HDB tightens rental flat eligibility criteria

The Housing and Development Board (HDB) is tightening its rental flat eligibility criteria with immediate effect to ensure that these heavily subsidised flats go to the truly needy.

HDB rental flats come cheap. With rent rebates and discounts, 85 per cent of tenants pay very low rent, according to the National Development Ministry.

Taking into account the increased rebates under the Goods and Services Tax Offset Package, this is how much tenants will pay this year: one-roomers pay just S$240 or S$20 a month, while 2-roomers will pay S$540, which works out to S$45 a month.

These attractive rates have led to overcrowding in the public rental market, said National Development Minister Mah Bow Tan.

Over 300 new applicants join the queue every month, but only about 150 return their rented flats. There are currently 4,000 people in the rental flat queue, with an average waiting time of 17 months.

Two thirds of them used to own HDB flats, but have cashed out on their property and are coming back for a heavily subsidised rental flat.

Mr Mah said most do not seem to have financial difficulties when they sold their flats. They were not in arrears and they were not divorce cases. In fact, 40 per cent received more than S$90,000 in sales proceeds.

The minister said these applicants in the queue should not be competing with needy families for rental flats. To weed out these cases, the HDB will introduce new rules on top of existing ones, which hinge heavily on meeting the income ceiling of S$1,500 per month.

For those who have taken a housing subsidy, the board will now consider their income and assets, including CPF savings and proceeds from the previous flat sale. They will be excluded if they used to own a private property.

Family support will also be taken into account. Applicants will be excluded if their child owns a private property or has spare rooms in his flat to take the parents in.

Mr Mah said: “We must reinstate the public rental scheme to its rightful role as the final safety net and the final housing option of last resort for the needy. If everyone jumps onto the safety net, whether they deserve or they don’t, that safety net is going to break.”

For existing tenants, rents will be kept low. The HDB will maintain the 2005 market rent rate. The rent alignment exercise, where households who earn more will pay more rent, will also be deferred for a year.

The alignment was announced in November 2006. Tenants earning more than S$800 per month were earlier informed that their rents will be raised over two tenancy renewals or four years.

HDB will also increase the supply of rental flats by 20 per cent to 50,000 units by 2012. For this year, HDB will add another 1,450 rental flats through its rental flats building and conversion programme.

Source : Channel NewsAsia – 6 Feb 2009