SINGAPORE - Eligible families waiting for their Build-To-Order (BTO) units will soon be able to tap $300 a month in rental vouchers to offset rent for an HDB flat or bedroom on the open market.

The initiative under the Parenthood Provisional Housing Scheme (PPHS) will run from July 2024 to June 2025, National Development Minister Desmond Lee said in Parliament during a debate on his ministry’s budget on March 5.

It aims to provide eligible families with more support as the Housing Board adds another 2,000 vacated flats in Tanglin Halt to the stock of temporary homes under the PPHS from the second half of 2025.

Currently, HDB has about 2,000 interim rental flats under the scheme.

The PPHS provides interim rental housing for families with an unfinished flat from HDB’s sale exercises. They must have a monthly household income of $7,000 or below.

To qualify for the open market voucher, families must meet these criteria and have a rental tenancy registered with HDB when they apply.

Mr Murali Pillai (Bukit Batok) had asked what steps the Government would take to address concerns that the voucher would drive up rents.

Mr Lee said the voucher’s amount was “carefully calibrated” to help families defray the cost of renting a flat on the open market, while mitigating its potential inflationary impact on the rental market. He added that the authorities will monitor the voucher’s impact on the rental market.

Eligible families will receive the voucher through reimbursement, based on the number of months their tenancy falls within the one-year period between July 2024 and June 2025.

They will receive up to $3,600 if they qualify for the full year of support.

Families will not be eligible for the voucher if they rent a unit from immediate family or close relatives.

Asked about potential misuse of the voucher, a spokesman for HDB said it will carry out various checks on the tenancy, which may include physical checks at the tenant’s address, before disbursing the voucher.

“If necessary, HDB may also refer cases to the police for further investigation, and withhold disbursement for suspected abuse cases,” he said, adding that HDB will treat attempts to abuse the scheme very seriously.

The spokesman said the number of applications under PPHS has dropped significantly after HDB ramped up the supply of temporary homes from 800 units in 2021 to the current 2,000.

In 2021, there were more than 20 applicants vying for each available flat, and in February 2024, this fell to 2.3.

In a written parliamentary reply in October 2022, Mr Lee had said that despite the high number of applicants for a PPHS flat, almost half did not select a flat when invited, “suggesting that many of them have other options”.

Separately, some young couples who apply for an unfinished five-room or smaller flat – under the BTO, Sale of Balance Flats or open booking of flats schemes – will get more help in the form of a lower initial down payment, Mr Lee said.

At present, full-time students or national servicemen, or those who completed their studies or national service in the 12 months before applying for an HDB flat eligibility letter, may defer their income assessment for the Enhanced Central Provident Fund (CPF) Housing Grant and an HDB housing loan until just before they collect the keys to their flat.

This is so that they would more likely qualify for the grant and a higher loan amount after working for some time.

From the BTO sales exercise in June, the upfront down payment for couples eligible for the deferred income assessment will be lowered to 2.5 per cent of the flat price, regardless of their financing option, under HDB’s Staggered Downpayment Scheme.

This will help to ease the initial cost they will have to fork out when buying a flat, Mr Lee added.

For example, the reduced initial down payment would be $12,000 for a $480,000 four-room flat in the mature town of Bedok, compared with $24,000 now, he noted.

The remaining down payment is paid when they collect the keys.

“For couples who are ready to purchase a flat and have been saving up to afford the down payment, we hope this enhancement will help you to settle down earlier and start your families earlier,” Mr Lee added.

Previously, the upfront down payment under the Staggered Downpayment Scheme had already been halved to 5 per cent for buyers taking HDB loans and those without a housing loan, and 10 per cent for buyers opting for bank loans.

HDB said some young couples, however, may still face difficulties paying this initial down payment, as the Enhanced CPF Housing Grant of up to $80,000 – if they are eligible for it – is disbursed only closer to key collection. This means they would have to use their savings for the first deposit.

Flat buyers taking HDB loans must pay a total down payment of 20 per cent of the price of the unit. For those opting for bank loans, it is 25 per cent of the flat price.

HDB said it has processed about 3,800 flat bookings from young couples who qualified for the deferred income assessment from its introduction in May 2018 to December 2023.

In a sign of a stabilising property market, Mr Lee said BTO flat application rates have dropped from a high of 5.8 applicants vying for each available flat in 2020, to 2.9 in 2023.

Responding to questions on the future Voluntary Early Redevelopment Scheme (Vers), where owners of flats aged 70 years and older can vote for the Government to buy back their homes before their leases run out, Mr Lee said the authorities are working on their plans.

Mr Chong Kee Hiong (Bishan-Toa Payoh GRC) asked if the criteria for estates to be eligible for Vers could be more flexible, as the scheme is now reserved for precincts that are 70 years or older. Workers’ Party MP Jamus Lim (Sengkang GRC) suggested lowering the voting thresholds for older flats.

Mr Lee said the roll-out of Vers is a “big, complex, long-term task”, and the Government needs to “carefully stage” redevelopment in the older parts of the towns, while minimising inconvenience to residents in the newer areas.

“Some Singaporeans will need to relocate as a result of this… We will also need to ensure that there are sufficient homes available at the right time for them,” he added.