HDB’s Rental Housing Policy (Part 1): The Malay EIP limit

Sometime in the middle of 2012, I conducted a review of all my Meet-the-People Session cases and sought to identify the issues that repeatedly came up, to understand why they continued to be so intractable, and how the status quo could be improved.

Repeated requests for Housing and Development Board (HDB) rental flats from needy Singaporeans was the one intractable issue that kept coming up.

That rental housing stood out was not surprising, as the former Minister for National Development Mr Mah Bow Tan had informed parliament in 2009 that HDB receives more than 500 appeals from MPs for rental housing each month.

In a parliamentary speech delivered in March 2011, Mah announced that the HDB was building another 7000 rental flats by 2012, bringing the total supply to 50,000 (HDB had already committed to this figure in November 2006). In addition, HDB had also moved to tighten the eligibility criteria for rental flats focusing on the most needy families. As a result, Mah stated that the number of eligible applications received per month decreased from about 300 in 2008 to 190 in 2010. In addition, the average waiting time was reduced to 8 months in 2011, compared to 21 months in 2009. The former Minister also said that the HDB received 14,000 appeals from 7,000 appellants for rental flats.

Tellingly, Mah said, “if all the 7,000 cases are granted rental housing. I don’t think we will be able to cope. That said, I have put in place an appeals process, where cases that merit special consideration are put before an Appeals Committee for further review. This committee is headed by my Senior Parliamentary Secretary and includes a panel of MPs. There is an independent assessment of the merits or otherwise of each case.”

Shortly after the 2011 General Elections, Minister for National Development Mr Khaw Boon Wan announced at a youth forum at the Woodlands Community Club, “we need to ramp up the building of rental flats as quickly as we can, (and) not just by a few thousand. We need to build by the tens of thousands, and the earlier the better.”

The arrival of a new Minister at the helm suggested that HDB’s rental housing policy was in line for a significant revamp with tens of thousands of rental units anticipated. But in a recent parliamentary reply in November 2012, Khaw has confirmed that the plan is to increase this number to 57,000 by 2015, an increase of 7000, not the “tens of thousands” posited earlier in 2011.

A brief primer on rental housing in Singapore

In 1985, the HDB published a commemorative tome entitled, Housing a Nation: 25 Years of Public Housing in Singapore, and in a short section, traced the eligibility criteria, amongst others, of the HDB’s rental housing policy. See table (right), which is sourced from p.243 of the publication in question:

In 2011, the HDB produced another commemorative publication, titled Our Homes: 50 Years of Housing a Nation authored by current Straits Times editor Warren Fernandez, which better set out more useful facts on rental housing in Singapore.

According to Our Homes, in 1964, before the government introduced the home ownership scheme, all HDB flats were up for rental, and around 18% of the Singapore population lived in flats rented from the HDB. As a result of the government’s plan to nudge Singaporeans to become home-owners and to create a sense of ownership, the HDB launched a host of schemes to help less well-off Singaporeans. Demand for rental housing fell steadily and by 1982, the HDB stopped building rental units and closed the register for 3-room rental flats.

In 1982, the HDB had 135,000 rental flats, of which 110,000 were one and two room flats (today that number is around 49,300).

According to Our Homes again, in Oct 2003, HDB’s rental housing policy was extended to households with a monthly income of $1500, an increase from $800 previously. This change led to an increase in the demand for rental flats, and the HDB received about 350 rental applications a month.

Getting the data: The limits of parliamentary questioning

Since the 2011 elections, the overwhelming majority of residents who came to see me for public rental housing requests and appeals were Malay residents.

Unusually, for those who were fortunate enough to be allocated a rental flat, the wait extended to months, and for some, more than a year even. I realized over time from HDB replies that this was because of the HDB’s rental housing policies, which are also tied to the longstanding Ethnic Integration Policy (EIP). A negligible number of replies from the HDB to me stated that the delay was because of an applicant’s preference about the location of the flat etc.

The EIP limits the number of Chinese, Malay, Indian and Others (CMIO) households in any given rental block, and at the overall neighbourhood level.

The presence of the EIP necessitated an understanding of what the ethnic limits for HDB rental housing were, and whether Malays had exceeded these limits, resulting in a longer wait for rental housing, or until another Malay household had moved out.

I filed a parliamentary question in July this year and received a useful, albeit incomplete answer.

Mr Pritam Singh asked the Minister for National Development (a) what is the current percentage of Malays, Chinese, Indians, and others residing in all HDB rental flats, on (i) a block-by-block basis and (ii) zone/cluster-by-zone/cluster basis; (b) what is the current average waiting time for an approved rental housing application for all ethnic groups, for each zone/cluster; (c) what is the longest waiting time that an applicant from each ethnic group has had to wait before a rental flat was allocated; and (d) how often has the Ministry changed its ethnic integration policy (EIP) limits for rental housing since the introduction of HDB rental housing and what are the reasons for those changes.

