Budget 2024: Rental vouchers for couples awaiting BTO flats to see high usage but could push up rents, property analysts say

  • 4 weeks ago
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  • A government rental voucher under the Parenthood Provisional Housing Scheme will be given to eligible families awaiting their Build-To-Order flats
  • This newly announced move has property experts and agents expressing concerns about its impact on resale rental prices
  • Some said that landlords might exploit the situation by raising rental fees due to the expected high demand from voucher recipients
  • The actual impact will depend on the yet-to-be-disclosed details of the voucher, which will be provided for one year
  • Some couples are waiting for more information about the voucher’s terms and eligibility criteria before deciding on its usefulness

SINGAPORE — A newly announced rental voucher to be used for interim housing options as eligible couples wait for their Build-To-Order (BTO) flats may be a double-edged sword pushing up rental prices of resale flats in the open market, property analysts cautioned.

Right now, married couples waiting for their BTO flats may rent a subsidised rental flat from the Housing and Development Board (HDB) under the Parenthood Provisional Housing Scheme (PPHS). They need to have a monthly household income of up to S$7,000 to rent a flat and those expecting or who have children are given priority.

However, figures from HDB showed that demand has been high with a significant number of applications over recent years.

Last week, HDB said that PPHS application rates were oversubscribed by more than 20 times in 2021 — meaning that there were more than 20 applicants vying for each flat. As of last December, it was at 2.6 times, which means one flat had close to three applicants vying for it. 

HDB increased the supply of subsidised rental flats for the PPHS scheme from 800 in 2021 to 2,000 in 2023, with another 2,000 more to be added by 2025.

To further ease the crunch, Deputy Prime Minister and Finance Minister Lawrence Wong said on Friday (Feb 16) during his Budget speech in Parliament that the PPHS (Open Market) Voucher would therefore allow eligible families to rent an HDB flat in the open market. 

The voucher will be provided for one year, but most of the details about it is not yet known.

 

WHAT PROPERTY AGENTS SAY

Property experts and agents told TODAY that they have encountered many clients who needed their own space while waiting for their BTO flats to be completed but had financial difficulties renting properties at market rate. 

They thus expect the take-up rate to be high, but some of them are also concerned that landlords may look to take advantage of the situation by increasing rental prices.

HDB’s website showed that rental rates of flats under PPHS are based on their location and type. Rentals for two-room flats are around S$400 to $550, while that for three-room flats range from S$600 to S$900.

In contrast, three-room HDB flats on the open market typically cost four to five times more to rent. A search of online property portals by TODAY showed that most three-room flats were being listed for rent at between S$2,500 and S$3,500.

While rental prices for HDB flats in the open market have stabilised from the continuous increases in the last two years, Ms Edith Tay, executive director of real estate agency PropertyBank, said that the distribution of the vouchers may be a “double-edged sword”. 

“While it can make living more affordable for tenants, landlords may feel that they can charge high for rent since there are vouchers that the tenants can use.” 

Mr Dominic Schacher, founder of property management platform Rently, had the same worry. 

“Landlords are quite smart. If they know there are subsidies available, I am afraid they will increase their prices. I’m not sure how this problem can be mitigated, but there is a possibility that rental prices will see a jump.”

Ms Karine Lee, a property agent with PropNex Realty, said that some flat owners might seize the opportunity to raise rental charges, but she was hopeful that others who collect passive rental income would “remain reasonable and help these families tide through the waiting period”.

In one transaction that she facilitated, for instance, the landlord who was her client agreed to lease a three-room Woodlands flat for a monthly S$3,000 instead of the market value of S$3,300 after negotiating and taking her tenants’ situation into consideration.

They were a newly wedded couple with a newborn baby looking to rent for two years. 

Ms Christine Sun, chief researcher and strategist of property agency OrangeTee Group, believes that the possibility of rent prices rising may not be high, and even if it occurs, it would likely affect smaller HDB flats. She said that this was because most couples taking up the PPHS scheme will usually not lease bigger flats due to cost concerns. 

One of the eligibility criteria for PPHS applicants is that the monthly household income must be S$7,000 or below.

“The impact on rental demand and prices will depend how many people qualify for the vouchers and amount given,” she added. 

Mr Nicholas Mak, chief research officer at property technology company Mogul.sg, does not foresee rental prices for HDB flats to rise, noting that there would be eligibility criteria for the vouchers as indicated in Mr Wong’s Budget speech.

Giving a wider picture forecast, Mr Mak said: “I expect overall private property rental rates to fall by 10 to 15 per cent this year, so it’s only a matter of time that HDB flat rentals will come down.”

“If the Government gives out a sufficient amount of vouchers, it will not reverse the projected downward trend of rental rates,” he added, noting that the rising supply of private and public housing since late last year will also drive rental prices down. 

WHAT COUPLES SAY

When approached for their views, most couples told TODAY that they are waiting for the voucher’s value and eligibility criteria before deciding if they would be interested in taking up this relief measure.

Receptionist Siti Sabrina Yahya, 27, and her future spouse come from big families, and she said that she is considering moving out after getting married next year but her BTO flat will only be ready in March 2028.  

“The open market voucher sounds useful, but we will wait for details to be announced before making a decision. Hopefully, there’s at least a 50 per cent monthly rebate.”  

Systems engineer Gan Kai Ler, 27, said that he liked the idea of the voucher but could not comment more on its usefulness until the voucher’s worth was announced. 

“If the dollar value associated with it allows me to rent an average housing unit five to 15 minutes away from the nearest MRT station and is in a fairly central location, I think it is a very good deal.”  

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