PSP’s housing proposal is a “prepaid rental scheme leveraged on past reserves”: Sim Ann


Progress Singapore Party’s NCMP Mr Leong Mun Wai’s alternative housing plan does not solve any problems and raises more questions than it answers.

Senior Minister of State for National Development Sim Ann said this on the second day of the housing motion debate today (Feb 7, 2023) in Parliament.

In fact, SMS Sim said his proposal is problematic both ways: there are problems if it’s attractive and there is another set of problems if it’s unattractive.

More questions than answers

While there may be a lot of applicants for BTO flats due to their low price under PSP’s proposal, these applicants will face a huge clawback, in the form of land cost plus accrued interest, if they intend to sell their flats in the future.

“So it’s possible that prospective sellers of these flats are looking at actually a much higher price that they have to pay to the government if you add everything up together,” she said.

That is because there’s no housing grants and subsidies like the current BTO system, which is based on affordability.

And what happens when sellers with genuine needs (like those who need to downsize) don’t have enough money to pay the land cost plus interest to the Government?

“Members have also pointed out that implications of upheaval in the resale market and their concern that the value of existing homeowners assets would also be negatively impacted,” the SMS said.

Why would anyone want to purchase anything on the resale market when one can purchase a new flat at a very low price?

Another problem is that if it’s attractive, it will attract plenty of buyers — making it even harder for first-timers to purchase their flats.

“Does that not make it harder for first timers to get a flat and does that not worsen the current concerns that some have about accessibility?” she asked.

On the flip side, if the proposal is unattractive, that would mean that the public housing model would have failed.

“If the scheme is not attractive to applicants, actually also for the reasons that commentators have pointed out, I think that’s also a concern, because wouldn’t that mean that young people, applicants included, would abandon the public housing scheme,” she said.

A prepaid rental scheme

SMS Sim went on to say that Mr Leong’s plan is not sustainable because ultimately, it is still a draw on the Reserves.

This is because land cost is not paid if the person doesn’t sell the flat.

“In fact, from the get go, we can think of the scheme as a prepaid rental scheme leveraged on past reserves,” she said.

It is also incorrect to say that the land on which HDB flats are built should be treated like land which public infrastructure is built, she added.

“Although we call it public housing, the use of the flat is exclusive to the household that owns it. And this is completely different from public infrastructure. More importantly, HDB flat owners can sell their flats if they wish and keep the proceeds. But we cannot break public infrastructure up sell it off and look at the proceeds as individuals,” she explained.

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