Wednesday, July 11, 2012

HDB restricts Singapore PR flat owners' to rent their flat only for 1 year

A new cooling measure for Singapore property market has come from Housing Development Board (HDB) today as a revision to the subletting rules on the public housing flats. With immediate effect, flat owners with Singapore Permanent Residents (PRs) status will only be allowed to sublet their HDB flats for one year, down from the current three years:

“Under the revised rule, SPR flat owners will be allowed to sublet their flat after meeting the MOP, if they have not sublet the flat before. The approval will be granted for 1 year only, instead of 3 years. Upon expiry of the 1-year period, the application to extend the approval will be assessed on a case-by-case basis and approval will be granted only if there are extenuating reasons. The total period of subletting during the flat owners' entire duration of the flat ownership is capped at 5 years.
The revised rule is to reinforce the policy intent of providing HDB flats as homes to SPRs, and to deter those who are buying the flats for rental yield or investment. While HDB allows SPR owners who have met the MOP to sublet their flat, the subletting should be on a temporary basis. If the SPR families no longer need the flats for their own occupation, they should sell the flat instead of subletting them.”
Source : HDB Steps Up Enforcement against Unauthorised Subletting and Revises Subletting Rule for SPRs
The new rules has come a week after the news of continued price increase for resale HDB in Q2 2012:
Resale HDB flat prices have inched upwards yet again, this time by 1.3 per cent in the second quarter of this year, according to the Housing Board's flash estimates released on Monday.
This resurgence comes on the back of a downward trend in the two previous quarters.
Source: Resale HDB flat prices up 1.3% in Q2 this year
According to the evening news, there are 2,100 Singapore PRs renting out their flats at the moment and this makes 5 per cent of all HDB flats rented out. According to ERA, there is an increased trend of Singapore PRs renting out their HDB flats with 60 PRs renting out their HDB flats every month.

Singapore Permanent Residents are allowed to buy public housing flats, called HDB flats here, from the secondary market (resale flats) and were allowed to sublet them as Singapore Citizens. According to Ministry of National Development blog’s “Who Buy Resale Flats?” article, around 20% of the resale HDB flats were bought by Singapore PRs in 2010.

Profile of resale HDB flat buyers - Source : Housing Matters Blog
Although many Singapore PRs buyers are owner occupiers who buys to stop paying very high rental prices, these measures may have effect on the resale flat prices since having a very expensive flat without an option to rent them out will be discouraging for Singapore PRs to buy an HDB flat.

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