Rental increases will now be waived for two years for those whose incomes cross a $800 a month threshold, said National Development Minister Khaw Boon Wan in a blog post on Wednesday.

This is in a bid to avoid a "cliff" effect that occurs for low-income Singaporeans who rent flats from HDB when their wages rise. In the past, crossing this income threshold into the "$801 to $1,500" tier meant that their rent spikes sharply, sometimes tripling.

The rental increase may consume their entire pay raise, and therefore act as a disincentive for tenants to work hard to improve their incomes, wrote Mr Khaw. He added that it was Emeritus Senior Minister Goh Chok Tong who first alerted him to this phenomenon.

After two years, tenants may be able to get another two-year waiver if their incomes are still low relative to the rent increase, said Mr Khaw. This means a total of four years "grace" before their rental go up.

There are 46,000 HDB rental units currently, and the Government aims to raise this to 57,000 by 2015.