Welcome to the third and final instalment of our series on Singapore housing and its related policies. In Part 1, we talked about the major issues faced by Singaporeans today,
and how they tie in with our home ownership, or lack thereof. In the second part, we elaborated further on these issues, and also talked about how current policies can be enhanced or modified to meet the vastly different socio-economic landscape of today’s Singapore, compared to when HDB was first set up.

In this final chapter, we will put forward how such policy enhancements or modifications can be implemented, in much greater detail.

We have also noticed that the Singapore Democratic Party has recently developed a thoroughly-researched paper on housing as well. Their findings are actually quite congruent with ours; in fact, we believe that some of their proposals, such as the Non-Open-Market Scheme, can co-exist with and complement some of our ideas.

It is our hope that these ideas will give planners something to think about as they make the decisions that will affect millions of Singaporeans and other residents. This was a concerted effort to provide as much detail as possible, after our observation of the Singapore property market and how the average Singaporean interacts with it. However, as a small team without significant manpower or resources, we lack much of the statistics and data to go into very fine detail on many aspects.

We feel it is time that the Singapore government take a good look at the situation today, and start adjusting their policies holistically in order to properly address the looming iceberg ahead.

We have given much thought into the ideas presented here, but at the end of the day, these are just our suggestions for a better nation for everyone. We welcome any of your suggestions and critiques at housing.response@bluta.com

And now for the final instalment, we will touch on our proposed policies for creating differentiation between private and public housing, the Comprehensive Rental Scheme (with attendant subsidy scheme and dormitory proposal), 60-year leasehold scheme, and finally, implementation of Low Cost Flats and Customisable Flats.

Thank you for your interest in our three-part article. Should you wish to share it with others, please do link to us directly instead of duplicating our content.

Clear Differentiation From Private Properties

Objective

Public housing MUST be clearly differentiated, price-wise, from private property to ensure that these two niches remain distinct in the Singapore property market. Even if value-for-money features and cost-effective measures do not compare, aesthetically and visually, to the high-end style of private dwellings, this distinction in cost is paramount. 

Proposed Measures

  • While comfort and liveability of HDB enclaves and their surroundings are very important, costly frills like electronic security systems, underground carparks, fully trimmed public spaces and landings, private sky gardens, intensive landscaping and the likes must be avoided. The main goal must be to sacrifice extraneous features, in favour of practical comfort and reasonable costs. Contrary case in point, Pinnacle @ Duxton has several features that are both costly to implement and maintain, exceeding private property expenses in some cases.

 

  • A strict budget must be drawn up to keep building costs low and affordable. A council will be set up to:
    1. Monitor building costs taking into account inflation regularly, and, if necessary, make adjustments to budgets,
    2. Maintain a list of approved features for implementing in HDB units and regularly review it, and
    3. Evaluate newly proposed features in HDB flats for suitability and practicality in day-to-day living, while keeping the cost differentiation for public housing vis a vis private properties. Only features that meet the criteria will be approved by this council, and be added to the list.

 

  • HDBs are built with public funds and subsidies, hence, all common facilities and spaces in future HDB projects must be fully accessible by the public, including any sky gardens. Should such a scenario be logistically untenable (due to security risks or maintenance issues, for example), then the feature or facility should simply not be implemented.

 

  • Other than being compliant with the above requirements and environmentally conscious, features catering to the wellbeing of the residents such as handicap access and open areas are also important. Like-wise, ease and low cost of maintenance of these features will be a major consideration when planning a future HDB project.

 

  • Going forward, Executive Condominiums (EC) will be the only bridging step towards the private housing market.

 

Key Benefits

  • Keeping building costs low by focusing on the core goal for HDB
  • Keeping public housing prices affordable while retaining comfort for residents
  • Allowing the private housing market to reach its full potential whilst the majority of Singaporeans and other residents have an alternative housing that is affordable

 

Alternative Housing – HDB Rental Flats

Objective

Making rental HDB units available on a larger scale will provide Singaporeans and other residents a viable alternative to owning their homes. This alternative, when correctly priced, will also prevent an over-exuberant home rental market. In turn, this helps to curtail runaway rental returns, and hence keep the entire housing market and its prices more grounded and affordable.

