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13-04-2024, 03:57 PM
Singapore’s public housing program is sui generis, un-replicable in its entirety anywhere.
During the 1959 election campaign for the first fully elected parliament for domestic self-government, the People’s Action Party (PAP) promised to improve the living conditions of Singaporeans. One year after being elected, it established the Housing and Development Board (HDB) to undertake a public housing program to fulfil its promise.
From the outset, the housing program was a political good and the HDB has been practically synonymous with the PAP government. For Singaporeans, HDB flats are ‘government housing’. Beginning with providing one-room rental flats in low-cost, low-rise walk-up blocks for the poor, the HDB began to develop larger flats—with two or three bedrooms, sitting-room, dining room, kitchen, and multiple toilet facilities—to let on a 99-year lease. By the mid-1980s, up to 85% of resident households were housed in HDB flats, with more than 80% holding a 99-year lease on their flats. This achievement is built on three essential elements.
First, the availability of land to the state. Combining the transfer of colonial Crown land, the aggressive compulsory land expropriation from private landlords in the 1960s and 70s, and extensive coastal land reclamation, the Singapore state owns approximately 90% of the land in the country. Land is thus effectively nationalised and readily available for all national development purposes, including public housing.
Second, the availability of financial loans to enable households to purchase the 99-year lease on HDB flats. Conventionally, mortgages from commercial financial institutions, such as banks, are available only for the creditworthy, leaving those with low and/or uncertain incomes out of homeownership. An inclusive solution that can provide all Singaporean households with at least one steadily employed member access to a mortgage was facilitated by allowing the leaseholders to make pre-retirement withdrawals from their compulsory social security savings; namely, the individual’s Central Provident Fund (CPF) savings, which is extracted at the source of employment.
The HDB holds the mortgage for the 99-year leaseholder, the CPF makes the monthly payment to the HDB from the latter’s monthly savings. The interest charged by the HDB on the loan is fixed at half a percentage point above the interest paid by the CPF to the individual’s savings; it is effectively interest-free. The entire transaction is contained within a closed circuit of financing, without incurring generally higher mortgage interest rates from commercial financial institutions. With the facility of CPF payment, introduced in 1968, the rate of 99-year leaseholdings on public housing flats rose rapidly, covering practically the entire nation, except for the top 10–15% of high-income households who reside in the expensive private housing sector and, the 5–6% of the poor who rent small HDB flats.
The HDB holds the mortgage for the 99-year leaseholder, the CPF makes the monthly payment to the HDB from the latter’s monthly savings. The interest charged by the HDB on the loan is fixed at half a percentage point above the interest paid by the CPF to the individual’s savings; it is effectively interest-free. The entire transaction is contained within a closed circuit of financing, without incurring generally higher mortgage interest rates from commercial financial institutions. With the facility of CPF payment, introduced in 1968, the rate of 99-year leaseholdings on public housing flats rose rapidly, covering practically the entire nation, except for the top 10–15% of high-income households who reside in the expensive private housing sector and, the 5–6% of the poor who rent small HDB flats.
More at https://tinyurl.com/m458c5ac
During the 1959 election campaign for the first fully elected parliament for domestic self-government, the People’s Action Party (PAP) promised to improve the living conditions of Singaporeans. One year after being elected, it established the Housing and Development Board (HDB) to undertake a public housing program to fulfil its promise.
From the outset, the housing program was a political good and the HDB has been practically synonymous with the PAP government. For Singaporeans, HDB flats are ‘government housing’. Beginning with providing one-room rental flats in low-cost, low-rise walk-up blocks for the poor, the HDB began to develop larger flats—with two or three bedrooms, sitting-room, dining room, kitchen, and multiple toilet facilities—to let on a 99-year lease. By the mid-1980s, up to 85% of resident households were housed in HDB flats, with more than 80% holding a 99-year lease on their flats. This achievement is built on three essential elements.
First, the availability of land to the state. Combining the transfer of colonial Crown land, the aggressive compulsory land expropriation from private landlords in the 1960s and 70s, and extensive coastal land reclamation, the Singapore state owns approximately 90% of the land in the country. Land is thus effectively nationalised and readily available for all national development purposes, including public housing.
Second, the availability of financial loans to enable households to purchase the 99-year lease on HDB flats. Conventionally, mortgages from commercial financial institutions, such as banks, are available only for the creditworthy, leaving those with low and/or uncertain incomes out of homeownership. An inclusive solution that can provide all Singaporean households with at least one steadily employed member access to a mortgage was facilitated by allowing the leaseholders to make pre-retirement withdrawals from their compulsory social security savings; namely, the individual’s Central Provident Fund (CPF) savings, which is extracted at the source of employment.
The HDB holds the mortgage for the 99-year leaseholder, the CPF makes the monthly payment to the HDB from the latter’s monthly savings. The interest charged by the HDB on the loan is fixed at half a percentage point above the interest paid by the CPF to the individual’s savings; it is effectively interest-free. The entire transaction is contained within a closed circuit of financing, without incurring generally higher mortgage interest rates from commercial financial institutions. With the facility of CPF payment, introduced in 1968, the rate of 99-year leaseholdings on public housing flats rose rapidly, covering practically the entire nation, except for the top 10–15% of high-income households who reside in the expensive private housing sector and, the 5–6% of the poor who rent small HDB flats.
The HDB holds the mortgage for the 99-year leaseholder, the CPF makes the monthly payment to the HDB from the latter’s monthly savings. The interest charged by the HDB on the loan is fixed at half a percentage point above the interest paid by the CPF to the individual’s savings; it is effectively interest-free. The entire transaction is contained within a closed circuit of financing, without incurring generally higher mortgage interest rates from commercial financial institutions. With the facility of CPF payment, introduced in 1968, the rate of 99-year leaseholdings on public housing flats rose rapidly, covering practically the entire nation, except for the top 10–15% of high-income households who reside in the expensive private housing sector and, the 5–6% of the poor who rent small HDB flats.
More at https://tinyurl.com/m458c5ac
