Policies may cause the number in arrears to continue to rise. By Leong Sze Hian.

Providing affordable housing – HDB should re-look policies

Leong Sze Hian

I refer to the article, “Measures to help new HDB flat buyers, existing owners” (Business Times, Feb 6).

I would like to applaud the HDB for its pro-active measures to help Singaporeans during the recession, such as freezing the alignment of rents to income for one year. This second round of increase was originally scheduled for November 2008.

However, some of the policy changes could not have come at a worse time, and may cause financial stress for some Singaporeans.

For example, the new additional eligibility criteria for rental flats, to permanently exclude those who have purchased two new HDB flats before, or ex-private property owners, may be too harsh as some of those in these categories may have lost their homes because of financial difficulties.

Just because one has owned two new HDB flats or private property previously does not mean that one will never be in financial difficulties in the future.

This is perhaps underscored by the statistic that 6,500 households are in arrears for more than two years, and HDB concessionary loans in arrears over three months has grown from 25,000 in 2003 to 33,000 as of October last year. If HDB bank loans in arrears are included, what is the total number of HDB mortgages in arrears?  Does this indicate that the pricing of HDB flats may be an affordability issue for many Singaporeans.

Another example is to exclude rentals to parents whose children have private property or HDB flats with spare room to take-in their parents. This may cause some hardship to parents who do not stay with their children, unless the powers of the Parents Maintenance Tribunal are extended to force children to take-in their parents. We should not forget that parents too, can lose their homes due to foreclosure or inability to afford existing open market rentals due to retrenchment or business failure.

The second HDB concessionary loan entitlement for those who have to downgrade, should be given as a matter of course, instead of on a case-by-case basis as has been the HDB’s practice.

What is the rationale for granting a second HDB loan only to those who upgrade to a bigger HDB flat?

This policy may cause the number in arrears to continue to rise, as people may be compelled to buy larger flats.

How many of such case-by-case appeals for a second loan by down-graders were approved last year?     Instead of harping year after year that the rental queue and waiting period are getting longer because there are too many non-needy applicants, I would like to suggest that we consider another plausible explanation – that the prices of HDB flats may not be affordable for some Singaporeans.

One needs only to look at the household income data from the Department of Statistics’s Key Household Income Trends 2008 report, which says that the bottom 10 per cent of employed households, which I estimate to be about 100,000 households, have an average per capita household income of only $340 monthly. If we include unemployed households (73,100 residents were unemployed in December 2008) and retiree households who may be in financial difficulties, how many needy households are there in total?

Instead of policies to try to dampen demand for rental or smaller flats, like the new additional eligibility criteria or the second loan for upgraders only, the HDB should re-focus on its mission to provide affordable housing for Singaporeans, especially now that Singapore is in its worse recession.