SINGAPORE: Workers’ Party MP Jamus Lim expressed concern over the increase in rental prices, saying that he recently asked Parliament whether the government has considered rent controls that would give renters a bit of breathing room.
In early July, Assoc Prof Lim asked whether “there has been any consideration by the Ministry to legislate on the maximum rental fee adjustments by landlords following a lease renewal,” adding that this has been done in Australia, Canada, China, France, Germany, and many states in the United States.
In a Sunday morning (Aug 27) Facebook post, he noted that while Singapore’s homeownership rate is among the highest in the world, it doesn’t make sense to insist on buying a house when conditions are unfavourable—such as not having enough money, too high mortgage rates, or when a person is in a situation when renting makes more sense, such as when they are young or old.
And even if most Singaporeans are homebuyers and not renters, skyrocketing rental rates still affect everyone.
“That was a major motivation for a recent Parliamentary Question I filed, on whether there should be a maximum permissible percentage that the rent may be hiked, at the expiry of the lease,” he wrote.
Assoc Prof Lim wrote that even for HDB flats, rental rates have been high, as seen by the example of a Choa Chu Kong executive apartment rented out for a record S$6,600 monthly in May.
“While the increases have slowed, the shock of such rapid increases is real. Some may be aware that, in other countries, protections from such rental surges are in place. This allows market forces to still operate, but smooths out the transition process to allow tenants to adapt to higher rental costs,” added Assoc Prof Lim.
He wrote that National Development Minister Desmond Lee said in his response that most rent agreements are done privately between lessor and lessee and that the limits suggested by the WP MP might inadvertently distort the market.
Assoc Prof Lim acknowledged this possibility but added, “Markets often function just as well (if not better) when there are mechanisms to dampen sharp corrections and reduce excess volatility.”
He explained that his question is not about rent control in itself but is about implementing something like a “‘speed bump’ to slow sudden, large increases.”
“These frictions allow tenants time to adjust, while also encouraging landlords to constantly pay attention to market conditions, so that they don’t spring unreasonably large rental spikes, which are hard to manage. Such sensible slowdown measures can help contain volatility not just in the rental market, but could spill over to the ownership market, too, all to the benefit of Singaporeans,” he added. /TISG
More about the WP’s housing proposals below: