Thursday, March 12, 2015

Former home owners applying for rental flats a ‘worrying trend’



SINGAPORE — A “worrisome trend” has emerged in the public rental flat scene, with a greater proportion of applicants being former home owners who have had to sell their flats for various reasons.

This group makes up 59 per cent of public rental applicants, up from 52 per cent five years ago, Dr Mohamad Maliki Osman, Minister of State (National Development), told Parliament yesterday.

In a rising property market, or when one is financially strapped, the temptation to sell is very real, he said during the Ministry of National Development’s (MND) Committee of Supply debate.

“But my advice (is) resist the temptation and don’t cash out. Keep your home, protect your nest egg. Life may be harder in the short run, but it will work out,” Dr Maliki added.

[But this is what happens when you tell people that their home is an  asset, an investment, and one can monetise the asset. I agree they should not sell their home, but am I surprised that they do? When they have been hearing the message that "you're rich. your flat is worth a lot of money." ]

In response to calls by several Members of Parliament (MPs) for a relook at the rental housing policy to ensure low-income families and single parents can have a roof over their heads, Dr Maliki said the MND is ramping up supply of rental flats.

However, he added, the ministry would continue to take a “judicious” approach in allocating these highly subsidised rental flats to ensure it “targets help where it is most needed”.

“Will our society support giving them more housing grants than what other families, including lower-income families, receive — if the reason they need more help is because they have used proceeds from the sale of their previous HDB flats unwisely or even irresponsibly?” he asked.

Dr Maliki noted that the public rental policy is meant as an interim “safety net” for those who cannot own a home immediately and have no family support.

The changes the MPs are asking for may result in a “moral hazard”, he cautioned.

“With better outreach and community engagement, we hope home owners will make more informed choices and not be easily taken in by the promise of short-term gains, without realising the serious long-term implications,” Dr Maliki said.

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