Thursday, 12 July 2012

Tougher for PRs to sublet flats

New rules cap duration of lease and limit who can rent out HDB homes

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Guanyu 道 said...

Tougher for PRs to sublet flats

New rules cap duration of lease and limit who can rent out HDB homes

By Daryl Chin
12 July 2012

Permanent residents who want to sublet their HDB flats will now find it harder to do so.

Under revised rules that kicked in yesterday, only PRs who have not sublet their flat before will now be allowed to do this.

They will be able to sublet their unit for one year. If they want to extend this, HDB will have to approve their request and will do so only if there are 'extenuating reasons', it said.

The entire duration PRs can sublet their flats will now be capped at five years.

PRs whose flats are currently being rented out cannot renew the lease if they have exceeded the five-year cap. Those who have not exceeded the limit can seek HDB's permission.

Previously, PRs - and citizens - could lease out their flats for up to three years at a time, and this was renewable with no cap on the duration. Rules for citizens remain unchanged.

HDB said the revisions are meant to reinforce the policy of providing HDB flats as homes to PRs, 'and to deter those who are buying the flats for rental yield or investment'.

Subletting should be only temporary, and if PR families no longer need their flat, they should sell it instead of subletting it, it said.

There are 49,190 PR households which own HDB flats. Latest data shows 2,142 flats owned by PRs are being rented out. This is less than 5 per cent of the total 41,000 flats being sublet.

PRs are allowed to buy only resale flats on the open market and do not enjoy subsidies. Singaporeans who meet income criteria can buy new, subsidised flats. All Singaporeans can also buy flats on the open market as long as certain conditions are met.

New flats can be rented out after five years, while the minimum occupancy period for resale flats is between one and five years.

The new move, said the HDB, is part of ongoing reviews of policies to keep them relevant and to ensure subletting is done only as a temporary measure.

Real estate firm PropNex's chief executive Mohamed Ismail said the move is a clear sign from the Government that 'public housing is not an investment property, all the more if you are a PR'.

He said there has been some unhappiness about PRs collecting rent while they are away from Singapore.

Mr Tony Du, president of Chinese immigrant group Tian Fu Association, said the new rules make the distinction between citizens and PRs clearer, and 'act as a motivation to obtain citizenship'.

ERA Realty's key executive officer Eugene Lim said the move could lead to fewer flats for subletting in the short term.

Subletting approvals from the HDB rose from 3,525 in the first quarter of 2009 to 6,653 in the same period this year.

But more flats might also be channelled to the resale market. 'PRs who no longer have a viable source of income from renting out their resale flats, which they do not stay in, have to decide if they want to sell it,' Mr Lim said. Based on his agency's monthly transactions, out of an average of 350 HDB resale-flat rentals, about 10 per cent belong to PR households.