HDB FLATS PURCHASED BY RENTAL TENANTS (Figures)

Dr Koh Lam Son asked the Minister for National Development how many families in Housing and Development Board rental flats purchased flats under the incentive schemes introduced in December 1985.

The Minister of State for National Development (Dr Lee Boon Yang) (for the Minister for National Development): Mr Speaker, Sir, since the introduction of the incentive schemes in December 1985, 11,765 rental tenants have purchased flats under the schemes. Another 4,224 tenants who have applied to purchase flats are still awaiting allocation of their flats.

Dr Koh Lam Son: Sir, in terms of percentage of the total number of tenants in the rental flats what does this number represent? What are the reasons for the remaining tenants to continue to live in rental flats and not take advantage of the generous incentive schemes? How many does he think will come forward and how many will not come forward? Does he think that they do not come forward at all simply because they are poor and they will forever be poor and cannot afford? And if so, is it possible for us to achieve this 100% home ownership which we have visualized and hope to realize by the year 1999?

Dr Lee Boon Yang: Mr Speaker, Sir, as of 1st January 1988, the total number of occupied rental units is about 76,000. If you take the total number of applicants who have benefited from this low income incentive scheme, including those who are still awaiting allocation of flats at about 16,000, we are then talking of about 10% of them, I think.

The other point is the reason for those who have not come forward. I think there are many reasons. Some of them may not be ready at this point of time as yet to take advantage of the scheme despite the fact that there is this low income incentive scheme to enable them to purchase when they do not have to pay the full downpayment. They are paying only part of it, 5-10% of the downpayment. They still have to carry the mortgage repayment after they have been allocated a flat. So whether they will come forward or not will depend on them. They will have to decide whether they are able to continue to meet the mortgage repayment. Whether they will come forward later or not, we can only hope so. We hope that as their income improves, as the economy progresses, more people will be able to improve their level of income and be able to become one of the home-owners.

The fact that there will always be some people who cannot afford to buy a home does not really undermine the concept of full home ownership. As I said recently, when we talk about full home ownership, we recognize that there will always be a small percentage of people who for various reasons are not able to purchase their homes. It is just like talking about full employment. When we are talk about 100% employment, it does not mean the employment of all those people who are able to work. In fact, even in a full employment situation, you have a few percent, maybe 3%, of people unemployed. Therefore, when we talk of full home ownership, 100% home ownership, we must make provision for a small percentage (3-4%) of the people who will continue to rent flats. These may be people who are waiting for their purchased flats or people who for other reasons are unable as yet to purchase their own flats. It does not mean that the existence of some people living in rental flats is a sign that our objective of full home ownership cannot be achieved.

Mr Chng Hee Kok (Radin Mas): Sir, will the Hon. Minister of State then consider improving the scheme by lengthening the period of repayment, so that the repayment per month will be kept as low as possible and only marginally above the rent of a similar type of flat?

Dr Lee Boon Yang: Mr Speaker, Sir, HDB has already lengthened the repayment period not long ago to allow purchasers of flats to pay up their loans in 25 years. In fact, at the present moment, if you take a 3-room flat in a New Town, the difference between a monthly mortgage repayment and the monthly rent is not very significant. So we believe that a further lengthening of the repayment period at this point is not necessary as it will not contribute towards encouraging more people to buy their own homes.

Mr Ng Kah Ting (Punggol): Mr Speaker, Sir, can I ask the Hon. Minister of State whether he thinks that 15% of these rental tenants who purchase flats is a satisfactory figure? If not, will he try to devise an incentive scheme to encourage more of these people to purchase flats so that the full home ownership scheme will be accomplished?

Dr Lee Boon Yang: Sir, the figure I gave, about 20% of tenants in rental flats who are buying flats, are those people who have availed themselves of the benefits of the low income incentive scheme. The total number of tenants in rental flats who have upgraded to purchased flats is much higher than that figure. I believe the figure is around 50% of those who are affected by the relocation exercise have opted to purchase flats.

Mr Ng Kah Ting: Since it is about 50% could the Hon. Minister of State, at some later stage let us have the figure?

Dr Lee Boon Yang: Yes.