By Vignesh Louis Naidu
The Housing and Development Board (HDB) was established in 1960 to provide low-cost housing for the masses and solve Singapore’s housing shortage. In 1964 the home ownership scheme was launched to give Singaporeans the opportunity to own an asset in their country. Today the HDB has evolved. It does not simply provide low-cost housing but also aims to cater to the aspirational desires of a more affluent population. Along the way, however, people have put their flats to other uses.
A quick search of rental HDB properties in propertyguru.com yields over 20,000 results. These results would obviously include HDB shophouses and individual rooms available for rent. However, there is a very large number of complete HDB units available for rent.
Why are there so many privately-owned units available for rent?
Allowing owners to rent out complete units transforms these apartments from homes to investment vehicles. This would certainly have an effect on sale prices. Sellers would factor in the potential rental yield into their asking price.
Preventing HDB flats from being rented out is not feasible. There needs to exist a pool of HDB flats over and above the low-cost rental units offered directly from the HDB. Rental units are needed by foreigners coming here to work, families who are in between homes and those still saving up to purchase one.
If the rental market is driven by private investors and homeowners, what is the implication on sale prices? The prices of new flat prices are not only determined by the construction cost but also affected by the prices of resale flats within the estate. Resale prices have in recent years shot up, leading to discontent and unhappiness in certain segments of society. The government has implemented various cooling measures to lower the prices of resale flats while increasing the number of new launches to meet the high demand.
When we allow a person to turn a subsidized home into an investment vehicle, we may be losing sight of our founding leaders’ noble motivation, to ensure that all Singaporeans could afford their own home.
In my opinion, only the HDB, should be allowed to rent out HDB flats. A family which no longer wishes to live in its HDB flat could try to sell it on the open market. If the flat remains unsold after a certain time, the HDB would offer to buy it back at its valuation price. The HDB could then keep the flat within its existing pool and rent it out.
The HDB should also construct more rental flats. Instead of providing only low-cost and two-room flats, it should also offer three-, four- and five-room flats for rent.
My proposal does not take into account the subletting of rooms within a flat, which would require a more nuanced approach.
Singaporeans should be able to earn an income from property investments but these investments should not be subsidized HDB flats. The HDB was created to provide affordable quality housing and this aim should not be forgotten.
Vignesh Louis is a young and passionate Singaporean who recently completed the Master of Public Policy course at the Lee Kuan Yew School of Public Policy.