APPLICATION FOR HDB TWO-ROOM FLATS (Raising of income ceiling)

Mr Ho See Beng asked the Minister for National Development whether he has figures of one-room flat dwellers whose applications for two-room flats were rejected because their combined family income had exceeded the ceiling of $500, and, in view of the current inflation, if the Housing and Development Board will consider removing the $500 ceiling so as to accommodate the requests of those applicants who cannot afford the higher rental of three-room flats.

Mr Teh Cheang Wan: Mr Speaker, Sir, since the introduction of the income ceiling of $500 per month, there have been 30 cases of tenants living in 1-room flats whose applications for transfer to 2-room flats have been rejected because their monthly income exceeded this limit.

Tenants whose family income exceeds $500 per month should have no difficulty in using their CPF savings to pay for the downpayment and the monthly instalments for the purchase of 3-room flats. As it is Government policy to encourage home ownership, it is not proposed to raise the income ceiling. However, in genuine hardship cases, special consideration will be given on the merits of each case.

Mr Ho See Beng: Mr Speaker, Sir, I would like to ask the Minister for National Development whether he is aware that although the family income may exceed $500, the take-home pay can be less than $500 because of deduction for contribution to CPF. Under such circumstances, will the Minister consider an application from such a family to rent a two-room flat? He is not buying a flat; he only wants to rent, and so there is no question of his using his CPF savings.

Mr Teh Cheang Wan: Mr Speaker, Sir, the $500 income limit has been set because if a person's monthly income is $500 he is likely to make a CPF contribution of $150 per month. Now, the monthly instalment for the purchase of a three-room flat is about $100. Therefore, the income limit has been set in such a way that a person with an income of $500 per month is in a position to buy a three-room flat. If he is not prepared to buy a flat, then he will have to rent a three-room flat. He is not allowed to rent a one-room flat. The difference in size between the one-room improved flats and two-room flats is not so great. Moreover, we know that the people who live in the one-room improved flats usually partition off the area into two-room flats. In fact, those who have been denied one-room flats have moved into two-room flats. So really there is no cause for complaint of hardship. But if he wants to move to a better flat, then we encourage him to purchase a three-room flat.