How much of HDB rental costs can the government's new subsidy scheme cover?

Eligible Singaporeans can receive $300 vouchers monthly to rent HDB flats in the open market. 

Experts believe that whilst the government's Parenthood Provisional Housing Scheme (PPHS) (Open market) voucher scheme can defray some rental expenses, the amount of $300 is on the "modest side."

PropNex CEO Ismail Gafoor underscored that rents of PPHS flats vary depending on their location.

"The rental rates of 2-room PPHS flats could range from $400 to $550 per month, while that of 3-room PPHS flats could be from $600 to $900 per month, according to the HDB website," Gafoor said. 

"In contrast, the average monthly rental rate for HDB 2-room and 3-room flats in the open market was $2,147 and $2,647, respectively, in 2023. After factoring in the $300 PPHS voucher, we expect that families will still have to bear a substantial rental cost in the interim while they are leasing in the open market," Gafoor added.

OrangeTee's Chief Researcher and Strategist, Chisine Sun, said the subsidy may cover around 15%-25% of the rental cost if the eligible applicant chooses to rent a room in an HDB flat, depending on the size and location of the unit. 

"Based on rental rates published on property listing platform PropertyGuru, the $300 subsidy can cover about 23.5 per cent of the median room rental cost of an HDB flat in Punggol at around S$1,275 per month," Sun shared.

"For a mature estate like Geylang, the $300 subsidy can cover around 16.4 per cent of the median room rental cost at S$1,825 per month," Sun added.

Should the applicant rent an entire unit, the $300 rental subsidy will only cover 9%-13% of the rental cost.

Citing data from HDB, Sun said the subsidy will cover approximately 13% of the median monthly rent for 2-room flats, which is around S$2,300.

"If the couple wishes to rent a 4-room flat, the S$300 rental subsidy will cover approximately 9.1 per cent of the median monthly rent of S$3,300. It is unlikely that many applicants will rent bigger units such as 5-room or executive flats due to their higher rental costs," Sun commented.

Lee Sze Teck, senior director for Data Analytics at Huttons, said couples looking to rent a room in the open market may also face difficulties after the vouchers end.

"The scheme will run for one year, from July 2024 to Jun 2025. For example, if a couple applies for the $300 voucher in Dec 2024, they can only receive the voucher until June 2025. A couple will benefit fully if they apply for the voucher in July 2024," Lee said.

"As most tenancies in the open market are two years, the couple may face difficulties after the vouchers end. The take up is not likely to be high as the amount is too little and does not cover the full tenancy period of two years in the open market," Lee added.