Tuesday, March 9, 2010

Curbing subletting not the best solution

WITH regard to property agents’ call for curbs on subletting (‘Property agents call for curbs on subletting’, Sunday), I do not think the restrictions will work.

If 10,000 HDB flats and 10,000 private flats are available for subletting, and the HDB introduces a new rule that means only 7,000 HDB flats are available, the net supply reduction of rental homes will push tenants to compete for the remaining 17,000 HDB or private flats and individual rooms in HDB or private flats.

The net result is an increase in rental rates. This increase in rental rates will encourage people to buy more HDB and private flats for rental return or capital gain.

In other words, tweaking the rules will only redistribute rental income among home owners.

A more effective solution is to moderately regulate dual ownership of HDB and private property by taxation, rental restriction and other ways.

This will reduce actual demand for homes, rental rates and home prices.

David Loo

Source: Straits Times, 9 Mar 2010

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