I read in papers that Minister Khaw is thinking about doing away with the income ceiling for new HDB flats. I am in favour of that. In fact, I have suggested the same thing in Parliament: see https://www.facebook.com/notes/hri-kumar/executive-condominiums/504055682974367.
Why do we have income ceilings?
Initially, it was thought that public housing should be for some, not all, Singaporeans. Those who could afford it should buy private housing. HDB imposed an income ceiling as a way of separating between those who could not afford to buy private housing, and those who could.
The income ceiling is simple to administer, but is a blunt tool. It does not take into account the expenses the applicant may have eg. where they have a large family, medical issues or elderly parents to support. Further, the high price of private property makes it difficult for those just above the ceiling to buy a home.
Besides, a Singaporean couple who earns more than $10k or $12K a month may still want to buy public housing because they want to be frugal or consider that HDB estates provide good value for money, have many amenities and are well-maintained. They may also enjoy the experience of living in a HDB estate - a very Singaporean experience. Why should they be denied?
Some people say that Singaporeans who earn more than $12K a month should not receive subsidised housing. Others say that the additional applicants will cause a longer wait for everyone. These are legitimate concerns, but any policy will have its downsides. Never believe anyone who claims he has a perfect solution.
How do we balance everyone’s concerns?
The question always is which policy does the greater good and has the lesser evil.
I think the greater good is to help all Singaporeans, regardless of income levels, buy affordable housing so that they can better plan for the future.
But we should not stop there. Consistent with our objective of encouraging home ownership, we must discourage speculation or the use of HDB flats as investments. We should lengthen the Minimum Occupation Period and review the rules which allow renting out of entire units. If you do not need to live in your flat, do not buy one or sell it to someone who does.
True, the rental issue is complicated. We are at a time when demand has outstripped supply. There is also a sizeable part of our population that requires rental accommodation, and for whom buying a flat is simply not feasible. There are also many Singaporeans who derive a good income from being landlords.
One solution may be to impose some form of rent-control for HDB units to make it less attractive as an investment, but will still allow owners to rent them out. But that gives rise to other problems.
These are difficult questions. I am sure there are many different opinions on how we should deal with this. As always, I welcome your views.
In my next post, I will deal with a disturbing aspect of subsidised rental housing that is on the rise.