Mr Khaw Boon Wan: The Ethnic Integration Policy (EIP) was introduced in 1989 to ensure a balanced mix of the various ethnic groups within HDB estates. The objective is to prevent the formation of ethnic enclaves. EIP limits are set at the block and neighbourhood levels and they apply to both sold and rental flats.

The EIP was last revised in March 2010, when the ethnic limit for the Indian/Others ethnic group was increased by 2%-points. This was in response to Singapore’s demographic changes.

The limits are 87% for Chinese, 25% for Malays and 15% for Indians/Others. These are at the block level. At the neighbourhood level, the corresponding limits are tighter by 3%-points. The current rental households comprise 62% Chinese, 25% Malays, and 13% Indians/Others.

The average waiting time for a public rental flat is about four months for Chinese, six months for Indians/Others, and seven months for Malays. At the individual level, the waiting time would vary for different applicants and is a function of factors such as the applicant’s choice of rental zone, type of rental flat, and the EIP quota available.

The Minister did not reveal the current demographic breakdown of households living in rental flats across Singapore. This information was necessary as it would have provided clear details on the absolute numbers of public rental households in Singapore across the different races – data central to fully understand the application of the current HDB rental policies, or even to propose tweaks to the system.

But what the Minister did reveal went a long way to explain why Malay applicants had to wait longer than most for a rental flat.

The Malay quota of 25% had already been reached.

The Malay EIP limit for Rental Housing: On the Ground in AHTC

Aljunied GRC and Hougang SMC host a few rental flats. After some checks with the Aljunied-Hougang Town Council and some of my fellow MPs, I realized that in the case of most of our rental blocks, the percentage of Malay households was greater than 25%, beyond the limits established by the Minister in Parliament.

In fact, the figure hovered around the 30-40% mark for most flats, and for one block in particular, the figure was close to 50%. The EIP limit of 25% for Malay applicants as established by the Minister’s reply in parliament did not correspond with the numbers found in rental flats within the Aljunied-Hougang Town Council (one important caveat in the veracity of these percentages is the classification of Indian-Muslim applicants, and whether they come under the Malay or Indian EIP limits).

That the real percentages on the ground were so different from the limits revealed by the Minister was a curious anomaly. It potentially reveals a reality that is difficult to look past – in future, the Malay EIP limit could hypothetically go up to between 30% and 50%, and no adverse consequence is likely, since that is the very status quo, if rental flats in AHTC are anything to go by.

For the August sitting of parliament, I asked a follow-up question to find out how many rental blocks in Singapore had passed the 25% threshold for Malay families. I also wanted to know if the official EIP limit would be increased for Malay families, so needy Malays could be allocated their rental units at the same time as other needy Singaporeans. The reply came to this question came in November, as the question was not answered by the end of question time during the parliamentary sessions in August, September and October.

Mr Pritam Singh asked the Minister for National Development (a) whether the ethnic limit of 25% for the Malay ethnic group at the block level in all HDB rental flats has been reached and, if so, when; (b) whether HDB has plans to increase this limit for the Malay ethnic group at the block level; and (c) whether HDB will consider allocating rental flats on a strict needs basis only to avoid rejection or delay as a result of the applicants’ preference of rental zone.

Mr Khaw Boon Wan: Sir, the Ethnic Integration Policy (EIP) limits are reviewed from time to time to reflect Singapore’s demographic changes. Currently, about 60% of HDB’s public rental blocks have reached the EIP block limit of 25% for Malay households. We are in the midst of reviewing the EIP limits for rental flats, to take into account the demand from the various ethnic groups.

Applications for a rental flat are assessed and approved on a strict needs basis. As for allocation, rental applicants may prefer certain locations, which are nearer their workplace or their children’s school. We allow them the flexibility to choose the location zone, so that we are better able to meet their needs. HDB will advise them on the estimated waiting time for their preferred zone as well as the zone with the shortest waiting time, so that they can make an informed decision.

Again, only a partial answer was forthcoming, with no clarity about when the 25% limit for Malays had been exceeded, as opposed to “reached”.

But unsurprising to me, the Minister revealed that about 60% of rental flats had reached the ethnic limit of 25% for Malay applicants. What the public continue to be clueless about is whether Malays comprise 30, 40 or 50% of a typical block of rental flats, as the Minister did not answer the question when it was asked earlier. No reason was given why this information could not be released.

Crucially though, the Minister did let in on important detail – that the HDB was reviewing EIP limits for rental housing to take into account demand from the various ethnic groups. This would almost singularly be the result of a large number of Malay Singaporeans requiring rental housing, since the other races are still within the EIP limits.

All said, for Malay applicants, this was welcome news indeed.

Next: HDB’s Rental Housing Policy (Part 2)  https://singapore2025.wordpress.com/2012/12/30/hdbs-rental-housing-policy-part-2-reviewing-the-system/

I would like to thank my colleague, Faisal Abdul Manap, MP for Aljunied GRC for his views on this blogpost.