Key Takeaways:

Owners and authorised occupiers are counted towards the maximum occupancy cap.

According to the Singapore Department of Statistics, around 89.3% (Increase from 88.9%) of the residents live in owner-occupier households. 

Amongst them, approximately 77.9%(Decrease from 78.3%) live in HDB flats. HDB flat owners, aside from selling the flat, also monetise their flat by renting out the entire unit or any of their spare bedrooms (s) to supplement their retirement needs.

There are 17%(An increase from 16.5%) staying in Condos, and 4.9% of households living in landed properties without change.

Before a flat owner can rent out his flat, they must fulfil specific terms and conditions. These measures aid in maintaining a conducive and harmonious living environment in HDB estates for all, as these HDB flats are where most of our population calls home.

Here are the conditions that potential landlords need to meet to rent out their HDB flats or bedrooms.

Eligibility Requirements To Rent An HDB Flat And Bedroom 

There are a few conditions that flat owners need to know about before they can rent their HDB property.

For New BTO Standard Flats and Resale Flats, the flat owner must fulfil their minimum five-year occupation period (MOP) before renting out their entire HDB flat. 

Across the board, if the flat owner only wants to rent the bedrooms, there is no MOP requirement.

Second, only Singapore Citizen (SC) flat owners can rent the entire house, whereas Singapore Permanent Residents (SPRs) can only rent their bedrooms.

Third, for the rental of bedrooms, a flat owner of a 3-room flat can only rent out one bedroom, and a flat owner of a 4-room or bigger is allowed to rent out up to two bedrooms. Therefore, flat owners can only rent out some of the bedrooms individually.

Furthermore, a flat owner who wishes to rent the bedrooms must stay with the tenants and any authorised occupants. The flat owner must avoid circumventing this rule by locking up a room and renting out the rest. The Housing Development Board (HDB) can revoke the approval for renting out bedrooms if the flat owner is found to have flouted this condition.

Flat owners of 1-room and 2-room HDB flats are only allowed to rent out their whole house; they cannot choose only to lease out their bedrooms. These rental conditions do not apply to those living in 1-room rental flats or 2-room Flexi flats, as they are not allowed to rent out the whole house or any of the rooms from the beginning.

If you plan to ballot for the upcoming BTOs, please note that you will not be allowed to rent out the unit, which is an HDB Plus and HDB Prime Flats.

Flat Type Maximum Number Of Bedrooms Allowed For Renting

1-room and 2-room Not allowed to rent out the bedroom

3-room 1 Bedroom

4-room or bigger 2 Bedroom

Source: HDB

Another condition that flat owners should take note of is that they cannot rent out parts of their house, like the bomb shelter or a partitioned space in the living room. Only the rental of bedrooms that were constructed initially by HDB is allowed.

This is unlike for landlords for condo looking to rent to Co-living, generally, condo msct does not object for the apartments to do the partitioned walls in the Living room area.

At WING TAI HOLDINGS team, we have a team of property management services that helps landlords to get good tenants and a one-stop solution even for landlords that are relocating overseas.

Who Is Eligible To Rent An HDB Flat And Bedroom 

Next, we look at who would be qualified to rent the HDB flat.

Three groups of people can rent HDB flats:

1. Singapore Citizens,
2. Singapore Permanent Residents and
3. Non-citizens legally residing in Singapore have Employment Passes, S Passes, Work Permits, Student Passes, Dependent Passes, or Long-Term Social Visit Passes. The passes must have a validity period of at least six months as of the date of application.

There are no restrictions on Malaysian work permit holders from renting the whole HDB flat or rooms. However, non-Malaysian work permit holders from the construction, manufacturing, and process sectors are only allowed to lease rooms and can only rent out part of the flat and not the whole unit.

Before a flat owner decides to advertise their flat for lease, they should check on the Non-citizen Quota to determine whether they can rent out to non-Malaysian non-citizens. The preset cap is 8% in the neighbourhood and 11% for the renting within the HDB block. Once the quota is reached, the flat owner can only rent out to Singaporeans and Malaysians. However, this non-citizen quota limit does not apply if only the bedrooms are rented.

HDB has a minimum rent period of 6 months to 2 years. Therefore, flat owners are not allowed to rent out their HDB flats to tourists as their passes usually have a validity period of 30 days, which violates the HDB minimum rent period.