Proposed Measures

  • Rental flats are offered at a nationwide base rental rate on a sustainable and affordable per-square-foot basis, which is determined by a dedicated council of experts.  When an unoccupied flat is first made available, there will be a two-week period for a public tender exercise. This exercise will be conducted via the internet, on an open bidding website, with real-time information available for all interested parties. The highest bidder (taking into account the added subsidy multiplier) will be offered the flat. For example, a Singaporean who is entitled to 50% subsidy and who bids S$800 will be considered to have an effective bid of S$1,600; this will be considered higher than a bid of S$1,500 from a foreigner who does not qualify for any subsidy.

 

*1  Typical built-in sizes of existing or newly built mixed Rent / Sale HDB blocks, that have been accumulatedd from balance unsold flats, HDB buy-back flats or HDB repossessed flats set aside for HDB rental scheme
*2  Reccomended built-in sizes of newly built Rent only HDB blocks
NOTE: All references to “child” denote a minor of less than 18 years of age.

 

  • The winning bidder will pay the 2nd highest bid (in other words, the bid just below his value, before subsidy adjustment of that second highest bid). In the example above, the Singaporean bidder, if successful, will be paying S$750 which is 50% of the second highest bid.

 

  • Where there are more than one winning bid (that is, the highest bid is equalled by one or more other bids), a ballot will be conducted and the winner will pay the winning bid amount for rent. Therefore, in the above example, if the foreigner bidded S$1,600 (equal to the Singaporean’s effective bid) and a ballot held in which he was the winner; he would be paying S$1600. If, on the other hand, the Singaporean won the ballot, he would be paying S$800.

 

  • Should the flat attract no qualified interest in the two-week initial offering period, a 2nd similar two-week exercise will be carried out. After a total of four weeks pass without securing a tenant, the flat will be made available to the first qualified tenant at base rental on a first-come-first serve basis.

 

  • A substantial supply of ready rental flats will be maintained, with an ideal surplus supply at 3 – 5%. Fluctuations down to 1% during a boom period and up to 15% extra flats in a glut period will be acceptable. This excess supply is counted over the entire country; in other words, not all estates or regions will have a surplus, but there must be surplus units available somewhere in Singapore.

 

  • On top of the requirement immediately above, a nationwide excess supply of HDB rental flats are to be maintained at all times to ensure that at least 10% of the flats offered for rent during any 12 month moving period are rented out at the pre-determined nationwide base rates (without competing bids) to ensure that rental rates remain affordable.

 

  • All available flats will be made know in a convenient and easily searched online database, maintained in the main HDB website.

 

  • Construction of new rental flats should anticipate population growth at least 2 to 3 years in advance.

 

  • During the glut period where unoccupied rentals flats near or exceed 15% of the total available rental units, construction of all new HDB flats should cease and the excess unoccupied rental flats can be gradually re-purposed and offered for sale or any other reasonable temporary uses until such time that the surplus falls within the ideal 3-5% again.

 

  • The qualifying criteria for rental flats are the same as those that currently apply to HDB resale flats.

 

  • In addition to the above qualifying criteria, foreigners and PRs will also be eligible, subject to meeting the same requirements as Singaporeans and paying an addition 3 months’ rent as deposit.

 

  • Rental tenures are fixed at 24 months with auto renewals for another 12 months unless otherwise informed (at least 2 weeks in advance of the renewal date).

 

  • Upon renewal, rates will be reviewed and revised based on the current rental paid by the tenants as follows:

 

The calculation of the applicable median above will be based on a minimum of 10 samples. As such, the council should first look at the number of samples in a block. If the block has insufficient sample size to calculate the median, the council should refer to the precinct, and failing which, the estate.

  • Tenancy can be terminated with 3 months notice after fulfilling at least 6 months of rental.

 

Key Benefits

  • Able to retain real assets for Singapore and Singaporeans
  • Additional resource to react to market movements and prevent overheating of market
  • Relatively good returns of 2% to 5% can be achieved from the rents collected
  • Provide alternative housing to Singaporeans and all other residents
  • Does not require tenants to stump out a substantial initial down payment

 

Recognising PRs, Singaporeans, family units and needy Singaporeans with extra subsidies

Objective

On top of the rental alternative for housing, this subsidy scheme aims to provide assistance to struggling and needy residents, while also recognising contribution to the nation’s growth. It will cater to Singaporeans and their families, as well as permanent residents.

