Breakdown of Cost Per Year for Government to Subsidise Each Public Rental Household
Ministry of National DevelopmentSpeakers
Summary
This question concerns Ms Carrie Tan’s inquiry regarding the total annual cost and expenditure breakdown for the government to subsidise public rental households. Minister for National Development Desmond Lee responded that rent revenue forgone averages $10,000 per household annually, totaling $500 million across 50,000 households. He stated that additional building and management costs averaged $145 million over three years, with 60% spent on construction, land, finance, and upgrading. Administrative, maintenance, and ancillary costs comprise the remaining 40%, supporting households with highly subsidised monthly rents that can be as low as $26. Minister for National Development Desmond Lee added that HDB continues to partner with other agencies to help rental households eventually achieve home ownership.
Transcript
12 Ms Carrie Tan asked the Minister for National Development what is (i) the average total cost per year to the Government (inclusive of direct subsidies and administrative costs) to subsidise a public rental household (ii) the breakdown in terms of percentages between building costs, maintenance costs, direct subsidy, administrative and other costs and (iii) the average total cost involved in subsidising each public rental household before they successfully move to their own homes, given that the median number of years they stay in public rental housing is seven.
Mr Desmond Lee: HDB currently manages about 50,000 public rental households. Their rents are highly subsidised compared to rents in the open market, and can be as low as $26 per month for a 1-room flat and $44 per month for a 2-room flat. This translates into a rent subsidy, or a net rent revenue forgone, of about $10,000 per year on average for each household, and a total of $500 million per year across all public rental households.
In addition, HDB incurs costs to build and manage public rental flats. The total cost varies from year to year; for example, it was higher in years where we carried out major upgrading and improvement works for older rental blocks. For the last three years, the total cost was about $145 million per year on average. In terms of breakdown, 60% was for building, land, finance and upgrading works, and the remaining were administrative, maintenance and ancillary costs.
Each rental household has their own unique challenges, and the time they need to build up and stabilise their finances for home ownership will differ. HDB will continue to support rental households in achieving home ownership, in close partnership with MSF and social service agencies.