In Part 1, we told you about our concerns in the Singapore housing scene. Unfortunately, our housing problems run deeper than that. Today, we are going to look at how current HDB policies may be enhanced.

Other than refocusing on providing cost-effective, basic housing with fewer bells and whistles, we believe that certain HDB policies and building guidelines must be revamped, as follows:

Build-to-Order scheme

The current Build-to-Order scheme has been in place since 2001. In order to understand why the BTO scheme is failing Singaporeans today, we must understand some of its history. This system was originally for eligible buyers to indicate their interest and book a flat in their preferred site, before it was constructed. This implies that HDB projects were not over-subscribed when the BTO scheme was first introduced. In fact, some projects were in danger of being aborted if they did not have enough interest to generate at least 65 to 70 percent bookings. Today, of course, that has changed. The BTO scheme is not just obsolete; it is failing to keep up with the growing population. To put it simply, the BTO scheme was put in place because too many HDB flats were being built too fast and too soon. Today, the opposite is true.

Subletting of public housing

Currently, HDB owners are allowed to rent out their apartment once they have fulfilled the Minimum Occupational Period. Despite approval being required from HDB to do so, it is often used as a supplemental source of income. This places public housing into the category of investment assets, closing the gap between subsidised housing and property investment. This will drive up prices as investors, both speculative and long-term, try to get into the investment game.

Permanent residents acquiring subsidised housing

Subsidised housing being offered to not just Singaporeans, but also to permanent residents, creates demand and upward pressure on HDB prices.

Affordability of current leasehold tenure

HDB units sold directly from HDB come with 99-year leases. This has been true since the advent of HDB flats. However, most HDB blocks currently do not last more than 50 years under the current regimen of renewal. Having only one type of lease for all locations and scenarios may not be optimal.

We have a few suggestions to counter these issues later in this post. Right now, however, let’s talk about a new approach to housing.


Early in the 1970s, the Singapore government embarked on an ambitious plan to give all Singaporeans a place to call home – literally. Home ownership became a mantra, and the Housing and Development Board, or HDB, was formed to provide everyone with a chance to own their own home. The government believed that this would give citizens a greater sense of belonging and community. As a fledgling nation with largely immigrant roots, this was an important consideration. It would give people a reason to stay and promote a more stable workforce. This initiative was a great success, and today more than 80% of Singaporeans own their home.


Country Home ownership rate (%) Date of Information
1  Bulgaria 97.00% 2011[2][3]
2  Hungary 91.90% 2001[4]
3  Singapore 88.60% 2011[5]
4  Palestine 84.00% 2000[6]
5  Ireland 83.00% 2002
6  Slovenia 82.00% 2002
7  Italy 78.00% 2011
7  Belgium 78.00% 2010[9]
7  Spain 78.00% 2001[7]
8  Norway 77.00% 2002
9  Brazil 74.00% 2008[8]
10  Israel 71.00% 2002
11  United Kingdom 69.00% 2002
11  Australia 69.00% 2002
12  United States 68.00% 2002
13  Canada 67.00% 2002
13  Finland 67.00% 2000
14  New Zealand 65.00% 2004[10]
15  Portugal 64.00% 2002
16  Japan 60.00% 2000
16  Sweden 60.00% 2000
17  Austria 56.00% 2002
18  France 55.00% 2000
19  Denmark 51.00% 2000
20  Netherlands 49.00% 2000
21  Germany 42.00% 2002


1  ”Homeownership Rate: Definition from”. Retrieved 2012-07-06.
2  Bulgaria Tops Europe’s Chart of Private Home Ownership, Sofia News Agency, 30 January 2003
3  Renovation of Multi-family Buildings (Bulgaria): Retrofitting for the Future, Sustainable Energy Europe Awards
4  ”Hungarian Census 2001″. Retrieved 2012-08-19.
5  ”Statistics Singapore – Key Annual Indicators”. 2012-02-14. Retrieved 2012-07-06.
6  ”Home ownership statistics – Countries compared”. NationMaster. Retrieved 2012-07-06.
7  Cabré, Anna; Módenes, Juan Antonio, 9, “Homeownership and Social Equality in Spain”, Home Ownership and Social Inequality in a
    Comparative Perspective (Stanford University Press): p. 235
8  [1][]
9  “Aantal huiseigenaars daalt door crisis”. 2010-02-08. Retrieved 2012-08-19.
10  ”Housing New Zealand”. Retrieved 2012-07-06.


