Tag Archives: leasing

5 Must Knows for Private Property Rental

Can you list your property for short-term rental on websites such as Airbnb.com? Who pays the maintenance fees for your condo? Although renting out a private property may mean less restrictions than if it were a HDB flat, there are still strict guidelines to follow. Here are five things every potential private-property landlord needs to know to avoid flouting Singapore’s strict law when you lease out your property.

Do I need to seek permission from any government bodies before I rent out my property?

No. Unlike subletting a HDB flat, which requires approval from the HDB, private-property owners are free to lease out their spare rooms or entire units. However, you’ll have to follow some strict guidelines from the Urban Redevelopment Authority (URA). The most important one states that for short-term rentals – classified as lease periods of less than six months on a daily, weekly or monthly basis – are not allowed. You may lease out the whole unit or sublet rooms for residential purposes only for long-term stays of six months or more, provided you meet certain conditions. For example, there should be only one single tenancy agreement or master tenant per residential unit to cover the number of occupants if you are renting out your entire unit. You can, however, choose to lease out rooms to individual tenants. You cannot put in internal partitions to alter the layout of the property so as to create more rooms, as overcrowding will create safety hazards. Each occupant must have at least 106sqf (10sqm) of space. However, the maximum number of occupants you can squeeze into a residential unit is eight, no matter how big your property is. If you are living within the premises, you will be included in this headcount. This means that even if your family is willing to live with a dozen strangers so as to maximise your rental income, you will be flouting the URA’s guidelines and could be investigated. The good news is that if you are renting out the whole unit to one family, and it’s not sublet to anyone else, this rule will not apply to them.

Is it legal to put up my room or home for short-term rental on home-sharing websites such as Airbnb?

Technically, you will be flouting the regulations, even though a quick check on Airbnb’s Singapore website showed over a thousand local listings. If caught, homeowners can be jailed for up to a year and fined up to $200,000. Since 2013, over 570 complaints were lodged with the URA about the alleged rental of individual strata-titled private residential properties for under six months. The URA’s main concern (and reason behind the current short-term stay guidelines) is to “safeguard the amenity and living environment” of a residential development, and to ensure that residents are not adversely affected by the frequent turnover of transient occupiers. However, there is no denying the growing popularity of such services.

In a separate study commissioned by Airbnb and conducted by David Binder Research, published in February this year, nearly three-quarters of the 600 Singaporeans surveyed were supportive of allowing short-term rentals to be legalised. Over half of them are convinced that short-term rentals contribute to extra income that “pays their bills (so that they can) afford to live in Singapore”. Another 63% feel that “Airbnb brings tourism money into local communities that wouldn’t otherwise see it”. Despite the enthusiastic feedback, the verdict is still out for thousands of Airbnb listers hoping for good news from the URA that will allow them to legally tap into the global trend of house-sharing.

What documents do I need to check from my tenants when I rent out my property?

If you’ve hired an agent, she should ensure that all necessary documents such as your tenants’ passport and work permit or employment pass are valid, with photocopies duly submitted to you. However, as the landlord, you will also need to practise your due diligence. Should you be found harbouring illegal immigrants or over stayers, you risk facing a $6,000 fine or imprisonment of up to 24 months. Check the foreign tenants’ original pass or permit, ensure that the particulars in the passport are the same as those in the pass or permit, and verify that the pass is still valid by checking with the issuing department. If you have tenants who are on Long Term passes or Students’ passes, visit the Immigration and Checkpoints Authority (ICA)’s website (www.tinyurl.com/EnquiryICA) to check their passes’ validity and authenticity. If they are on Work passes or Dependant’s passes, you can log on to www.tinyurl.com/CheckWorkPass to check.

Are my tenants allowed to sublet my property?

