Solving the housing problem in Singapore

I suggest the following approach to solve the housing problem in Singapore.

HDB should build a large number of flats for rental at affordable rentals that are lower than the current market rates. I suggest the rentals be set at the following level.

• 4 room flat $1,200 per month
• 3 room flat $900 per month
• 2 room flat $600 per month

These flats are to be built in the new towns and have modest finishes. They are to be given for rental to Singaporeans, with priority for those who have served National Service. It is easier and faster to build flats for rental - as the tenant is less fussy on their requirements, compared to a family who has to spend a large sum of money to buy a flat. 

The rental rates can be adjusted yearly based on the change in median income.  The above rental rates are lower than the current market rates, and can be considered as a subsidy to make it easier for Singaporeans to provide affordable public housing.

Renting has its advantages. It gives flexibility to the family to choose a flat that is close to the place of work or to move to a new rental flat when they change their job. By living close to the workplace, the worker will educes the time and cost of travelling and traffic congestion.

Families who rent the flat can invest their spare savings in shares or real estate investment trusts or other suitable investments and do not need to tie their investments to the home that they occupy. 

When Singaporeans know that they can have a flat that is available at a reasonable rental, they do not need to panic and rush in to buy a property at its inflated price. This will help to stabilise the property market and preserve the value of the HDB flats that have been bought earlier, i.e. does not cause a drop in their values.

We also need to allow the use of CPF savings to pay towards the rental of the flat (up to certain limits), similar to the use of CPF to buy a flat. I do not know how to handle this tricky issue. I hope to get some views.

Tan Kin Lian