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HDB – policies that are cruel?

Leong Sze Hian /

In the Straits Times’ report, “Scrutinise WP's manifesto”, it reported the comments of Deputy Prime Minister Wong Kan Seng thus:

“He (Wong Kan Seng) cited, for example, the WP's call to peg the price of HDB flats to the median income of eligible buyers, and for flats to be affordable enough that mortgages can be paid off in 20 years instead of 30.

'If you want to pay the mortgage in 20 years, does it mean you have to pay a higher sum every month?' asked Mr Wong. 'And if you fix the price at the median income, will there also be restrictions on the sale (price)?’”

After reading the Workers' Party's Manifesto Chapter 8 on Public Housing, in my view, if new HDB flats are priced at the median income such that for example, a typical 4-room flat will require only the CPF Ordinary Account (OA) contribution at the median income for a 20-year HDB Concessionary Loan, the monthly mortgage may be even less than a 30-year mortgage based on the much higher Market-subsidy Pricing currently used by the HDB.

Let me illustrate this with an example. The median monthly income from work among resident households was $5,000 in 2010. So, at 23 per cent OA contribution, the monthly mortgage repayment works out to be $1,150, assuming no down-payment to simplify matters, which translates to a 4-room flat price of about $215,000.

Similarly, the above can be computed for other flat types, like the 3 and 2-rooms, to peg prices to the respective income percentile.

To reflect differences in location such as the constituency, area, floor, etc, this $215,000 may be used as the price ceiling, with less desirable flats priced at a discount.

There may also be no need to place any restrictions on the sale price, as there is already a 5-year Minimum Occupation Period (MOP). And since it may take around 10 years (5 years to wait for the Build-to-order (BTO) flat to be built and 5 years MOP), the impact on the resale market may not be significant, and may actually help to cool prices gradually, which repeated cooling measures have failed to achieve.

I trust that the above addresses the Minister's remarks that: “When people look at all these items (on the manifesto), they should look into the details, ask for better explanation on how these policies can be implemented”.

Whilst we are on the subject of HDB policies, I would like to share with you what HDB policies have meant to an ordinary Singapore.

Old, unemployed and penniless?

Mr Yeo Kim Mong, is 72 years old, walks with a limb, unemployed and penniless.  His CPF statement shows that there is no money in his CPF account, except for $1,628 in his Medisave Account, which he cannot use unless he falls ill.

His last contribution to CPF was $64 for his last work done in May 2007, and his last contribution as a self-employed was $472 for the whole year in 1997.

These figures may indicate how little Mr Yeo's earnings were.

He has appealed to the HDB, through his Members of Parliament Dr Lily Neo and Dr Lee Boon Yang, several times, to be given a HDB rental flat, because of his dire financial situation.

The HDB has rejected all his appeals, giving basically two reasons.

1.  That those who have sold two HDB flats, are permanently debarred from renting a HDB flat.

This unbending policy, is devout of compassion and reason. Hasn't the HDB heard of divorce, job loss, pay-cuts, business failure, sickness, accidents, etc, that may cause financial stress to Singaporeans?

How can we assume that anyone who has sold two flats can never be poor for the rest of their lives?  His first flat was purchased for $6,200 (sold for $26,600), second flat bought at $40,800 and sold for $156,000, in December, 1999 - 11 years ago.

In any case, Mr Yeo's last sale in 2009, which was two years ago, did not give him any profits. After deducting the outstanding housing loan, CPF utilised and accrued interest, the cash profits from the sale of the 4-room flat was only $2,062 ($21 to Mr Yeo and $2,042 to the other joint owner).

In any case, I do not see why the HDB cited his resale flat sale, as it has nothing to do with the  permanent debarrment for those who have sold two new flats or resale flats with grants.

2. That he and his “daughter may consider renting a room/flat from an HDB lessee under the approved Subletting Scheme”.

Since Mr Yeo is basically broke, how can he be expected to be able to rent a room for around $500 or a flat for around $1,500 in the open market?

According to Mr Yeo's friend, Mr Eddie Chan, Mr Yeo told him that when he sought financial assistance, it was suggested to him that he should sue his daugther under the Parents' Maintenance Tribunal (PMT). The monthly maintenance amount was $75 a month. This low sum may indicate that his daughter may not be very well off.

Because of the PMT issue, Mr Yeo has not been in touch with his daughter, and does not even have her contact or know of her whereabouts. Needless to say, his relationship with his daughter has been estranged because of this.

It may be very hurting for a father to be estranged with his daughter just because of the maintenance issue.  This may be somewhat cruel, because money aside, how would you feel if you are a father in Mr Yeo's predicament?

A rare samaritan?

Being without a home, Mr Yeo is now using his friend Mr Eddie Chan's address in order to seek financial assistance from the government.

Eddie was a stranger when they first met in Chinatown, when Eddie went there to try to find another male Singaporean to share a rental flat, in order to meet HDB's rental flat eligibility criteria.

Of course, since Mr Yeo had sold two flats, he could not qualify.

Without a good hearted samaritan like Eddie, Mr Yeo would not even have a mailing address.

But let us be honest with ourselves – how many samaritans are out there, who would allow a complete stranger to use his address?

With this kind of 'uncaring' policies of the HDB, perhaps more Singaporean samaritans like Eddie will emerge.

Because if we don't help one another, we may all be at the mercy of the HDB.

By the way, according to Eddie, he estimates that about 60 per cent of the rental flats in the block that he is renting, (Blk 29, Havelock Road) is rented to foreigners, about 10 per cent are vacant and about 40 per cent are rented to financially stressed Singaporeans like Eddie who is paying $250 rent a month for a room, in a shared 3-room flat, under a 5.5 months' lease.

Why is it that about 70 per cent of the flats in this block are rented to foreigners for profit or are left vacant, when there are Singaporeans like Mr Yeo, who desperately needs a rental flat?

In the meantime, Mr Yeo has been uncontactable the last few weeks. Eddie says he too does not know where Mr Yeo is – and that Mr Yeo would only show up at his flat occasionally.

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Financial Counselling

The Online Citizen’s columnist Leong Sze Hian, Past President of the Society of Financial Service Professionals (SFSP), and Alex Lew, Vice-President SFSPI, shall be conducting one-on-one financial counselling every Thursday night, from 8 pm to 10 pm at Blk 108, Potong Pasir Ave 1.

If you have any financial problems, issues or questions, such as HDB mortgage or eligibility,  electricity bills, loan issues, bankruptcy, etc - you are welcome to attend the counselling session.