International experience has shown that while rent controls may moderate rental increases for some tenants in the short run, they are likely to distort the housing market, National Development Minister Desmond Lee said in a written reply in Parliament on Jul. 3.
According to Lee, rent controls may inadvertently reduce rental supply, and cause rental housing demand to exceed supply, which could lead to issues of allocation and equity.
In addition, rent controls may distort property prices and disincentivise landlords from maintaining proper upkeep of their rental units.
Lee added that the government is “not closed” to any option however, and will continue to monitor the situation and adopt such measures as may be necessary.
Rental rates are beginning to stabilise
Lee was responding to several questions filed by Workers’ Party Member of Parliament Jamus Lim.
Lim had asked about whether there has been any consideration by the Ministry of National Development(MND) to legislate on the maximum rental fee adjustments by landlords following a lease renewal, to a maximum percentage of the prior rent as practised by other countries such as Australia, Canada, China, France and Germany, among others.
He also asked if there has been any consideration by the Housing Development Board to cap rental fee adjustments following a lease renewal to a maximum percentage amount of the prior rent, and whether there are any practical constraints to imposing such a cap.
In response Lee, replied that rental rates are showing “early” signs of stabilising.
In the first quarter of 2023, the increase in public housing rents was 4.4 per cent, down from 8.1 per cent in the previous quarter, he said.
Meanwhile, the increase in non-landed private housing rent was 6.2 per cent for the first quarter of 2023, a drop from 7.5 per cent in the last quarter of 2022.
Lee added that rental pressures are expected to further ease in the coming quarters as MND ramps up the supply of public and private housing and a significant number of residential units are completed.
According to the minister, nearly 100,000 public and private residential units are expected to be completed from 2023 to 2025, which will add to rental supply.
It will also reduce rental demand, as households temporarily renting move out of their rental units and into their new homes.
Schemes are in place to support Singaporeans who rent
Lee also highlighted schemes offered by HDB to support Singaporeans who rent such as the Public Rental Scheme for low-income Singaporeans with no other housing options, and the Parenthood Provisional Housing Scheme, for eligible families who need interim housing while waiting for the completion of their Build-To-Order (BTO) flat.
He further added that the rental rates for open market HDB rental flats and private residential properties are private arrangements between flat owners and tenants.
Top photo by Joshua Lee
