HDB tightens rent eligibility rules

Source : Straits Times - 7 Feb 2009

THE Housing Board has tightened criteria governing who is eligible for its heavily subsidised rental flats.

Eligibility tests include assessing not just a tenant’s income but also assets such as savings.

Those who previously owned private property, or whose children own private property, will now be excluded under the new rules. Also, an application will be rejected if the applicant has a child who owns an HDB flat with a spare room.

The new rules, which kick in today, were unveiled in Parliament by National Development Minister Mah Bow Tan, who described them as a way to ‘reinstate the public rental scheme to its rightful role as the final safety net and the housing option of last resort for the needy’.

‘If everybody jumps onto this safety net, whether they deserve to or they don’t, that safety net is going to break.’

Mr Mah’s announcement yesterday followed an HDB review of the eligibility criteria for rental flats.

The burgeoning queue for such flats became cause for concern after it emerged that more and more tenants were cashing in on their low-rent flats by illegally subletting them to foreign workers or students for big gains.

The announcement comes at a time when demand for rental flats has been rising, outstripping the supply of 42,000 units.

Mr Mah told Parliament yesterday that there are about 4,550 applicants in the queue, while 300 join the list every month but only about 150 people return flats in the same period.

MPs also submit 500 appeals a month on behalf of those who do not qualify for rental housing.

Responding to concerns raised by Mr Masagos Zulkifli (Tampines GRC) and Madam Ho Geok Choo (West Coast GRC), Mr Mah noted that although some in the queue were eligible, many can afford other housing options.

He cited a rental applicant who had sold his five-room flat and received proceeds of $325,000 - more than enough to buy another flat. Yet, he is in the queue because he has zero income and waited 30 months after selling his flat before applying.

Mr Mah said two-thirds of applicants in the queue used to own an HDB flat, with about 40 per cent receiving more than $90,000 in sale proceeds.

‘They could easily afford a studio apartment or a small resale flat. They…should not be competing with needy families for rental flats…We need to take decisive steps to correct this.’

HDB said yesterday the new rules will mean asking for more information at the time of application - regarding savings, car ownership, how many children the applicant has and what type of residence he has.

HDB will verify the information with the permission of the applicants before assessing their eligibility based on the new criteria. These are on top of the existing eligibility rules, which will continue to apply.

Apart from the new rules, Mr Mah also announced a set of measures to help low-income tenants.

Needy cases will get extra rental rebates under the GST offset package. As announced in the Budget statement, tenants will get another month of rebates for this year.

Existing tenants paying rents pegged at market rates will also get a helping hand. HDB will freeze rental adjustments and continue to peg rents to 2005 levels, instead of the current, more expensive levels.

It will also suspend the alignment of rents for this year for tenants earning above $800 a month. The second round of increases was originally scheduled for last November, which would have raised tenant payments according to their incomes.

Meanwhile, HDB will build more rental flats to boost supply. Since 2007, about 930 rental flats have been made available by converting old HDB flats. This year, a further 1,450 will come on-stream, through construction of new flats or the conversion of more old flats.

By 2012, HDB would have boosted supply from the current 42,000 flats to 50,000.