Proposed Measures

Base subsidies

This base component of the tiered subsidy structure takes into account citizenship and family status.

 

Additional subsidies

This component of the tiered subsidy structure adds further subsidies on top of the base component, depending on the tenants’ situation.

 

 

NOTE: All references to “child” denote a minor of less than 18 years of age; all references to “adult” denote a person of at least 21 years of age. All references to “retiree” denote a person above the official age of retirement and retired from any form of employment.

NOTE:
All references to “child” denote a minor of less than 18 years of age; all references to “adult” denote a person of at least 21 years of age.
All references to “retiree” denote a person above the official age of retirement and retired from any form of employment.

Key Benefits

  • Able to recognise the contribution of citizens and other residents in a progressive manner
  • Promotes family cohesiveness and encourages family growth
  • Benefits a wide group of people without raiding the national coffers

 

New Type of Housing – HDB Dormitories

Objective

This type of housing, although not new, has not been done on a national level in Singapore. It will form the low-cost alternative to housing for low-income singles, couples and small families. It can also cater to the needs of foreigners with modest means.

Proposed Measures

NOTE: Unless otherwise stated, all facilities are NOT en-suite, that is, they are not included within the unit itself for the tenants’ exclusive/private use. Toilet and Kitchen facilities, if not stated as included, are provided as public amenities (shared Kitchenette, Male/Female Toilets and Bath) at every level.
All references to “child” denote a minor of less than 18 years of age; all references to “adult” denote a person of at least 21 years of age.

Key Benefit

  • Caters to a greater spectrum of housing needs for an increasingly diverse population

 

Introduction of 60-year leasehold properties

Objective

By introducing an alternative lease period for sale of HDB units, it will diversify choice and pricing in the market. This will provide additional choice for would-be owners looking to manage their finances and requirements. The 60-year lease will co-exist with the current 99-year lease in certain areas only, and only for new flats; it will not be retro-actively applied to any existent HDB units.

Proposed Measures

  • In estates with available land to build, 60-year lease HDB flats should be built in addition to the regular 99-year HDB flats
  • Such flats will be extra low cost construction units with very basic amenities
  • The 60-year lease option will only be implemented for one- to four-room flats

 

Key Benefit

  • Able to help lower entry point to owning a HDB flat

 

Additional fitting options for new HDB flats – Low Cost Flats (LCF) and Customisable Flats (CF)

Objective

With a view to keeping construction costs low and to minimise wastage, new HDB flats can be built with two additional options for fitting. These two options recognise two major groups of buyers of HDB units:

  1. Cost-conscious, low-frills buyers
  2. Value-add buyers who are willing to splurge on extras and will renovate immediately

 

Proposed Measures

Standard HDB flats will be built with reference to the 1970s and 1980s models as baseline, but updated to current construction techniques and structural materials

  • For LCFs, basic internal fittings and amenities are provided in near move-in condition
    1. Simple common areas with minimal trimmings
    2. Public amenities are built for durability, robustness and low maintenance
    3. Compared to standard HDB flats, LCFs will have more fixtures and fittings, such as lights, kitchen cabinets and toilets with basic amenities including shower head, but these will be more utilitarian, cost-effective and cheaper to maintain
    4. Fixtures and fittings will be basic but durable, e.g. standard white tiles for kitchen and toilets, and toilet trimmings are standard white water closet and sinks
    5. LCF blocks will be located in non-prime areas, in keeping with their minimalist, cost-saving objective

 

  • For CFs, the goal is to provide the barebones structure for new owners to customise as they see fit (within building guidelines)
    1. Flat interiors will be bare concrete floor and pillars for owners to layout and trim at their own costs
    2. Only the toilets and kitchen will be defined by walls and waterproofed
    3. All piping for water and gas are also prefixed with predetermined locations for WC, shower / bath and floor traps
    4. Costs saved on internal trimmings will be redirected to extra trimmings and amenities for common area
    5. CF blocks will mostly be located in mature, prime estates, although a few will be mixed in with standard and LCF blocks, in non-prime areas

Key Benefits

  • Reduction in renovation noises arising from removal of existing tiles, trimmings and fixtures
  • Lower cost and time required for renovations
  • Prevent wastage; even basic fixtures and fittings cost money, and will be wasted if owners renovate the brand new flats

 

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  6 Responses to “BLUTA on Housing, Part 3”

  1.  

