Building of Subsidised Rental Flats

This was another Parliamentary Question I posed to the National Development Minister on 20 October 2011 regarding the building of subsidised rental flats.

This was another Parliamentary Question I posed to the National Development Minister on 20 October 2011 regarding the building of subsidised rental flats.

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Mr Gerald Giam Yean Song asked the Minister or National Development (a) how many subsidised rental flats would need to be built to meet the current high demand; and (b) when does HDB plan to build these flats.
The Minister for National Development (Mr Khaw Boon Wan): Mr Speaker, Sir, as I said yesterday, currently, there are 44,000 households living in HDB rental flats. Another 1,600 applicants are on the waiting list and the average waiting time for a flat allocation is now six months.
We are building more rental flats, with a view to shortening the waiting time further through speeding up the allocation of flats to these low-income families. Our supply of rental flats will soon reach 47,000, to which we will add another 3,000 units next year. So, this should clear the outstanding demand while meeting demand from new applicants.
We plan to build another 7,000 units. This will further increase the total stock to 57,000 by 2015, amounting to 5% of all HDB households. As we build more rental flats, we must ensure that they are safeguarded for poor and needy households who cannot afford to own a home, have no family support, and do not have other housing options. It is important that HDB maintains strict rules and criteria to do so. Nonetheless, HDB will exercise flexibility to help those who do not meet the rules but worthy of consideration.
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We must also recognise that needy and vulnerable families often face social problems that extend beyond the need for rental housing. We will also work closely with MCYS and other social agencies to help these families more holistically.
Mr Gerald Giam Yean Song (Non-Constituency Member): Mr Speaker, I would like to thank the Minister for his reply. I would just like to ask one supplementary question. Has this number that he has come up with factored in the likely higher demand due to the looming economic downturn, and in light of the Minister’s remarks yesterday that he intends to make housing for low-income families his second top priority?
Mr Khaw Boon Wan: Obviously, figures are dynamic and we have to be mindful of changing circumstances. Fortunately, for rental blocks, the construction time is relatively shorter, so we do have some lead time. I am ramping it up anyway, hence the numbers — 7,000 new units, 3,000 new units. They are higher than the normal projection of the annual demand. But I keep a very open mind because we do not quite know how the situation will shape up. Yesterday, I shared with the Member from Aljunied, Mr Low Thia Khiang, in the Members’ Room, that whatever we do, we must not unwittingly incentivise the growth of these rental blocks. We need some, but I think if you make it too easy for rental units to be accessed, you can unwittingly create other kinds of problems.
As a stretch target, if you ask me, I would prefer “zero rental units”, meaning everybody becomes a home-owner. We know that that is not possible but I think we should always bear it in mind that the correct thing to do is to prevent problems so that families do not get into a dire situation when they become homeless and need to be temporarily placed somewhere. The best is if they can organise themselves, and working with us, work towards home-ownership. That I think should always be our target.
Mr Yaw Shin Leong: Mr Speaker, I thank the Minister for the clarification. Just a supplementary question: it was reported that HDB will review its public housing model. So will HDB be considering abolishing its commercial partnership with Keppel Land to commercially rent out public flats managed by EM Services?
Mr Khaw Boon Wan: Sir, I think the Member was referring to another scheme which is a pilot scheme called Interim Rental Housing (IRH). Let us back-track a little. 92% of Singaporeans own their own homes. This leads us to ask, “What has happens to the other 8%?”
Sir, 8% of Singaporeans are living in a rented place. The bulk of them in subsidised HDB rental flats, which is the 44,000 that I spoke about – which will become 57,000. The rest are in various kinds of arrangements, most of them private market arrangements. They rent a room, or they rent a place from landlords. They are not subsidised. Then, there is a small category which makes up a very tiny percentage of the total rental market. MND started this scheme two to three years ago as an interim programme. They were not sure how the project will shape up, so they asked EM Services — which happened to be the joint-venture which the Member spoke about — to test it out. They worked on a cross-subsidy model. Some of the units are rented out at market rates, some are at subsidised rates. The profit made from the market rates are used to subsidise the other portions.
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I am reviewing the policy but because those are contractual arrangements that have been made to the company, I will see through the contractual arrangements. My own thinking is eventually we will take over all the rental units and leave the rest to the market.

