May I suggest that the Government consider restoring the HDB rental system in a big way. During the early days of this nation, this was how many Singaporeans were adequately housed when they were resettled from kampungs. One-, two- and three-room Housing and Development Board (HDB) flats were rented out to those who could not buy.
Why is it that these smaller flats were subsequently either perceived by the HDB as lacking a demand, or was it a matter of policy? What is wrong with living in a small flat even on rental if it means affordability and having more disposable income for other uses?
The Japanese people are known to live in “rabbit hutches”, as a former Prime Minister of theirs said. But still they can make their small living environment nice and liveable.
In any case, HDB flats on purchase have a 99-year lease. Owners are really lessees only, according to the HDB agreement.
If the monthly rental of a three-room HDB flat is only half the amount needed for purchase – say S$500 instead of a S$1,000 monthly instalment – one can save S$500 in cash or in CPF which ensures a bigger nest egg for retirement. One can also use the savings to invest in low-risk types of investment like international government bonds with a return starting from 4 per cent annually.
Under the current situation, much of the CPF savings of a HDB lessee can be used up in paying for a new HDB flat whose value may start depreciating 50 years into the lease – which, incidentally, would be at the point of one’s retirement age.
And one’s HDB flat cannot be easily liquidated as cash for use because one will always need housing. Indeed, the Government has proposed that an eligible lessee sell it back to the HDB for a monthly payment that can be used for living expenditures in his/her old age.
The Government should seriously consider restoring the rental system for HDB flats. This is on top of the urgent need to quickly build more flats to house new families.
Letter from Chia Hern Keng
Source : Today – 17 May 2011