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MND vs NMP: Round 2 TKO

by Leong Sze Hian

I refer to the article “Rental flat scheme has helped over 1,300 families” (ST, Nov 24) and the report “1,318 families benefit from Interim Rental Housing scheme” (Channel News Asia, Nov 24).

The former states that “Of this, 311 have since moved out of IRH (Interim Rental Housing) flats.

Earlier this year, The Online Citizen has reported stories of tenants in IRH who faced forceful eviction from their flats. ( "Do you want me to stay at the beach", TOC April 8) Why didn't the minister in his reply to Parliament reveal how many of the 311 who moved out were evicted in a similar manner?

As I understand that most of the homeless that were picked up by the Ministry of Community Development, Youth and Sports (MCYS), were placed in IRH, can we have the statistics as to how many homeless were moved to IRH, and how many have been evicted. Also, of those evicted, what was the average stay allowed in IRH?

The Straits Times article also reported that the IRH were meant to help familes that had run into financial difficulties and needed to downgrade quickly:

"With the scheme, families could sell their flats immediately, and buy new smaller flats. While these were being built, they could live in rental flats priced below market rate.”

Since it takes at least three years for the “new smaller flats” to be built, I am puzzled as to why 311 would voluntarily move out so soon, since the scheme was only launched in January last year? Where would these famlies stay, given that IRH is the cheapest housng option other than HDB rental rental flats, and their “new smaller flats” are still not built yet?

IRH is reviewed every six months?

Perhaps the impressive numbers of tenants who have moved out from IRH could be explained by the following:

We learnt from tenants and social workes that under the IRH scheme,

a) IRH is normally for a maximum period of six months and thereafter, there is a review on a case-by-case basis – rent may be increased

b) tenants face a late payment fee of $50 is charged, even if the rental payment is just one day late

Can the minister please clarify whether the above is true?

A flat under the IRH at Havelock Road

Also, since the economy is booming and expected to be the highest growing in the world this year at 15 per cent GDP growth, and meda reports say that the job market is bursting at the seams, why has the number who have to resort to IRH increased from 611 on 31 March to 1,318 now? How is it possible that the number of such families who could not pay for their HDB flats, increased by 116 per cent (1,318 divided by 611), in just over the last six months or so?

Didn't the Minister of National Development say in his two articles on 5 and 12 November in Today that HDB flats are affordable?

Affordable and enough HDB flats?

On the issue of affordability, I would like to refer to the Minister of National Development's article "Are HDB flats affordable" (Today, Nov 12).

It states that "(HDB) has made it possible for an average of 15,000 young couples every year to join the ranks of homeowners".

According to the Department of Statistics' Yearbook of Statistics 2010, the total number of HDB flats increased from 823,760 in 1999, to 888,143 in 2009.This is an increase of only 64,383 flats in the last 10 years, or about 6,438 a year. In 1999, 34,836 flats were constructed by the HDB, against just 6,495 in 2009. Against this, the population grew during the same period by 1.03 million from 3.96 to 4.99 million.

So, how was the "average of 15,000 young couples every year to join the ranks of homeowners" derived? Moreover, surely, not all the 6,438 average number of flats per year, were bought by "young couples", as some would have been purchased by older families.

HDB concessionary loan

With regard to "new and resale flat buyers can apply for a concessionary loan. For a $200,000 loan over 30 years, the interest subsidy amounts to about $30,000", HDB bank loan interest rates have always been below the HDB concessionary loan's 2.6 per cent, since banks were allowed to offer HDB loans from 1 January, 2003. Assuming an average HDB bank loan interest rate of 2 per cent, the repayments on a HDB concessionary loan in the example given is actually $22,118 more than a HDB bank loan, as the monthly repayment would be $800.68 and $739.24 for the HDB and bank loan, respectively.

With the historical intense and healthy competition from banks in the HDB mortgage loans market, if a HDB loan borrower refinances his or her bank loan say every three years or so, the interest savings compared to a HDB loan may be even more than that calculated in the above example.

By the way, current bank loan rates are all below HDB's loan rate of 2.6 per cent, and almost all are below 2 per cent. The lowest rate available now is only 0.88 per cent.

So, how can the HDB loan still be described as "concessionary" and an "interest subsidy"?