HDB’s Rental Housing Policy (Part 2): Reviewing the System

The profile of rental flat applicants

Rental flat appellants comprise of Singaporeans with widely varying circumstances. Some are victims of structural unemployment, moving from one contract job to another, where salaries can vary quite significantly. Others are divorcees with children, then there are also ex-prisoners who have been shunned by family members who need people to take a second chance on them, and want to be self-sufficient. Many come from families where family relationships have broken down and irreconcilable differences have come to the fore. I had one most unfortunate case where the applicant was a transvestite and who needed an accommodation of his own but was unable to find a suitable partner (the Housing and Development Board (HDB) does not allocate rental flats to individuals. A minimum of two applicants must apply together). And there are many other unique cases.

In fairness to the HDB, allocating rental housing is not a straightforward task. The most difficult part has to be making a judgment about which family or individual is in greater need since supply is currently incredibly finite (possibility explaining the Minister Khaw 2011 remark to build tens of thousands of rental flats). The progressive tightening of eligibility criteria has been devised to ensure that only the most needy are allocated rental flats. How one defines “most needy” is not a science, and remains a difficult balancing exercise.

To this end, the HDB has got its basic principles correct in disallowing sellers of HDB flats with significant cash and CPF proceeds from renting HDB flats. However, in the current “unhappy” phase of Singapore’s property cycle (We’re not in happy part of housing cycle, Tharman admits, ST, Apr 5, 2012), the high cost of resale flats and ever-rising COVs has made rental from the open-market increasingly unaffordable for desperate sellers. Those that suffer most are low-income households who have no choice but to sell their flats to settle mortgage arrears and debts accrued for a variety of reasons, not necessarily linked to individual financial profligacy. In the current property climate, these individuals represent a good example of the unique cases that seek rental housing from the HDB.

Serving needy Singaporeans better

What would an EIP review for rental housing look like going forward? What sort of expectations should Singaporeans have for it? Can we expect the quota for Malay applicants to increase? Or should the review consider removing the Ethnic Integration Policy (EIP) in its current form from the HDB’s rental housing policy, to a scheme that allocates flats to the most needy Singaporeans, regardless of race? As more low and middle-income jobs in Singapore go down the contract and freelance route, should the government review the requirement for more (and larger, like 3 and even 4-room) rental flats? Should the government relook the entire HDB rental nomenclature in light of moderate economic growth in future, by having a 5 or even 10% buffer of rental flats for a rainy day?

Firstly, it would appear that the current EIP limits have been severely under-estimated for the Malay community, rendering the current limits obsolete. Accordingly, with the EIP figures for the rental flats in Aljunied-Hougang Town Council in mind, the relevance of the EIP limits for rental flats across Singapore ought to be seriously looked into afresh. If the government is tepid about the complete removal of the EIP quota for whatever reason, then perhaps one upper limit for all races would be a way forward – for e.g. 50% for any one race as a starting point. This would ensure that needy Singaporeans are not penalized because of a bureaucratic policy that makes race such an overly significant and restrictive component of its social welfare policy.

Separately, according to HDB rules, applicants with children who are able to provide accommodation for them in their own homes or whose children have the financial ability to provide alternative accommodation are not eligible to rent HDB flats. It is forseeable that the HDB has to assess applicants who try their luck and claim that relations have broken down with family members. What is not transparent today is how the HDB Appeals Committee verifies the status of these relationships.

Appellants whose family relationships are not deemed to have “broken down enough” to be allocated rental housing are usually directed to Family Service Centres to resolve their disputes. Quite a few of my Malay residents were advised to pursue this alternative.

While it is not known if the HDB calls upon the Ministry of Social and Family Development (MSF), and the Community Development Councils (CDCs) to assess the family history of rental applicants; such a whole-of-government approach, coordinated by one agency under the HDB should be considered as part of the current review so as to ensure that deserving applicants are not unfairly filtered out.

A whole-of-government one-stop approach appears to be working well in the case of the Agency for Integrated Care (AIC) (www.aic.sg), an agency set up by the Ministry of Health to oversee, coordinate and facilitate the Government’s effort in care integration for elderly Singaporeans in particular.

A similar approach ought to be considered for needy Singaporeans, regardless of race who require rental housing, with MSF, the CDCs (de-linked from the People’s Association, so as not to politicise the disbursement of social welfare and aid) and other social welfare entities working in a coordinated fashion under one agency. The objective of such an agency should be to allocated rental housing to needy Singaporeans with a view to equip them with workforce related skills to give them a leg up and to get as many of them to purchase their own flats in due course. A central pillar of an envisaged one-stop agency would also have to include elements of the Workforce Development Agency (WDA) to look into and monitor the job prospects and employability of rental flat tenants with a long-term view to get them to purchase their own flats, be they studio or larger BTO flats. A critical role of this agency would be to make a deliberate and sustained attempt at breaking the poverty cycle for all tenants – and younger tenants in particular.

In tandem, in view of a tight labour market and the reduced number of quotas for foreign workers for the forseeable future, such a coordinated one-stop approach can also open the prospect of a large number of public rental flat tenants representing a sizeable local workforce for our Small and Medium Entreprises (SMEs), which have persistently provided feedback about the lack of Singaporeans to run their operations, and the high cost of hiring foreign workers. With 57,000 rental flats expected by 2015, rental flat tenants may well provide a useful respite for our SMEs from the cost pressures of increasing foreign worker quotas, provided rental tenants are paid a respectable wage consistent with the cost of living in Singapore.

Finally, as we move into a new phase of stable and developed-nation economic growth for Singapore, what is becoming apparent is that the demand for rental housing is not likely to abate. In such an environment, the expectation of transparency with regard to housing policy and information is not likely to abate either. The Government needs to seriously look into its longstanding reluctance about being open about non-security related information, a point iterated by its own Chief of Government Communications, Mr Janadas Devan.

In an ST article, “Government changing way it engages diverse society”, dated 15 Nov 2012, Devan was asked if the Singapore government would enact a Freedom of Information Act sometime down the road.

Mr Devan said he was not sure but he felt the Government’s current policy, where it deems most data confidential unless it decides otherwise, should shift to one “where you assume most of the information should be publicly available, unless you feel it should be confidential”.

While it is not known how the HDB or the Ministry of National Development (MND) feel about a prospective Freedom of Information Act or about making information public, revealing the EIP limits for rental flats public should be a safe place to start. If anything, a shift in attitude in favour of transparency, would put us in better stead as a nation to devise new policies and reviewing old ones to look after needy Singaporeans better. Substantive transparency would also empower Singaporeans to assist in the co-creation of policies and improve the quality of public feedback to state agencies.

The author would like to thank his colleague, Faisal Abdul Manap, MP for Aljunied GRC for his views.

Ends.

Useful Link:

Eligibility Criteria for HDB rental flats:

http://www.hdb.gov.sg/fi10/fi10323p.nsf/w/RentDirectHDBEligibility