SINGAPORE: Extending public housing rentals to the mainstream will change social norms and could weaken communities, said Senior Minister of State for National Development Sim Ann on Tuesday (Nov 2).
This is not something the Government will embark on “without deep consideration”, she said in Parliament on Tuesday.
Her comments came in response to an adjournment motion by MP Louis Chua (WP-Sengkang), who urged authorities to significantly increase the stock of rental units across all flat sizes and create an "expanded public rental scheme" for the wider population.
Describing home ownership as “a key tenet” of Singapore’s social compact, Ms Sim said mainstreaming rental would be a “significant departure” from current public housing policy and principles. Currently, home ownership rates in Singapore are close to 90 per cent.
“It will reshape our social norms and could weaken our communities, because unlike home ownership, where people sink their roots, rentals are more transitory. This is not something we will embark on lightly without deep consideration," she said.
The Ministry of National Development (MND) will continue to study how Singaporeans’ preferences and aspirations evolve, and continue to develop the public housing programme to meet these changing needs, she said.
SEVERE SHORTAGE OF RENTAL UNITS
In his adjournment motion, Mr Chua pushed for a greater diversity of housing options. But the key problem is the “severe shortage” of Housing Board (HDB) rental flats, he said.
There were 1.019 million sold HDB flats in Singapore as of March this year, but only 63,773 rental units, he added.
These rental flats are available through three schemes: the Public Rental Scheme, the Interim Rental Housing scheme – for low-income households with no other housing options – and the Parenthood Provisional Housing Scheme (PPHS), which helps temporarily house families waiting for their new flats to be completed.
Mr Chua pointed out that there were only about 1,600 rental flats under construction, which will be completed progressively by around 2025.
But current average waiting times for rental units have already lengthened to five months, he said, adding that MPs have received requests to help with appeals for such units.
It is a similar situation for PPHS, and although there are plans to nearly double existing supply with another 800 such units, supply remains tight, he said.
The MP noted that there were 544 applications for 60 available PPHS flats in October, “indicating excess latent demand that cannot be met”.
MORE DIVERSITY IN HOUSING NEEDED
In the bigger picture, a subsidised and expanded public rental scheme for the wider population would better support diverse needs, especially for millennials who are faced with limited living options, he said. It would also cater to a growing class of gig economy workers, added Mr Chua.
Expanding public rentals could help get rid of the stigma of HDB rental housing, he noted.
“Renting an HDB flat need not and should not be seen as a sign that you are poor and needy, and our position on rentals need to reflect that.”
Mr Chua said one of the biggest misconceptions is that home ownership is "superior" to home renting.
“To use an analogy from the insurance world, is a whole life insurance policy necessarily superior to that of term insurance? ... I believe the same can be applied to housing, and the saying that ‘tenants pay subsidised rents but own nothing’ is only a half truth," he added.
Looking overseas, Mr Chua also pointed out that Switzerland and Germany have the lowest home ownership rates among OECD countries at 38 per cent and 44 per cent respectively, but they have one of the highest gross domestic product per capita and Human Development Index scores globally.
“The correlation between home ownership and the level of prosperity of a country may not be as clear cut. Home ownership is thus more of a preference than a superior option,” he said.
On how to provide this housing, Mr Chua mooted allowing private developers to partner with the HDB in coming up with Build-to-Rent (BTR) models.
If HDB were to provide more rental options, they could also be priced between that for public rental flats and open market rentals. This would also be “simply just a shift from a home ownership subsidy to a home renting subsidy instead”, he said.
He also suggested that the stock of HDB rental units could be held in a real estate investment trust (REIT) structure.
“This would also have the additional benefit of supporting the financing of the construction of new rental flats and is self-sustaining, reducing the cash costs on the part of the Government," said Mr Chua.
BENEFITS OF HOME OWNERSHIP
Responding to Mr Chua, Ms Sim outlined the benefits of home ownership, such as developing "a sense of rootedness and a concrete stake in Singapore's progress".
"Beyond being homes, HDB flats are also valuable assets that can be monetised to supplement their owners’ income during their retirement years," she said.
“More remarkably around 85 per cent of our low-income households own their homes,” Ms Sim added.
She said that housing subsidies are one of the “most significant bundles of subsidies” that most Singaporeans enjoy.
"Our home ownership policies also support our family formation policies, which reflects another important aspiration for many Singaporeans," she added.
While overall housing policy continues to support families, Ms Sim said authorities recognise the home ownership aspirations that many single people have.
“For instance, some singles have had to forego opportunities of forming families of their own because of caregiver responsibilities ... In such cases, home ownership can be material in improving a person’s well-being as well as financial security," she said.
“We are very mindful of the circumstances of this group and will continue to study ways to assist them.”
GOVERNMENT WILL HAVE TO CONSIDER POLICY “VERY CAREFULLY”
As for expanding rental offerings, Ms Sim said that other countries’ cultures of renting reflect different social circumstances. In addition, without public housing subsidies that support home ownership, “some end up renting for many years, or even for life”, she said.
She noted that there is already a wide range of open market rental options, including co-living – a growing trend that authorities are studying.
As to Mr Chua’s suggestion for HDB to rent out flats at subsidised rates, Ms Sim said: “It represents a change in the nature of our public housing policy and is something we would need to consider very carefully, for reasons of principle as well as practicality.
“We see the provision of a subsidised rental option as a means towards achieving home ownership, because we believe in the benefits that home ownership brings to Singaporeans.”
She added that without substantial rental subsidies from the Government, most Singaporeans would be unlikely to find it attractive to pay market rent using cash.
In addition, flat owners who pay off their loans are “assured of a roof over their heads for the rest of their lives”, but for those who rent, rental payments would continue to recur, even after retirement.
“We will also need to study the impact of introducing a new supply of rental flats at rates lower than market, which may affect rental rates across the board,” said Ms Sim.
Concluding her speech, she said home ownership has been and will continue to be a key housing strategy for Singapore.
"Beyond just a roof over our heads, home ownership has provided Singaporeans with a sense of stability, security and belonging, and has given us a strong stake in our country’s progress," she said.
"Given our limited fiscal space, we will continue to prioritise our resources to support Singaporeans in achieving their home ownership aspirations - that is, homes owned by Singaporeans, and not by private investors through REITS," Ms Sim added.