Singapore Property Update

Daily real estate news, advice and strategies for aspiring property investors

Time to reconsider relaxing eligibility criteria for public rental flats

By Timothy Quek


In an article published by The Edge on 19 September, Manu Bhaskaran suggest that it might be better for lower-income groups to rent homes “rather than be put in a position where they have to put aside so much of their limited savings that other financial objectives such as retirement are compromised.”

“If we have more public housing set aside for rental and combine that with housing market regulations to better protect tenants, we could have a better outcome for the poorer segments of the population,” he added.

At the present moment, in order to qualify for a public rental flat, one’s total household gross income must not exceed $1,500 per month.

According to the latest statistics from the government, 11.8 percent of households have no working person, 1.9 percent of households has a income of below $1,000 and 5.4 percent has a income between $1,000 and $1,999.

For the sandwiched class, 5.1 percent of households earn between $2,000 and $2,999, 5.2 percent between $3,000 and $3,999 and 5.2 percent between $4,000 and $4,999.


Photo by Christian Chen,


The gross income excludes CPF contributions meaning that these households are actually taking home 20% less.  After using monies from their CPF ordinary account for the monthly mortgage of their HDB flats, do they still have enough for their retirement?

It is time HDB reconsider relaxing its eligibility criteria for renting HDB flats in view of the higher cost of living and the inadequacy of CPF savings to cater to the retirement needs of Singaporeans.

Perhaps, it should conduct a stress test for buyers of BTO flats to assess if they have the means to attain the Minimum Sum in their CPF savings when they reach 55 years of age after using their OA funds to pay for their flats.

Singaporeans who need to use their entire or bulk of their CPF savings to service their monthly mortgage should not be allowed to purchase HDB flats and instead be offered rental flats.

While Singapore’s high home ownership rate is a constant source of pride for us, it defeats the purpose for Singaporeans to own a home now only to lose it through having to lease it back to the government via the lease buyback scheme during their golden years because they have depleted their CPF savings to service the mortgage.

Though having a large proportion of the lower income groups living in public housing will deprive HDB of revenue from the sale of BTO flats, it will ensure these Singaporeans not only have a roof over their heads, but have adequate funds to serve their retirement needs thereby lightening the burden on our social welfare system eventually.




Related articles:

Why HIP and VERS will not turn your depreciating HDB flat into an asset

Credit Suisse: HDB resale flats are likely to see a decline in value over time

Why HDB flats cannot be considered as an asset which will generate wealth

Differences between 99 year leasehold private properties and HDB flats

Can I use my CPF or secure a bank loan to buy a 70 year old HDB flat?


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About the Author

Timothy is a guest contributor to Singapore Property Update. He has been a property agent for the past ten years.

Updated: October 29, 2018 — 3:56 pm

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