Families awaiting BTO flats say rental voucher inadequate

After failing to secure an interim rental flat under the Parenthood Provisional Housing Scheme (PPHS), an assistant manager who wanted to be known only as Ms Peh resigned herself to renting a three-room flat in Ang Mo Kio for $2,900 a month in 2022.

The 34-year-old, who works in healthcare, said she was disappointed when she learnt that rental vouchers under the PPHS for flats or bedrooms on the open market were fixed at $300 a month.

National Development Minister Desmond Lee announced details of the voucher scheme on March 5 during a parliamentary debate on his ministry’s budget.

The voucher scheme will run from July 2024 to June 2025, allowing eligible families waiting for their Build-To-Order (BTO) units to offset rent for a Housing Board flat or bedroom on the open market.

But Ms Peh, who applied more than three times for a temporary home in 2021 before committing to a two-year lease, said: “$300 a month is not sufficient support at all, compared with high rents and rising costs of living.

“I have blown my savings, and the financial stress took a toll on my marriage. By the time my BTO flat is ready in 2025, I’m not sure if I’d have enough to cover the remaining down payment.”

To qualify for the rental voucher scheme, families must have a monthly household income of $7,000 or below, and have an uncompleted flat from HDB’s sales exercises.

The initiative aims to provide these families with more support as HDB works to double its supply of interim rental flats under the scheme from the 2,000 units now to 4,000 units by 2025.

Other buyers awaiting their BTO flats told The Straits Times that the rental voucher scheme was a good initiative, but that they would continue to apply for a PPHS flat as rents on the open market are steep.

A customer service officer who wanted to be known only as Ms Arifa, 25, said she would continue to live with her family while trying her luck for a PPHS flat.

“I would still prefer to rent from HDB, even though the chances are not high. Renting on the open market is too expensive,” said Ms Arifa, whose four-room BTO flat will be completed in 2027.

A 24-year-old engineering undergraduate, who declined to be named, noted that two-room flats under PPHS are priced for rental at around $400 to $550 a month, while three-room units are between $600 and $900.

“Rents for three-room flats on the open market are, at a minimum, $2,300 a month. Plus, the voucher is only for a limited time,” she added.

A healthcare worker, who wanted to be known only as Mr Tan, 27, said he hoped for a higher voucher amount for couples with children.

“I’ve been trying to rent a bedroom, but I keep getting rejected as I have a three-month-old daughter, and landlords are afraid she may disturb other tenants when she cries,” he said, adding that he cannot afford to rent a whole unit.

Mr Tan said he is currently living with a colleague but has to move out by end-March. “I have exhausted all my options,” he said.

Mr Lee told Parliament on March 5 that the voucher amount was “carefully calibrated” to help families defray the cost of renting a flat on the open market, while mitigating its potential inflationary impact on the rental market.

The authorities will monitor the voucher’s impact on the rental market, he said.

Second Minister for National Development Indranee Rajah said in a video interview with ST on March 7 that about 400 families that qualify for PPHS are currently renting on the open market.

Asked about the impact the voucher could have on the rental market, Ms Indranee said the authorities did not want it to be “so much that it would actually induce demand and then have a knock-on effect on the market”.

She said that at the end of the voucher’s run, the Government will assess demand and market conditions before determining if it is necessary to continue with the scheme.

PropNex Realty chief executive Ismail Gafoor said families would still have to bear substantial rental costs even after factoring in the voucher. He noted that in 2023, the average rent for two-room flats was $2,147 a month, and for three-room units, it was $2,647 a month.

However, Ms Christine Sun, chief researcher and strategist at property firm OrangeTee Group, said the voucher would provide more help for those who opt for room rentals.

In Punggol, where the median rent is $1,275 a month for a bedroom, the voucher would cover about 23.5 per cent of the rental cost, she added.

On March 5, Mr Lee also announced that the upfront down payment for couples eligible for deferred income assessment will be lowered to 2.5 per cent of the flat price, regardless of their financing option, under HDB’s Staggered Downpayment Scheme. This will take effect from the BTO sales exercise in June.

Ms Indranee told ST that for some young couples who have yet to build up their income, such as students and national servicemen, forking out the down payment on a flat can be daunting and difficult.

By reducing the initial deposit, there is less cash outlay, and they can pay the remaining down payment at key collection “when they earn more and when their finances grow with time”, she added.