    Is the nationwide base rate based on successful bids, or do bids start from nationwide base rates?

    The rental rates for Singaporeans in your tables look a bit too good to be true.

    •  

      Hi Void Decker,

      No, in our plan, the nationwide base rate is not based on successful bids. It acts more like a reserve price in auctions, so bids do start from the base rate. We would prefer not to allow bids to affect the base rate, as that would lead to the same situation of spiralling costs affecting the whole nation.

      We’re glad you think the rates are too good. In actuality, for regions that are in high demand, you’d be hard-pressed to get anything at base rate. The bidding for rental units in those areas would drive rents up. So the nationwide base rental rates would only be found in areas where there are fewer bids than available units.

      We believe, given the higher rates in popular areas, that the government might even get a decent ROI on these rentals.

      •  

        Singapore can be very expensive and very cheap, it all dneped how you spend your money. For example, a meal may cost from S$3 at coffee shops, hawker centre, food courts; to S$50+ at restaurants. Hard Rock cafe will cost you about S$20 a meal per person.Rental of car is about S$50 to S$120 per days. It’s cheaper on week day or longer term.

    •  

      I think a lot depends on the demand and supply in your bidding process – if prices are too good to be true, they probably are. It could end up like the high COE prices and current rental market.

      Still, it is a very interesting proposal you are making and worthy of further discussion

  2.  

    Hi Void Decker,

    Thanks for your observations. I agree that our system will come across just like the COE system and is at risk of being rather volatile, if not completely unable to achieve the affordable rate we have set out to achieve. However, we do think there are several factors that work in favour of our system:

    – HDB rental is just one form of public housing, and should bidding go out of hand, there is always the “superior” ownership option
    – Rent today cannot be paid by CPF fund and should remain so; without it being a factor, it should damp the bidding powers of those with substantial CPF savings or inflows
    – In an open market where economics is at play, as long as rental supply is sufficient and consistent and there is high market efficiency, prices should be somewhat dampened.

    To achieve that:

    – We have proposed that at any point of time, there should be substantial excess units for rent, if not in the popular areas, but at least somewhere in Singapore.
    – Further to that, we have also mandated that for such a scheme to work, the flat supply needs to be managed such that a certain percentage of flats taken up nationwide should be at the nominal base rate.

    Quoting from our proposal:

    “A substantial supply of ready rental flats will be maintained, with an ideal surplus supply at 3 – 5%. Fluctuations down to 1% during a boom period and up to 15% extra flats in a glut period will be acceptable. This excess supply is counted over the entire country; in other words, not all estates or regions will have a surplus, but there must be surplus units available somewhere in Singapore.”

    And…

    “On top of the requirement immediately above, a nationwide excess supply of HDB rental flats are to be maintained at all times to ensure that at least 10% of the flats offered for rent during any 12 month moving period are rented out at the pre-determined nationwide base rates (without competing bids) to ensure that rental rates remain affordable.”

    Also…

    ” – All available flats will be made known in a convenient and easily searched online database, maintained in the main HDB website.
    – Construction of new rental flats should anticipate population growth at least 2 to 3 years in advance.”

    With these 2 facts and 4 guidelines we are hoping that over exuberant bidding will only occur sporadically and reasonable rents can be achieved otherwise. Bearing in mind that managing the supply of flats is in the hands of a council of people, even with a well thought out guideline, there is no saying that it would not completely miss its target like the team managing the mandated 3% growth in COE numbers. Just how did they miss it by for so much and for so long completely stumps me!

    I also greatly appreciate your confidence in our proposal. It is written not because we think this is the only way to go, but because we want to bring up some of our observations, that to us, seem to have been overlooked, and to raise awareness of ignored solutions that are often “back to basics”. It is our hope to bring a new angle to housing and related problems and share
    a viable solution.

  3.  

    Pretty nice post. I just stumbled upon your weblog and wished to
    say that I have truly enjoyed browsing your blog posts.

    In any case I’ll be subscribing to your feed and I hope you write again soon!

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