Encouraging HDB Rental Flat Tenants towards Home Ownership

Mdm Speaker, HDB works closely with the Community Development Centres (CDCs) and Family Services Centres (FSCs) to identify and help rental tenants who need employment assistance to find a job or upgrade, such as through the Work Support programme.

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HDB also waives any rent increase at tenancy renewal for tenants who upgrade and improve their income from "$800 or less" to "$801 to $1,500". They continue to pay the lower rent for another two-year tenancy. Thereafter, if their income increase is still low, relative to the rent increase, HDB will waive the rent increase for another two-year term. In this way, they need not worry that their additional income from upgrading goes towards a higher rent. Instead, they can use it to provide for their families and build up their savings towards home ownership.

We support low-income families in owning a home through various ways. First, a first-timer household earning $1,500 or less can get $60,000 in housing grants to buy a flat. This is about 60% off the price of a typical 2-room BTO flat, which is already priced with a substantial market discount. Second, we build 2-room and 3-room new flats to provide affordable housing choices for low-income families, and safeguard supply for them through an income ceiling of $2,000 and $5,000 a month for 2-room and 3-room standard flats in non-mature estates respectively. Third, public rental tenants are given priority allocation of 5% of new 2-room and 3-room flats in Build-To-Order or Sale of Balance Flats exercises.

These measures have helped low-income families buy a flat. In 2011 and 2012, 630 rental tenants have progressed to own a home.

Mdm Speaker, I have a supplementary question. I have encountered instances of low-income residents who have asked their employers to not give them increments for fear that that would push them over the edge in terms of either qualifying for a flat or having to pay a higher rental. I appreciate that the HDB has discretion as to whether to impose an increase or not, but I think the difficulty, essentially, boils down to the fact that the discretion will be exercised after the increment is given or accepted. The fear is that this discretion may not be exercised favourably and so they would rather not take the chance.

Could the Ministry consider communicating these efforts and policies clearer to low-income families so that they can be rest assured that they will be treated fairly and properly when it comes to accepting increments? I also thank the Senior Parliamentary Secretary for the statistics in terms of families that move from rental to ownership. However, my experience is that there is a number of families which are really in a chronic stage, which are not likely – in the short term – to go into ownership status. Is there a long-term solution for such families? Because the way we were continuing to build up our rental stock, it is likely that more and more families would go into a rental status and then

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possibly create a permanent underclass sector.

Mdm Speaker, first please allow me to clarify. We now give automatic waiver of the rental increase if their income moves from $800 to $1,500. Previously, it was discretionary, depending on a case-by-case basis. I had made that announcement in an earlier session. So, we now give automatic waiver of the rental increase. This is what we call the cliff effect. Previously, the moment you hit above the $800 mark, they will charge higher rental. The concern is that the higher rental is higher than the income increase that they have.

Now, the moment they go into the next bar, we give them automatic renewal of the same rental for one term tenancy, which is two years. If after the first two years, their rental increase is still higher than their income increase, we will still allow them to keep to the same rental rate for another two years. The Member is absolutely right in that during this two-year plus two-year term tenancy period, we need to work with the families. This is why we always say that housing is just one aspect of the life of the low-income families. We need to look at the various social infrastructures that we can put in place to support them.

Income and employment are critical. We need to look at how we can enhance the income levels of these families. Sometimes, they are single-income families; sometimes they have the potential to be dual-income families but because of circumstances, they were not able to do so. The interface between the housing and social aspects is very important. What do we do now? We work with the FSCs and the CDCs very closely. HDB has got in every branch housing counsellors; they will help these families look at a trajectory; we call it the "pathway of housing opportunities". We look at what is possible for them. If they are first- timers and they have potential, we look at what that potential is. We will then work with them, for example, to get grants and with the grants, the price of the flat is maybe $60,000 or $45,000 or $50,000. This is for a 2-room flat, for example.

With that loan that you may take up to own a flat, what kind of jobs and income will you be required to have? We will work with the CDC to try and facilitate upgrading opportunities so that they can get the relevant skills to get the relevant jobs to get incomes that are suitable for them to buy those flats.

The public housing policy remains the same: we want to promote home ownership because it makes better sense for them to own their own homes.

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Their self esteem will be higher, and in due course, because of appreciation in the value of the property, they do have good investments. The point is that we work with closely with the different social service agencies. For these families, the challenge really is to work with all the other social aspects, issues that they are facing. It could be an issue of the skillset. It could also be issues of childcare or an issue of taking care of elderly patients. This is one group – especially for those who are first timers, it is easier for us to work with.

