National Development Minister Khaw Boon Wan said the government has taken steps to help low-income tenants of rental flats who see their pay rises eaten up by a rental increase.
In his blog, Mr Khaw explained how the government has helped those affected by this so-called “cliff effect” when they cross the income tier.
Rentals are based on household income. Those who earn less are subsidised more and therefore pay less than those who earn more.
For those who earn below S$800 per month, their rental rate may be at S$30 per month.
The next income tier of “S$801 to S$1,500” will attract a rental rate of S$110 per month.
For example, if a person’s income rises from S$750 to S$810, his rental rate may go up from S$30 to S$110 per month.
At tenancy renewal, tenants whose income improves from “S$800 or less” to “S$801 to S$1,500” will have their rent increase waived. Tenants can continue to pay the lower rent for the renewed two-year term tenancy.
At the end of the renewed term, if the tenant’s income increase is still low relative to the rent increase, the rent increase will be waived for another two-year term tenancy.
Mr Khaw said this arrangement helps low-income tenants who earn “$800 or less”.
They have up to four years to use their additional income to provide for their families and build up their savings.
To date, 1,004 out of 1,869 tenants who renewed their tenancies and whose income increased from “S$800 or less” to “S$801 to S$1,500” have benefited from this arrangement.
Source : Channel NewsAsia – 19 June 2013