However, it has also engendered a view that property rental is a blight on society; a grave error, even. While it is often regarded as a poorer alternative to owning property, the severe stigma attached to renting a home is quite an over-reaction. As shown in the chart above, many well-established countries do in fact have large rental populations.

Unless an owner has multiple properties in his name, any increase in property prices has no real monetary impact. The single-property owner-occupier cannot realise any profit unless he sells the family home. If he sells at a high, he still has to buy a new home at a high price.

Even former Minister Mentor Lee Kuan Yew was quoted by Channel News Asia in a report on 4 November 2012: “Everybody owns their own homes and the value of their homes go up as development takes place. Some are unwise enough to sell their homes, thinking they can buy another one, they then find they can’t and have to rent a flat.”

Taking that scenario one step further, how would a HDB flat owner realise the value of his property that has gone up “five times, 10 times, 15 times, 20 times”? There wouldn’t be any cheaper properties to downgrade to, as the whole market would have gone up at this time. Either he cashes out to leave the country, or he’s a permanent resident and sells his HDB flat to return home.

In effect, emphasising capital gains in Singapore property as a way to create return-on-investment encourages people to leave; or permanent residents to come in, make a quick buck, and leave.

And where does that leave new potential buyers, such as young couples and new immigrants; can they afford the new homes at 20 times the prices the older generation paid?

On the other hand, property rental is not the societal evil it’s made out to be here. There are, in fact, several advantages to renting a home, if managed properly. Firstly, a rental mechanism allows the government to provide housing while still maintaining flexibility of land use. With a larger stock of rental units throughout the country, the people have greater flexibility in balancing their housing needs versus the cost of rental. When they have less money locked away in long-term loans, people will also tend to be more entrepreneurial.

Another advantage is allowing foreigners or permanent residents the security and comfort of a home, but still keeping this precious resource “in the family”, so to speak. By offering them an abundance of reasonable rental homes, we can make them feel welcome, without selling away Singapore’s land to foreign owners. The capital gains from Singapore land should never be on the table of offerings to foreigners and others with loose ties to Singapore; such benefits should only be accorded to true Singaporean citizens. To use an analogy, we can give away our golden eggs for services rendered, but we should never sell or sacrifice our golden goose.

Moreover, the culture of passing on wealth to the next generation is causing abnormal inflation in property values. Everyone currently expects the property they buy to rise in price indefinitely; they expect that when they pass on an inheritance, it will include property that has appreciated significantly. But is this sustainable for all property owners, for all time? Or even into the near future? Where will all this rising wealth for our 80% of homeowners come from? Perhaps it is time to manage expectations, while providing a sustainable solution. Perhaps property ownership, with the expectation of significant returns on investment, is no longer appropriate for a population of over 5 million.

The question is not whether rental is an unpleasant and ill-advised alternative; the real question is, can we afford to continue this archaic mentality?


As part of our solution to the issues we came across, we are proposing a bold new way of thinking, a paradigm shift, even. Thus we present the Comprehensive Rental Scheme.

A public housing rental scheme should address the housing needs of citizens, permanent residents and foreigners. In total, the property market should shift, ideally, to approximately 30% tenant occupiers throughout the country. In order to accomplish this,  HDB must aggressively ramp up construction of new rental flats.

The goals of this rental scheme would be to:

  1. Provide affordable, alternative housing to Singaporeans in need, in a secure and stable manner
  2. Provide sufficient and adequate housing for foreigners and permanent residents working and living in Singapore temporarily
  3. Moderate the influence of speculative forces on market prices


It would have similar qualifications for buying public housing flats, with additional provisions for foreigners and permanent residents. Lastly, it should act as a stabilising baseline for housing in Singapore. No matter how much prices fluctuate, it should still be affordable for the target market.

The first basic component of the proposed plan is a tiered subsidy structure that first takes into account citizenship and family status. Qualifying families may receive more than 50% subsidy on the monthly rental rates, with truly needy families getting up to 90% subsidy.