Mr Gerald Giam Yean Song asked the Minister or National Development (a) how many subsidised rental flats would need to be built to meet the current high demand; and (b) when does HDB plan to build these flats.

The Minister for National Development (Mr Khaw Boon Wan): Mr Speaker, Sir, as I said yesterday, currently, there are 44,000 households living in HDB rental flats. Another 1,600 applicants are on the waiting list and the average waiting time for a flat allocation is now six months.

We are building more rental flats, with a view to shortening the waiting time further through speeding up the allocation of flats to these low-income families. Our supply of rental flats will soon reach 47,000, to which we will add another 3,000 units next year. So, this should clear the outstanding demand while meeting demand from new applicants.

We plan to build another 7,000 units. This will further increase the total stock to 57,000 by 2015, amounting to 5% of all HDB households. As we build more rental flats, we must ensure that they are safeguarded for poor and needy households who cannot afford to own a home, have no family support, and do not have other housing options. It is important that HDB maintains strict rules and criteria to do so. Nonetheless, HDB will exercise flexibility to help those who do not meet the rules but worthy of consideration.

We must also recognise that needy and vulnerable families often face social problems that extend beyond the need for rental housing. We will also work closely with MCYS and other social agencies to help these families more holistically.

Mr Gerald Giam Yean Song (Non-Constituency Member): Mr Speaker, I would like to thank the Minister for his reply. I would just like to ask one supplementary question. Has this number that he has come up with factored in the likely higher demand due to the looming economic downturn, and in light of the Minister’s remarks yesterday that he intends to make housing for low-income families his second top priority?

Mr Khaw Boon Wan: Obviously, figures are dynamic and we have to be mindful of changing circumstances. Fortunately, for rental blocks, the construction time is relatively shorter, so we do have some lead time. I am ramping it up anyway, hence the numbers — 7,000 new units, 3,000 new units. They are higher than the normal projection of the annual demand. But I keep a very open mind because we do not quite know how the situation will shape up. Yesterday, I shared with the Member from Aljunied, Mr Low Thia Khiang, in the Members’ Room, that whatever we do, we must not unwittingly incentivise the growth of these rental blocks. We need some, but I think if you make it too easy for rental units to be accessed, you can unwittingly create other kinds of problems.

As a stretch target, if you ask me, I would prefer “zero rental units”, meaning everybody becomes a home-owner. We know that that is not possible but I think we should always bear it in mind that the correct thing to do is to prevent problems so that families do not get into a dire situation when they become homeless and need to be temporarily placed somewhere. The best is if they can organise themselves, and working with us, work towards home-ownership. That I think should always be our target.

Mr Yaw Shin Leong: Mr Speaker, I thank the Minister for the clarification. Just a supplementary question: it was reported that HDB will review its public housing model. So will HDB be considering abolishing its commercial partnership with Keppel Land to commercially rent out public flats managed by EM Services?

Mr Khaw Boon Wan: Sir, I think the Member was referring to another scheme which is a pilot scheme called Interim Rental Housing (IRH). Let us back-track a little. 92% of Singaporeans own their own homes. This leads us to ask, “What has happens to the other 8%?”

Sir, 8% of Singaporeans are living in a rented place. The bulk of them in subsidised HDB rental flats, which is the 44,000 that I spoke about – which will become 57,000. The rest are in various kinds of arrangements, most of them private market arrangements. They rent a room, or they rent a place from landlords. They are not subsidised. Then, there is a small category which makes up a very tiny percentage of the total rental market. MND started this scheme two to three years ago as an interim programme. They were not sure how the project will shape up, so they asked EM Services — which happened to be the joint-venture which the Member spoke about — to test it out. They worked on a cross-subsidy model. Some of the units are rented out at market rates, some are at subsidised rates. The profit made from the market rates are used to subsidise the other portions.

I am reviewing the policy but because those are contractual arrangements that have been made to the company, I will see through the contractual arrangements. My own thinking is eventually we will take over all the rental units and leave the rest to the market.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

2 thoughts on “Building of Subsidised Rental Flats”

  1. I used to think rental flats were not built but were simply a portion of flats that were set aside under the Selective enbloc redevelopment scheme (SERS); clearly this is not the case.

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