The challenge is really when we have rental flat dwellers who are second- and third-timers. They are even more challenged because of the age that they are in. When they are in the mid 40s, 50s, to work with them on longer term employments is a greater challenge. But that does not mean we cannot help them; that they cannot become home owners subsequently. We work with the relevant agencies to also help such families.

Thank you, Madam. I understand that the HDB looks at the combined household income to assess the financial ability of the family. I would like to ask the Senior Parliamentary Secretary what is the Government's position on such a scenario: a low-income couple stays in a rental flat with a child. When the child starts working, the total household income exceeds the $1,500 income ceiling for rental flats. Would the family then be required to leave the rental flat and buy their own flat in line with the house-ownership policy? If the child were to get married possibly a few two-year cycles later and would like to get their own flat, would he be disadvantaged as a second-timer? And how would HDB be able to help families like these – both the parents as well as the child who are potentially flat owners in their own right?

Madam, when we look at the housing trajectory for families, first, we always look at it from the perspective that the family is still the first line of support for families, especially for parents also. So, when you look at a scenario of this nature, they grew up in a rental flat, a young adult grows up, works and has the capability to own a flat, if the income goes beyond $1,500, we do not immediately tell them, "Please go out". We want to tell them that you have the potential to own a flat and if you have the potential to own a flat, why not, so that the availability of rental flats could be given to others who are more deserving. Because there will be people who are asking for rental flats. People go through different life cycles, different life challenges and sometimes the rental flats could be better given to those who really are in need. So, if they have the potential to own a flat, we will encourage them to own a flat, but we give them time. We give them time to work towards home ownership.

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It is certainly not almost immediate that we expect them to move. That is why we introduce "term tenancy" where for every two years, we assess their capabilities. Even if they have gone into income levels like $2,000, sometimes circumstances do not enable them to own a flat, perhaps there is disability in the household, HDB is very, very compassionate. We look at such cases very compassionately. We allow them to continue to stay in the rental flat. We do not force them to move into home ownership unless we are quite certain that they really have the potential to do so.

To the question of what happens to the individual if the adult child chooses to buy a flat, what happens to the parents? Of course, we hope the whole family goes together, if that is a family household and we hope the child can also help to support the parents. So, when they buy a flat, I think they have to look at the long-term implications. Long-term implications are whether the child can continue to live and co-live with the parents and support the parents in the new flat, should they choose to purchase. Certainly, if the parents are old, we would advise them on the ability of the parents to own the flat on their own if the child chooses to marry. For such cases, the housing counsellors will actually look at each of the individual cases, assess them, provide them with relevant advice to look at the long-term implications of such choices that they can make.

Wherever possible, we would facilitate the possibilities of home ownership for them but I want to assure the House that we are not out to misplace people who are in the rental flats. What we are trying to do is to strike a balance because there will always be people who are subjected to different life circumstances and they fall below the cracks and they need the rental flats. But because of the limited stock of rental flats, we want to facilitate this continuous movement where those who are able to purchase and own their own flats should do so to provide space for those who may need the rental flats. And for those who have gone into the rental flats, we want to continue working with them such that they can own their own flats subsequently again.

Mdm Speaker, in last night's MPS, I had just seen a case like that. The child has grown up, got married, bought a flat and this old father received a letter from HDB asking him to shift out by 17 July. So, I have just put up an appeal. There are people who live in rental flats and when their children get married they face problems like this. So, I would like to ask the Minister what help can be given to them. Can we be more compassionate to help elderly parents in that situation?

As I have mentioned earlier, the context of housing and family support is intertwined. We hope that the adult child, who

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is able to purchase a property – it depends on the property that the child is able and capable of purchasing – if a child is able to purchase a 5-room flat, for example, and there is available space, extra room to accommodate their parents, we will encourage that. If the child is a low-income person who is able only to afford, say, a 3-room flat, and he has his own family, of course, we will be more compassionate to then say that maybe the child cannot provide for the parents, then we will be more sympathetic, and I will certainly take a look at the case when Er Dr Lee Bee Wah refers that case to us.

As I mentioned earlier, HDB really tries to understand the issues that every family faces and I think the House would probably appreciate that every case comes along with a complex array of issues and no one case is similar to the other. We have to look at every individual case differently so that we can try to help them better.