Rental eligibility now a game of cunning

Source : Straits Times - 26 Aug 2008

THE Housing Board has found itself in a quandary over sharply rising demand for the small stock of rental flats available. The twin trends - high rents for conventional HDB apartments and more people conserving assets for fear of prolonged economic uncertainty - that had been building for a year now are not easing. The HDB can expect the tight rental situation to persist, or worsen. Ineligible renters playing the system have added to the long application queues, but the HDB can be counted upon to weed them out at first sieve. To satisfy medium-term demand, raising the current stock of some 43,000 rental flats is an inevitable response.

This the HDB is doing. But the gestation period of about three years for the additional 7,000 to 8,000 units that will be built gives little comfort to those applicants who need shelter now, not three years later. There are an estimated 4,400 of these. These are families with household income of about $1,500 and no assets. Divorcees with young children are common among them. The HDB could consider releasing unsold smaller units from its normal stock for fixed-term leases to relieve pressure.

This is socially more enlightened than keeping the flats, usually in less favoured locations, for choosy purchasers to make up their minds about bidding. Beyond this, means testing which the HDB is considering is the fairest way of sorting out the scale of need.

Abuse of the low-rent dispensation was not a problem when granny flats were being built for retirees and rents for normal HDB flats were about half the current rates. But since the spike of a year ago, rent seekers have resorted to the deplorable practice of sub-letting rooms or whole flats, sometimes to ineligible foreigners. Families of some means, plainly not eligible, have joined the queue, attracted by rents of as low as $26 a month. They should be forced onto the open rental market by fail-safe administrative measures.

To disqualify applicants who own assets and whose household income exceeds the cut-off mark is easy. Trickier is checking the assets of their children and siblings, which the HDB is considering. The thinking is that immediate families should take them in. In practice, this may not always be practical owing to relationship frictions and family feuds. But it does not weaken the case for wholesale means testing.

It remains a logical way to ascertain need but the line should be drawn at checking the assets of applicants’ brothers and sisters. If these siblings are married, with their own grown children and consequent obligations, they are effectively separate families.