Mr Chua Kheng Wee Louis asked the Minister for National Development (a) in the last three years, what is the average increase in open market rents for HDB 3-room, 4-room and 5-room flats; (b) whether the Government will consider raising the monthly household income ceiling of $7,000 for families using the Parenthood Provisional Housing Scheme (Open Market) Voucher to rent HDB flats from the open market; and (c) if not, how will the Government assist more young couples to afford interim rental properties in the open market.
Ms Indranee Rajah: Open market rents had stayed broadly stable prior to the COVID-19 pandemic but have increased in the past three years due to unprecedented supply-side constraints and increased rental demand arising from COVID-19.
In 2021, the average year-on-year increase in open market rents for Housing and Development (HDB) 3-room, 4-room and 5-room flats was 5%. This increased to 35% in 2022, amid the easing of border restrictions and recovery of non-resident rental demand. We have since implemented a suite of measures to support households who need to rent accommodations. These include increasing both private and public housing supply, temporarily relaxing the occupancy cap for larger HDB flats and private residential properties, as well as ramping up our supply of rental flats under the Parenthood Provisional Housing Scheme, or PPHS.
Public and private housing rents have shown signs of stabilising. The average year-on-year increase in open market rents for HDB 3-room, 4-room and 5-room flats was 10% in 2023.
The PPHS provides a temporary housing option for families with less income at their disposal to rent a flat while waiting for their HDB flats to be completed. HDB is working to double the supply of PPHS flats from about 2,000 units currently to about 4,000 units by 2025.
Meanwhile, we will introduce the PPHS (Open Market) Voucher Scheme as a temporary measure to support eligible families who rent HDB flats or bedrooms in the open market. The scheme will run for a one-year period from July 2024 and eligible families will receive $300 per month. Families must be eligible for PPHS and have a rental tenancy registered with HDB.
The PPHS Voucher parameters have been carefully calibrated to provide some relief for eligible families, while mitigating the potential inflationary impact on the rental market. The $7,000 income ceiling targets our support at families with less income at their disposal to rent on the open market. Given the voucher quantum of $300 per month, eligible families will receive up to $3,600 if they qualify for the full year of support. Families will have the flexibility to select a rental option – whether a whole flat or an HDB bedroom – that suits their budget and needs.
There are currently no plans to raise the income ceiling of $7,000 for the PPHS Voucher, or to offer a higher voucher quantum. Households with incomes above $7,000 but have additional expenses due to exceptional circumstances, such as high medical expenses, may approach HDB for help. HDB will consider their applications on a case-by-case basis.
Families will also continue to have the option to apply for a PPHS flat offered by HDB. Married couples with children will continue to be given priority for PPHS flats. In recent exercises, all married applicants with children, including those expecting children, had a chance to select a PPHS flat.
Mr Speaker: Mr Louis Chua.
Mr Chua Kheng Wee Louis (Sengkang): Thank you, Mr Speaker. Just one supplementary question for the Minister. Given that, if I look at the median rentals of 3- to 4- room flats in the last two years since the income ceiling was introduced in 2021, I think it has gone up by about 30% to 70%, or about $600 to $1,600, a month, which is considerably more than the $300 voucher given, which while would go some way in defraying the rental costs, I wanted to ask the Minister if she would consider whether or not to provide greater assistance, especially for those who are less able to afford it, in the interest of equity, especially if rents continue to increase during this one-year trial period.
Ms Indranee Rajah: I thank the Member for his supplementary question. I think the first thing to bear in mind is that the $7,000 cap is actually a measure to help those who are less able to afford. That is the first point, because if we did not have that cap or if we increased that cap, you would have more people coming in, and that would drive the rents up. So, the first point to bear in mind is the $7,000 is a way of helping the lower-income group.
I think the main point he was asking was whether there would be greater assistance for those less able to afford it. At the moment, there are no plans to increase the voucher amount, but do not forget that we do have plans to double or to increase the number of PPHS flats.
So, there is a range of measures. There would be those who would be able to afford, to rent on the open market, whether private or HDB. Then, remember, in 2021, when we first introduced the PPHS, we started at about 800 PPHS units; which, in 2022, we then said we would be increasing to 840. And then by 2023, we actually more than doubled it to about 2,000. And now, we will be doubling it to 4,000. So, by increasing the number of PPHS flats and putting that into the mix, the lower-income can access that, even if they are not using the PPHS voucher.
I think what I would like to say is that we will keep an eye on this. We will bear in mind those who are not able to afford, to have such easy access. But for now, there are no plans to increase the amount. And also, for the PPHS voucher, we only just announced it in Budget this year. We have to give it some time to run.
Ministry of National Development
2 April 2024
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