On top of this tiered subsidy structure, there are additional subsidies for Needy Singaporean Families, Low-income Singaporean Families and Singaporean Families and Singaporeans. These extra subsidies are for retirees, staying near parents, or additional children, and will have varying stacking conditions.

The second component of the proposed plan is a fully-realised pricing plan for each type of public housing. This should be pegged to median income levels, and then further subsidised according to the type of house being rented and the renter’s situation. We are proposing rental rates for each type of renter and unit type at a 2005 rate. We feel that year 2005 is a good benchmark for market balance.

A new type of HDB – dormitories

A new category of housing is also introduced in this proposal, targeted at foreign workers, singles and extremely needy citizens. Dormitories are a relatively unknown concept in Singapore, outside of student and campus hostels. However, we feel that it can fulfil a niche in the Singapore housing landscape, if properly managed and maintained. These dormitory accommodations range from larger rooms capable of housing a small family, to just a bed and locker for personal belongings. Larger rooms will include attached bathroom facilities and even kitchenettes. Smaller rooms and beds will have shared bathrooms, kitchens and lounges at every level, much like a student hostel.

In order to defray the upkeep costs of the extra public facilities and other manpower requirements, a reasonable maintenance fee will have to be imposed over and above the monthly rental, depending on the type of rental unit.


Apart from the Comprehensive Rental Scheme discussed prior, we also propose the following changes to directly enhance current housing policies:

  1. HDB must maintain a surplus stock of HDB units, both for rental and sale, islandwide. This may bring back schemes similar to the previous Walk-in Selection. Having a cache of available housing units on hand, enough to satisfy approximately six to twelve months’ worth of housing demand, would help with demand and supply shocks.
  2. Foreigners and permanent residents should be allowed to rent, but not buy, any HDB units.
  3. Only HDB should be allowed to rent out whole units.
  4. HDB leasehold periods for certain newly-built releases should be shorter, perhaps 60 years, along with the current 99-year leases. This would only be for areas where demand for low-cost flats is anticipated, and only for new projects.



In addition to the policies to address the population’s immediate concerns, it is more important for policy to be sustainable, more so than environmentally friendly construction methods and materials. Tearing down 30 or 40-year old buildings that are still serviceable is more detrimental to the environment than not having sustainable building processes. A policy of sustainable housing should take into account factors such as:

  1. Population size and growth. This should anticipate both residents and transient workers.
  2. Plot ratio adjustments. These should be well-planned and changes should be significant. Many small increases of plot ratio over a short period of time are more disruptive than a small number of large increases.
  3. Forward planning of housing and construction projects, ahead by 25 to 50 years. This will lead to a more holistic usage of land and building resources. For example, better planning will allow buildings to be used for a longer period of time before being torn down.
  4. Building lifespan. Better planning will allow better utilisation of sunk costs of construction. Tearing down serviceable housing is wasteful, case-in-point; Outram Flats. A good example of maximising utilisation would be the 30,000 HDB flats awaiting SERS, but made available for short-term leasing; wouldn’t these be a great shot in the arm for HDB rental supply, instead of outsourcing to private operators to turn a profit?
  5. Maintain links to the past. Committee should be set up to evaluate public housing with potential historical value before demolishing for urban redevelopment. After all, shouldn’t we try and preserve the uniquely Singaporean parts of our architectural landscape, for example Telok Blangah Estate? This committee could co-ordinate with URA or other government bodies, and also seek public opinion.
  6. Built-in flexibility for housing policy. This will allow re-purposing of housing resources for multiple uses, promoting maximum utility. (eg, cater for conversion of rental units to sale units, or vice versa.)


Of course, sustainable construction and development can also help reduce costs in the long run, and efforts should focus on improving current pre-fabrication techniques, new construction techniques to reduce reliance on labour, and alternatives to using concrete and cement.

In conclusion, we have analysed the current housing situation in Singapore, as well as presented some suggestions to resolve them. We hope that our solution addresses as many current problems as possible. Watch this space as we present the finer details of our complete proposal, including the Comprehensive Rental Scheme in our last instalment.

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