Ministry of National Dev Distortion in residential property market
The govt offers a grant for a citizen to buy a new or resale HDB flat. This grant is very attractive, as the buyer can realize it when he sells the flat after 5 years.

There is no such subsidy when the family rents a flat.

Furthermore, the high contribution rate forces citizens to buy a HDB flat, because they cannot use the contribution to pay the rental.

This distorts the market. It forces people to buy a HDB flat or property when it is more sensible for them to rent a flat. It is a reason for the price of property to go up so high. It distorts the market.

High property prices is bad for the long term health of the economy or the living standard of the people.

This policy has to be changed. Here are the changes that I suggest.

a) The same subsidy should be given for purchase and rental of flats. If the subsidy is 10% of 20% of the purchase price, the rental rate should also be subsidized by 20%

b) Tenants should be allowed to use CPF to pay the rent. Alternatively, they should be allowed to opt out from contributing their 20% to CPF. They can use the money to pay rent. 

Tan Kin Lian

Vote - should the govt remove this distortion in the residential property market by offering rental flats on the same subsidy as purchased flats?

 

Add Comment

---