“Soon after separation, I resolved to enable every household to own its own home. If we were going to get the people to take National Service seriously, I could not ask their sons to fight and die for the properties of the wealthy. We worked out a personal savings scheme that allowed them to own an apartment painlessly through instalments over 20 years. We sold the apartments to them at below cost to enhance their assets. Today, 95 per cent of Singaporean households are homeowners. It has immeasurably increased their wealth and our social stability. Without home ownership, we would have become like Tokyo, Seoul or Hong Kong, where the voters in the cities are disaffected because they pay a large proportion of their salaries in rents.”
Some have argued on social media that a 99-year lease is permanent renting. That’s an invalid argument. The COE for your car is ten years, but no one claims he is merely renting his vehicle. Let’s face it. There are significant differences between renting and home ownership. You can sell the flat you own to monetise it. You can rent a room or the whole flat to earn income. You can’t do this with a rental apartment. Every cent you pay for rent is money spent.
In his adjournment motion (2 Nov 2021) on home renting, WP Louis Chua argued that home ownership is not necessarily superior to home renting. He proposed that home renting is made a mainstream option.
He cited a BT article (“Renting can be a viable alternative to owning a private home in Singapore”) which concluded from a simulation that owning a private home is not necessarily superior to renting in terms of financial outcomes if the renter puts money meant for buying a home into real estates investment trusts.
The comparison is for people rich with cash. The simulation compares renting to buying a $2M private property and assumes that people also have $700,000 to put in a REIT. This already rules out most of us who own a public housing flat.
Borrowing this simulation, he argued that if home ownership is still an ideal that the Government would like to champion, the Government could put the entire stock of HDB rental flats in a REIT structure, which can be either public or private. Now, Singaporeans can become a renter of an HDB flat while owning a part of Singapore’s entire stock of HDB flats by investing their money in this REIT. That’s a specious argument.
He argued that math is possible even for people with less money but then contradicted himself by calling for subsidising rent to make it affordable. Where is the money to put in a REIT if one needs subsidies to afford rent?
If you are already complaining about the cost of living without paying rent, how will you cope with paying rent? More importantly, where will the money to pay rent come from when you retire and no longer have an income from work?