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     FrontPage Edition: Fri 17 November 2006

Rates for HDB rental flats to be pegged to household income


More help for those who need rental flats

HDB will increase the supply of subsidised rental flats to further cater to the housing needs of the lower income households.
At the same time, HDB will align the rental rates to household income, to ensure that our rental subsidies are targeted at low-income families with no alternative housing options.
Increasing Rental Demand
To meet the growing demand for rental flats from low-income families, HDB will resume the building of new rental flats in various public housing estates. The new rental blocks will be interspersed with the sold blocks to achieve a balanced social mix.
In the interim, HDB will also convert 3 vacant blocks of 3- & 4-room flats at Boon Lay and Woodlands into about 1,000 units of 1- & 2-room rental flats.
The conversion works are scheduled to be completed in early 2008. This will enable HDB to offer more rental flats earlier to the low-income families.
Alignment of Rental Rates to Household Income
Currently, there are 2 tiers of rent under HDB¨s Public Rental Scheme.
1st-tier rent, at about 10% of market rent, is payable by tenants who earn $800 per month or less.
Introduced in Oct 2003, 2nd- tier rent is pegged at about 30% of market rent, and is payable by tenants who started renting their flats after 1 Oct 2003 with income between $800 and $1,500 per month.
Starting from 1 Mar 07, HDB will align the rental for its flats to the household income of the tenants.
Tenants whose monthly income is $800 and below will continue to pay the 1st-tier rent. Similarly, tenants who rented their flats after 1 Oct 2003 and whose monthly income is between $801 and $1500 will continue to pay the current 2nd-tier rent.
However, tenants whose income has since risen above these levels will be required to pay higher rent based on their new income levels (See Annex Table 1 for revised rent structure).
The vast majority (80%) of the existing tenants have income of $800 and below. They would not be affected by the rent alignment and would continue to pay existing rent.
The revised rent structure will encourage tenants who have greater financial means to opt for other housing options, such as a homeownership flat.
Eligible households will receive assistance such as the Additional CPF Housing Grant when they purchase their first ownership flat. This will help to free up more rental flats for the needy.
HDB rental flats are let on a 2-year term tenancy. The alignment of the rental rates will take effect from 1 Mar 07 and will be phased in over 2 tenancy renewals.
For existing tenants, they will be informed of the rental rates for their next tenancy term about 3 months before their current tenancy expires.
2nd-timers renting HDB flats
Starting from 13 Nov 2006, rental rates will also take into account whether tenants have enjoyed housing subsidy previously.
Those who have previously sold one subsidised flat in the open market (ie 2nd-timer households) will be charged higher rent compared to other low-income families who have not enjoyed any housing subsidy previously. This is to ensure equitable distribution of public housing subsidy. The rent structure for new 2nd-timer households is shown in Annex Table 2.
For enquiries on the revised rental policies, the public can contact the Branch Office Service Line at 1800 225 5432.
More..... (Annex)

Source: Press Release 12 Nov 2006

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