Buybacks from owners who go private?

I REFER to yesterday’s letters, ‘Costly choices’ by Mr Mervyn Song, and ‘Room for pragmatism’ by Mr Ng Kwong Yee.

The HDB flat ownership scheme has been tweaked several times to meet the demands of the population, without sacrificing the primary objective of the HDB as the government provider of affordable housing.

For example, in the 1970s, HDB compulsorily acquired flats of owners who had another property, but the rule was later amended to allow private property owners who lived in their HDB flat for more than five years to keep the flat and lease out their private property for investment.

The relaxation of rules should be commensurate with the circumstances in the supply and demand of affordable housing.

Where supply of new flats is abundant and resale flat prices affordable, HDB flat owners can live in them while investing in another property. Resale flats, like private property, are subject to the fierce forces of the open market, and prices come down only if supply exceeds demand. However, in the past two decades, demand has always exceeded supply, so we can expect prices of flats sold in the open market to go up.

Thus HDB remains the only provider of affordable housing amidst rising costs of building materials and land.

Mr Ng is right to mention that HDB lacks the teeth to weed out illegal letting of flats. Perhaps the National Registration Office can match registered addresses with HDB’s records to see how many mismatches there are.

Next, it may help if HDB buys back (not compulsorily acquires) from HDB flat owners who own private property and resells these flats to those who need a roof over their head at subsidised prices.

Patrick Sio

Source : Straits Times – 9 Feb 2010