Desmond Lee rejects WP’s rent control suggestion, citing potential supply and equity issues

Desmond Lee rejects WP’s rent control suggestion, citing potential supply and equity issues

SINGAPORE— Minister for National Development Desmond Lee dismissed the suggestion by the Workers’ Party Member of Parliament to regulate market rental fees, arguing that implementing rent controls could inadvertently reduce rental supply and create a situation where rental housing demand exceeds supply, resulting in allocation and equity issues.

According to Minister Lee, the rental rates for open market HDB rental flats and private residential properties in Singapore are determined through private agreements between flat owners and tenants.

He emphasized that international experience has demonstrated that while rent controls may temporarily moderate rental increases for some tenants, they are likely to distort the housing market.

“Rent controls may inadvertently reduce rental supply, and cause rental housing demand to exceed supply, which could lead to issues of allocation and equity.”

“This may also distort property prices, and disincentivise landlords from maintaining proper upkeep of their rental units.”

Nonetheless, Desmond Lee assured that the Singapore government remains open to considering various options and will continue to monitor the situation closely and adopt such measures as may be necessary.

Minister Lee’s response was provided in writing on Monday (3 July) in reply to Parliamentary Questions raised by Jamus Lim, a Workers’ Party Member of Parliament representing Sengkang GRC.

Suggestion to legislate on the maximum rental fee adjustments by landlords following a lease renewal

Jamus Lim asked the Minister whether there has been any consideration by the Ministry to legislate on the maximum rental fee adjustments by landlords following a lease renewal, to a maximum percentage of the prior rent as practised by other jurisdictions such as Australia, Canada, China, France, Germany, and many states in the United States.

He also asked the Minister:

(a) whether there has been any consideration by HDB to cap rental fee adjustments following a lease renewal to a maximum percentage amount of the prior rent; and

(b) whether there are any practical constraints to imposing such a cap on rental increases.

In response, Desmond Lee highlighted that rental rates in Singapore are displaying early signs of stabilisation.

In the first quarter of 2023, the increase in public housing and non-landed private housing rents moderated to 4.4% and 6.2% respectively, compared to 8.1% and 7.5% in the previous quarter.

He said the government expects rental pressures to further ease In the coming quarters, as the government ramps up public and private housing supply and a significant number of residential units are completed.

“Close to 100,000 public and private residential units are expected to be completed from 2023 to 2025. This will add to rental supply. It will also reduce rental demand, as households temporarily renting move out of their rental units and into their new homes.”

Desmond Lee also emphasised that to support Singaporeans who need to rent, the Housing and Development Board (HDB) provides schemes such as the Public Rental Scheme for low-income Singaporeans who have no other housing options, and the Parenthood Provisional Housing Scheme for eligible families who require interim housing while waiting for the completion of their Build To Order (BTO) flat.

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