No. Your lease contract should clearly state the names and details of each of your tenants, and your master tenant is not allowed to add to that original list without your permission. Some landlords can unknowingly flout the law when their tenants secretly sublet a room – or in some cases, even just a bed-and-cupboard space – to others. In 2009, a homeowner leased her 3,000sqf maisonette at Elizabeth Towers to a master tenant who illegally put up partitions and sublet the apartment to 11 other people; the master tenant did not live on-site. Upon investigation, the URA ordered the partitions to be torn down. It’s not just small-time master tenants who do that; some real-estate rental companies are also flouting the rules. In 2013, a reporter from The Sunday Times answered an advertisement by Bergen Associates Group, which offered short-term leasing for several units at The Sail @ Marina Bay. Posing as a potential tenant interested in renting a one-bedroom apartment for a month, the undercover reporter was offered a lease contract for six months, but with a clause to terminate early after a month. This clever trick is an attempt to get around the “minimum six-month lease” guideline by the URA. One homeowner at The Sail, who hired Bergen Associates Group to lease out his apartment, terminated his leasing agreement after he discovered that the company, which leased his unit for $4,500 per month, had sublet it to another company for $8,500. In three months, three different tenants had stayed in his unit. So, private-property owners, be warned – you should always do your own checks and keep all copies of your tenants’ papers, lest you fall prey to such practices.

Who pays for the condo’s maintenance fees – the landlord or the tenant?

As the property is in your name, you will be responsible for paying the maintenance fees charged by your condominium. This can range from $200 per month for a condo or apartment with limited facilities, to $800 for a high-end condo. Here’s the burning question: if you rented out your apartment, can you still pop by to use the condo’s facilities? For example, can you park your car there every night? Technically, once you sign the lease, the right to use the facilities now belongs to the tenant. It is also incorrect to assume that since you own a unit in the condo, you also “own” a parking space that you can use if your tenant does not own a car. In some condos, especially those near MRT stations where parking spaces in the estate are very limited, car owners – those who stay in the condo, be they owners or tenants – may have to ballot for a spot. As you don’t live there, you don’t qualify. What about popping by to use the swimming pool or the barbecue pit? As a non-resident, you can enjoy the facilities – but only if you are an invited guest. Check these by-laws with your Management Corporation Strata Title (MCST), the company hired to manage the condominium. Of course, how strictly these rules are enforced really depends on the MCST and the management committee – meaning, your neighbours. While some landlords reason that because they pay the maintenance fees, they should be able to use them, resist the temptation to pop by regularly to use the “free” facilities. Overcrowding the pool or quarrelling with your neighbours over a parking space will only create ill feelings and, in some situations, garner you warning letters from the MCST!


Condo rents falling, but leasing volume up

Average rents in Singapore fell in the first quarter of 2015 despite an increase in leasing activity, revealed CBRE and reported in the media.

In its report, CBRE said lease commencements rose 3.1 percent quarter-on-quarter to 15,229 in Q1 2015. On an annual basis, it was 13.5 percent higher than during the same period last year.

The rise was attributed to a flight to quality as tenants from older developments or HDB flats seized the opportunity to move into newly constructed condominiums at lower rents.

New permanent residents (PRs) could have also contributed to the increase as they rented homes while waiting to fulfill the mandatory three years prior to acquiring resale HDB flats.

However, the increase in rental volume failed to push up rents as it fell across all regions.

The rental index for the Core Central Region (CCR) registered the steepest decline of 1.9 percent quarter-on-quarter, followed by the Outside Central Region (OCR) which saw a drop of 1.8 percent. The Rest of Central Region (RCR) recorded the smallest drop of 1.6 percent.

Joseph Tan, executive director of residential at CBRE, explained that the sharper decline within the CCR and OCR was primarily due to an increased supply of rental properties.

He noted that the CCR, “which traditionally has the highest supply of rental stock, was hit by the shrinking budget of expatriates and the availability of newer accommodation at more attractive rents.”

Meanwhile, an unprecedented number of new condos were built in the OCR.

In Q1 2015, 2,976 new private homes were built which includes those within the OCR like Woodhaven with 337 units and Hedges Park with 501 units.

Tan revealed that most of these apartments were bought for investment and not for occupation by owners.

“Under the present lull market, these owners were more prepared to secure tenants at lower rents rather than leave them vacant,” he said.

As a result, the occupancy rate rose to 92.8 percent, while the number of vacant units fell 7.2 percent.

CBRE said average rent for luxury properties dipped two percent year-on-year to $4.95 psf per month. Prime properties saw rents decline 4.2 percent year-on-year to $4.55 psf per month, while rents for other properties fell six percent to $3.15 psf per month.

Looking ahead, the real estate firm expects leasing volume for the entire year to fall by five to 10 percent from last year, while overall rents are expected to drop by five to seven percent, given the mounting pressure from the growing supply of properties.

CBRE expects the number of new homes completed to reach 22,000 units by end-2015, or up 10.4 percent from 19,921 last year.