Thursday, 27 October 2011

Interim rental housing

MPs say rental scheme highlights new segment in need
By Daryl Chin & Shuli Sudderuddin, The Straits Times, 27 Oct 2011

FOR the past 21/2 years, administration assistant Peter Suppiah and his family have called a three-room Housing Board (HDB) flat in Toa Payoh home.

The 57-year-old downsized to an interim rental unit because of financial difficulties. In most cases under interim-housing rules, a family must share the flat with another family.

For the past three months, the co-residents had been another family of six who have just moved out. The space crunch meant that Mr Suppiah and his wife slept on a mattress in the living room while his three children and elderly mother shared a bedroom.

The sole breadwinner pays a monthly rent of $380, which takes up a chunk of his salary of less than $1,500.

He cannot apply for a public rental flat until 30 months have elapsed after the sale of his Admiralty flat.

Interim housing was a talking point in Parliament last week and some observers said the discussions point to a growing segment of people, like Mr Suppiah, whose housing needs should be addressed.

Interim rental housing (IRH) was started in 2009 as a temporary shelter to assist families in hardship and facing a transition in their housing arrangement.

About 800 flats, mostly three-room units in places such as Toa Payoh, Bedok and Taman Ho Swee, are in the IRH scheme.

IRH tenants include households in the public rental-flat queue but in urgent need of accommodation, and those in financial hardship while waiting to move to smaller flats that are being built.

Mr Zainudin Nordin, an MP for Bishan-Toa Payoh GRC, said at least half of the 60 cases he sees during his Meet-The-People sessions concern interim housing.

'This means that they do not have an ideal housing situation and come to me so often they are like my regular customers.'

He mentioned, during Parliament last week, that some people have been in interim housing since 2009 and sometimes two families are squeezed into a two-room flat.

'I cannot imagine how schoolgoing children can study, and how parents can keep their young safe while living with strangers. I'm disappointed that we're slow at resolving this issue.'

He called on the HDB to enlarge its rental scheme and work out 'meaningful subsidies' so that families can live together safely.

MP Charles Chong, who used to see about 15 interim rental cases out of every 60 people he met during his Meet-The-People sessions when he was in Pasir Ris-Punggol GRC, said the problem is exacerbated by the mismatching of families.

IRH typically has two families sharing a three-room unit - a practice that HDB said is meant to help keep rents low.

One example he gave was a family with an asthmatic member matched with another family whose members smoked.

Mr Chong, now the MP for Joo Chiat, has also seen the demand for such housing go up as the economy improves.

'These people get into financial difficulties during the recession, and sell their flats when the economy picks up. After liquidating, they are hit by debarment rules and perhaps poor money management,' he said.

Under HDB rules, those who sell their flats have to wait 30 months before they can apply for subsidised rental housing.

PropNex chief executive Mohamed Ismail noted an increasing number of people who do not qualify for subsidised rental housing and yet have difficulty renting flats at open market rates.

'Income ceilings have risen for buying a new flat. Perhaps, given the rising cost of living, it's time to raise the $1,500 income ceiling for subsidised rentals as well,' he said.

Another suggestion is for more flats to be allocated to the IRH scheme.

In the open market, monthly rents for three- to five-room HDB flats can range from about $1,600 to $2,600.

Public rental flats, meant to be the final safety net, cost between $30 and $275 monthly depending on income level, and come in one- and two-room options.

In between these two options are rental flats meant for the less needy and managed by private operators such as EM Services, LHN Group and Katong Hostel.

There are about 2,200 flats under the Selective En Bloc Redevelopment Scheme offered for such uses. These are located in areas such as Tiong Bahru, Commonwealth Drive, Havelock Road, Toa Payoh, Boon Lay Avenue and Bedok.

Of these, 1,400 of them are offered at market rates while the remaining 800 are set aside for IRH, which costs about $300 a month for a room.

Allocating more flats under IRH could also benefit newly married couples who have already bought a flat but are waiting for it to be built.

Mr Ismail said: 'These are people committed to plan in advance, get married and would like to live on their own. They might need help too.'

His view is shared by Ms Lee Bee Wah, chairman of the Government Parliamentary Committee for National Development.

But overall, Ms Lee, who is also an MP for Nee Soon GRC, felt that IRH is the right solution as it 'helps to bridge families waiting for permanent homes'.

Mr Liang Eng Hwa, an MP for Holland-Bukit Timah GRC who also sits on the committee, believes that Mr Zainudin comes across the interim housing issue more often because there are such blocks in his area.

'I am not as exposed to this problem. The thing is, this is meant to be interim housing so I think it's serving its purpose,' he said.

When asked if the HDB would abolish its partnership with commercial landlords such as EM Services, National Development Minister Khaw Boon Wan said last week that he was reviewing rental policy as a whole but would abide by contracts previously signed.

Last week, one of the points he brought up was that he was reviewing the rental structure to introduce more rental tiers. This would be done so that 'the incentive to work harder and earn more is not unwittingly diminished'.

Calling vulnerable families who earn less than $1,500 a month a top priority, he added that the HDB is speeding up the programme to ramp up supply.

There are more rental flats in the pipeline, up to 57,000 by 2015. Mr Khaw gave assurances that there will be further improvements to the waiting time, which has been whittled down from its peak of 21 months in 2008 to six months now.

Summing up the situation, Mr Zainudin called for further tweaks to the rental structure.

He said: 'While the Government's stance is that home ownership should be as widespread as possible, the reality is that there will always be some people who cannot achieve this.

'We must have a solution that is good and robust.'

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