My parents bought their first and only HDB flat in 1976 for $30,000. It was the first house they ever owned, and helped them raise nine children in a stable home. My parents passed on some years ago, but the house remains with my family. Most of us have got married and moved out, but our old flat will always be home to us. All over Singapore, there are countless number of similar stories. The houses HDB built improved the lives of the majority of Singaporeans. It provided us with a good home and financial security. Most importantly, it gave us a stake in this great nation of ours. It also allowed the Government to promote national policies, such as racial integration and even marriage.
But the HDB’s success, and its attempts to meet the aspirations of Singaporeans, have created some disquiet. Some of the complaints we have read and heard about high prices and unavailability of flats are politically driven. Some, not all.
The important question is whether the current situation continues to promote our national policies? If a couple puts off marriage because their flat will only be ready in 3 years, and they cannot afford a resale flat, how does that help them or Singapore? How does it help integration if different ethnic groups are allowed to congregate by renting flats near each other? Would my parents have been able to buy a flat and raise a family today?
I am not asking HDB to re-write its policies. There is no need to. But I do urge the HDB to implement rules which encourage home ownership, and not property ownership. It should significantly advantage first-time owners, and have no room for those who wish to speculate, or treat it as an investment. I have four suggestions to make this happen.
First, let’s start with a positive principle. Let any Singaporean who wants to buy a HDB flat do so. Lift or do away with the salary cap. Those who earn high salaries will probably rather buy private property anyway. But there may be high earners who, for various good reasons, wish to start off in a HDB flat. They may want to be financially prudent, and we should encourage that. There may also be those who have heavy financial commitments, such as supporting their aged parents and children. If they wish to live in public housing, let them.
But the right to buy public housing must come with restrictions. That is only fair. We should therefore disallow individuals who own private property from purchasing HDB flats, including resale flats. Why would private property owners buy public housing, unless it is to speculate or invest? Why should an individual be allowed to live in public housing while earning an income off his private property or vice versa? Those who have the means, and who wish to buy or invest in private property, should not take up public housing. Parents who wish to buy HDB flats for their children can put the units in their children’s names and make a loan or gift to them. Nominee or trust holdings should be made illegal, as we do with landed property.
Secondly, the HDB should maintain a small but ready stock of flats reserved for first-time owners, so that those wish to get married may get a flat more quickly.
Thirdly, there should be more control over the subletting of HDB flats. Currently, no approval is required for the subletting of rooms and there is only a time bar for subletting an entire flat. I propose that all rental of HDB be subject to approval, whether it is for a room or for the entire flat. Having it as uncontrolled as it is now only encourages the mindset that HDB flats make good investments.
Fourthly, there should be an increase in the time bar before a HDB flat bought on the resale market can be sold. It currently stands at one year. Why? A one year bar encourages speculation. The point is not whether the unit is bought with a subsidy or concessionary loan. Public housing is public housing, whether new or resale. They should all be treated alike. Resale flats give the buyer more choices in terms of location and immediate availability, and he pays a premium for that. There should be no other difference or advantage. Make it 5 years, like new flats.
For private property, market forces should be the prime driver, although I appreciate that the government has to from time to time implement temporary measures to address bubbles.
But there are two things I would like the Government to consider doing on a permanent basis.
First, we should discourage foreigners from speculating in our property market. I have no difficulties with genuine investors. It is the “flippers” that we should target. How do we benefit from their activities? I therefore ask the Government to impose a capital gains tax on foreigners who sell their properties within, say, 3 years of purchase.
Second, we need to address option flipping. Buying and selling options is purely speculative activity. It adds absolutely no value, other than to artificially drive up prices. Make options non-transferable, or impose a tax on profits gained on transfer.