many cases of residents who are in negative equity and, as a result of that, the banks are forcing sale? Therefore, they actually do not have excess cash to help them rent or buy a flat. These cases are increasing because of the policy change of allowing banks to handle HDB mortgages. In fact, I have a resident - now this is the fifth week - who has been staying at the void deck and has not been able to find an alternative accommodation.

Mr Speaker: Mr Singh, no speeches. What is your question, please?

Mr Inderjit Singh: My question is: do we have a solution for such people who

Column: 1119

do not make any gain from the sale of the flat?

Dr Mohamad Maliki Bin Osman: Sir, we review every case on a case-by-case basis, and that is why it takes some time for us to review those cases. When cases come to us, we have to look at the background, the history of it, and the level of subsidies they have taken. Yes, there are issues of families facing negative equity. But when we look back, many of them would have already had several subsidies and benefited from the subsidies. Often times, it is very difficult for us to make a decision whether we should give them further subsidies with regard to subsidised rental flats. So, it takes a while before we are able to understand the circumstances of each case. Often times, we offer them temporary housing in shelters that are available and run by VWOs. And, often times, these families reject such options. So, whether they choose to take up those options or choose to live in void decks, at the end of the day, is really their choice. Often times, when we face these families, the first thing we offer them is really temporary housing through the shelters. And our experience is that these families reject the shelters that are made available to them. Secondly, we explore related families that are available - their brothers and sisters, their siblings. And when we look at the case history, we realise there are family members who have got flats that they can actually accommodate these families, and they reject those options also.

So, is it fair for us then to ensure that the Government comes in and gives them the rental flats just because they reject all these other options? But I want to also emphasise in the House that HDB has been very particular in looking at each case and trying to understand the circumstances within each case. And if the case is really deserving and merits a

Column: 1120

waiver of some policies, we will continue to try to help these families.

Mr Sin Boon Ann (Tampines): Sir, the Parliamentary Secretary mentioned earlier that home owners should be made aware when they take a bank loan. There are situations where they may not be able to service the mortgage loans. But is the Parliamentary Secretary also aware at the same time that for many of these families, they do not have a choice. When they applied for HDB loans they were turned down. The only alternative to getting financing for the flat is to turn to the banks. It is not as if they have a choice.

Dr Mohamad Maliki Bin Osman: Sir, whether they have a choice or not really is dependent on them understanding the circumstances that they face at the point in time. The choice that they have is they are eligible for the first subsidised flat from HDB or a housing grant if they choose to buy a resale flat. Often times, these are not first-time cases. They came buying the second flat or the third flat, meaning that they are well aware of the number of subsidies they have already taken. Choices - do they have to sell the flat? It is up to them. The decision to sell the flat at that point in time really is up to the family. We can say that because they are in negative equity, they have to downgrade, therefore they have to sell the flat.

Yes, then we look at those individual cases. If they really have to downgrade because of financial reasons, when they come to us and say they cannot take a bank loan for whatever reasons, we will look at it carefully. And if the case merits support from us, we will look into it and will give them the concessionary loan that is required. I think many of the Members of the House have also seen cases where HDB has been sensitive to the circumstances surrounding those families and have acceded to the requests for concessionary loans. But there are also cases that HDB has rejected based on different circumstances. I think

Column: 1121

the point to make here is that we will continue to look at individual cases. We will try to help individual cases. If they do merit consideration, we will try to help them.

Ms Irene Ng Phek Hoong (Tampines): Two supplementary questions, Sir. There are many residents, especially older residents, who cannot find jobs or they have jobs but their pay is low. But at the point when they apply for a flat, they could afford it because they have jobs. But circumstances change. Therefore, it is not so much an issue of financial planning as the fact that Singapore's economy is very volatile now. So when they sell their flats, the problem is that they have negative equity, they have medical bills to pay, especially if they are old, and the debarment period of 30 months kicks in and they do not get a rental flat. So in fact, we are giving them no option.

Mr Speaker: Your question, please, Ms Ng.

Ms Irene Ng Phek Hoong: Can I ask the Parliamentary Secretary what are the options for older residents, especially those without jobs or with low pay, who do not have an option for rental flat? My second supplementary question is on the reverse mortgage scheme. Can the Ministry work closely with banks to offer this option so that residents need not be kicked out of their homes but can stay in their homes and receive a viable sum of money that makes sense to them?

Dr Mohamad Maliki Bin Osman: Sir, on the issue of older workers, it is not whether they are older workers or they are not older workers. But we look at the circumstances of each case. Not only older workers are faced with certain difficulties when they lose their jobs. We look at the case based on the circumstances they are in right now, whether they have income or not and

Column: 1122

whether they have sufficient resources. At that point in time, if they really need to downgrade, we will look at the capability of downgrading and the type of flat that they are able to downgrade to. If they are not eligible for another concessionary loan, we look at the situation again to see whether we can actually waive that condition. Like I have said earlier, we will look at the case individually. If Members of the House have particular cases that they think merit consideration from the Ministry, certainly HDB will look at it very, very carefully.

On the question of reverse mortgage, the scheme is already in place. There are a couple of banks that have offered reverse mortgages for elderly households to actually monetise their asset. However, I think at this point in time, as I recall, the take-up rate is pretty low because the concept of reverse mortgage has not sunk in in many of our elderly households. Secondly, it could also be concerns that have been raised by several elderly households that what happens if they outlive the tenure of the reverse mortgage period. There are several issues that have arisen with respect to the reverse mortgage scheme. But just to reassure the Member, the scheme has already been in place. There are a couple of banks that are already offering reverse mortgages.

Mr Speaker: Mr Yeo Guat Kwang, last question.

Mr Yeo Guat Kwang (Aljunied): May I ask the Parliamentary Secretary whether he is aware that in fact the bank loan offer is not a clear cut alternative? Because for those who want to borrow money and they have been turned down by HDB, they will have to go to the bank. In Singapore, for most of, if not all, the banks, they will only approve loans with a minimum of $100,000, and there are people who actually do not need the money and end up having to borrow so much and get themselves into difficulties.

Column: 1123

Dr Mohamad Maliki Bin Osman: This is one of the challenges that HDB faces. Are we, in HDB, the banker of last resort, take up all the other cases that the banks do not want to offer? It is always a challenge. We do recognise the policies of the banks and the banks have every right to decide on their own lending policies. HDB recognises these policies in the banks. When cases come to us for appeals, perhaps for reasons that their loans are too small or because their household income is too low, there are many reasons that the banks give them for rejecting their appeals for a bank loan, for such circumstances, we do look at them.

I would like to suggest to Members, where there have been cases that have been referred to HDB for appeals, if there are particular cases that they think are difficult or ought to be looked at more closely, do let us know. I would be able to give individual Members a history of the different cases that have been referred to us and to show how we have responded based on the different circumstances. For example, the inability to get bank loans because the loans are too small or poor credit records or various reasons, we have acceded to some of these requests. But, again, cases are very unique. No two cases are similar. So sometimes, Members may see two cases that are almost similar, but the decision made is different because the background to the case may be slightly different and Members may not be aware of the background to those cases. Sometimes, at the Ministry, we will inform the Members the history of those cases so that Members become more aware of the circumstances of those cases and how the decisions were made whether to accede to their appeals or not.