Cut in tenant capacity not expected to affect HDB rental market: Analysts

SINGAPORE — From May, the maximum number of tenants allowed in four-room and larger Housing and Development Board (HDB) flats will be reduced to six, from the current nine.

The HDB said in a statement on Thursday (Feb 1) that the changes are meant to prevent overcrowding in public housing.

In the last three years, the HDB took enforcement action in 70 cases against flat owners for unauthorised subletting and/or overcrowding. According to property firms and analysts, there are small and medium-sized enterprises (SMEs) that put up their foreign workers in HDB flats, while other workers, particularly those who work in hospitals and in the food and beverage industry, group together to rent flats.

For cases that are approved before May 1, the revised cap will kick in upon renewal of the rental arrangement or when there are changes in the occupants, said the HDB.

The lowered cap will also apply to all living quarters of commercial properties that are being rented out.

But the new regulation, which is in line with the occupancy gap for private residential properties, will exclude units rented out to a single family unit with more than six occupants.

From May 1, all flat owners, including commercial property owners, will have to seek HDB’s approval before renting out their properties. Currently, those who own HDB commercial properties are not required to do so.

“This measure will help ensure that the eligibility conditions are met before the tenancy commences,” said the HDB.

Applications to rent out HDB flats, bedrooms or living quarters of commercial properties may be submitted online via HDB’s e-services.

Property analysts TODAY spoke to expect the impact of the new regulation to be minimal, noting that only a small proportion of HDB units currently house nine occupants.

ZACD Group executive director Nicholas Mak expects a “slight increase” in transactions in the HDB rental market, but this is not likely to shift rental rates significantly.

“If the whole flat is rented out, the rental rate is typically based on the location, age and size of the flat, and not so much on the number of tenants who will stay in the flat,” said Mr Mak.

Agreeing, Mr Chris Koh, director of property firm Chris Koh International, said the “healthy supply” in the market will be able to absorb the growth in demand. “I don’t think it will have a big impact. There is quite a substantial supply of flats for rent,” he said.

International Property Advisor chief executive Ku Swee Yong said the move could increase costs for employers who house their foreign workers in HDB flats, such as those in the food and beverage industry.

“Their budgets have to go up, so the cost of operating in Singapore increases… It may cause some employers to re-think the cost of operating in Singapore,” said Mr Ku. ADDITIONAL REPORTING BY KELLY NG