Tag Archives: Singapore property buyers

Property agents who broker short-term leases may lose licence

Some agents are facilitating short-term rentals due to the sluggish housing market.

Property agents who violate the rules against short-term leases of residential properties for less than six months may lose their licence, according to the Council for Estate Agencies (CEA), reported The Business Times.

“Property agents have to be mindful at all times that they are required to comply with the Estate Agents Act (EAA) and its regulations when conducting estate agency work. They should not do anything that abets or facilitates anyone to breach any law or regulation,” said Acting Deputy Director for Licensing, Chua Geck Siang.

However, there are some agents who facilitate short-term rentals due to the sluggish housing market, even though the commission for facilitating such transactions is not as high as brokering sales. They usually receive half-a-month commission per year of tenancy.

Some agents were found to be referring potential clients for stays of under six months at St Thomas Lodge, Devonshire Apartments and Oxley Thanksgiving Residence, even though none of the three have been granted permission to be operated as a serviced residence.

“Agents who engage in these activities are either desperate or not well-informed. If they want to earn this kind of money, they might as well drive (for) Uber to earn money legally,” said Eugene Lim, Key Executive Officer, ERA Realty.

However, enforcing the rules against short-term leases is tough, especially for private properties. To skirt the rules, some landlords use a standard contract of six months with early termination clauses.

Further exacerbating the problem is the popularity of short-term rental portals like Airbnb and Homeaway, as well as the significant supply of studio and shoebox units, coupled with the strong demand from foreigners who work or study for a few months in Singapore.

As such, Century 21 Singapore CEO, Ku Swee Yong, is urging the various government agencies to work together to define the laws and increase enforcement against short-term leases.

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Property players vanishing from market

With hardly any new projects or land bids in recent years, some developers have disappeared from the scene due to financial woes and tougher competition, media reports revealed.

These boutique developers, such as Raffles Medical Group’s Esquire Land and Indonesia-oriented Sinarmas Land, were active in the 1980s and 90s, when freehold land costs less than $100 million and profit margins exceeded 20 percent, said Chesterton Singapore’s Managing Director Donald Han.

Another example is Waterbank Properties, former transport group DelGro Corp’s property division, which left the property industry in September 1998.

On the other hand, some property players are only active when the market hits rock-bottom, such as Ho Bee Land and Lippo Group. “These are the early movers who read the market well, tend to take risks and generate the highest returns,” Han explained. “When the market nears its peak, these developers and consortiums then drop off, and are replaced by the more gung-ho ones.”

NTUC Choice Homes went into a hiatus after it submitted a losing bid of $97.4 million for an HDB housing site at Pasir Ris Central in May 2011.

“In the past few years, land prices in Singapore have not moderated much,” said its spokesman. As a result, opportunities to develop affordable and quality houses were scarce.

Since its founding in 1995, the company has built 15 projects with 6,944 units, including the Dakota Residences and Trevista. Its new development, the 315-unit Belysa is expected to be completed by October.

Nevertheless, NTUC Choice Homes has a moderate risk profile, meaning it could start acquiring landbanks when prices fall, noted Han.

In contrast, some developers are active all year round such as CapitaLand, UOL Group, Keppel Land, Singapore Land, City Developments, Frasers Centrepoint and Far East Organization.

Ku Swee Yong, Chief Executive at Century 21, added, “Some developers who are listed must show a steady flow of projects, otherwise there will be certain quarters when they report revenue plunges or zero profits.”

Source : PropertyGuru