The maximum rent period can only be extended to 3 years if all the tenants are Singaporeans or Malaysians.

Only A Maximum Of 6 People Can Occupy An HDB Flat

From the Previous Cap of up to eight people with the effect of 1 May 2018, the occupancy cap for 3-room to Executive HDB flats is limited to 6 people. This occupancy limit applies to flat owners renting out their flats or bedrooms to tenants.

This means that, for the rental of bedrooms, if the flat owner and the authorised occupiers consist of 5 people, then the spare bedroom can only be rented out to one more person.

HDB is intended to prevent overcrowding; your flat type limits your number of tenants. 

The occupancy is capped at four people for the 1-room and 2-room HDB flats. Please note that 1- and 2-room flats can only be rented out whole — individual bedrooms of 1- and 2-room flats cannot be rented out.

What To Know Before Advertising an HDB Flat 

After finding out who is eligible to rent your HDB flat, the next step is determining the rental rate.

Fortunately, HDB provides the HDB rental rates of whole flats rented out by flat owners in the past year, which allows potential landlords to make informed decisions before entering into a rental contract. HDB’s Market Rental Rates allow selecting up to 20 blocks based on location and flat type.

Unfortunately, HDB does not provide the past transacted HDB room rental rates, and landlords can only make inferences from the whole flat rental rates.

At this stage, the prospective landlord has to decide whether to engage the services of a professional real estate salesperson or to Do It Yourself (DIY).

If you do it yourself, you can advertise on popular property portals like marketplace platforms like Carousell or Facebook.

Giving the flat a fresh coat of paint and fitting it with tasteful furniture and fittings when advertising it will boost its attractiveness to potential tenants, making it easier to market for higher rates and faster take-up.

Furthermore, when writing your advertisement description, providing relevant information on the Property and the group of tenants that qualify is good. One should avoid making any remarks that are discriminatory, offensive or stereotyped in nature against any particular race, religion or group in society.

Pre-Qualify Prospective Tenants and Handle Viewings

This is the step that most DIY landlords would dread. Given the rise of unsolicited calls, it might be wise to have a separate phone line to communicate with potential tenants.

It takes some experience to pre-qualify potential tenants from all the calls. However, once the potential tenants have been vetted, they will want to view the flat.

Once the landlord and the prospective tenant have agreed principally on the rent, the tenant’s documents must be verified.

Singaporean and non-Singaporean tenants, such as those on student passes or long-term social visit passes, can verify their documents on ICA’s website.

For Work Permit holders, their documents can be checked on MOM’s website. For tenants on S Pass or Employment Pass, their records can be verified on a different MOM website.

These checks must be performed on potential tenants even if the flat is rented to a company that intends to house its employees.

Landlords can use the checklist provided by the Council of Estate Agencies (CEA) to rent HDB flats before the tenancy agreement stage.

Receiving LOI, Registering With HDB And Signing Tenancy Agreement – Can I rent out my HDB?

Upon the verification, including the request by the tenant for the landlord to verify that he is the actual flat owner, this would be followed by a Letter of Intent (LOI). It is often the precursor to the tenancy agreement and is not a binding agreement, unlike the latter.

The LOI usually states the rental price, the lease duration and the parties involved and is generally accompanied by a good faith deposit. This amount will become the security deposit when the tenancy agreement is signed.

Market Practise

For every one-year lease – One Month’s Rent for Deposit.

For every Two-year lease – Two Months’ Rent for Deposit.

Flat owners must obtain HDB’s approval before renting out their flats. They can apply My HDBPage, which charges an administrative fee of $20 for the whole flat or $10 per bedroom if only the rooms are rented.

Landlords and Tenants needs to know Fast Facts.

Prepare The Inventory List And Walk-Through With the Tenant Before Handover For Fully-Furnished Units

If you are renting with fittings (sofa set, dining table, beds) and fixtures (aircon, water heater), then it would be good to prepare an inventory list by each (bed/living/bath) room and attach it to the tenancy agreement, with a copy given to the tenant. This ensures that there will be no confusion about the ownership of the items at the end of the lease.

Furthermore, having photos of each item will also aid in any dispute over the condition of the items received and returned by the tenant.

Flat Owners Must Comply with the Terms And Conditions 

Lastly, flat owners renting out their HDB flats or bedrooms must comply with HDB’s terms and conditions. Any unauthorised rental could result in a financial penalty or the compulsory acquisition of the flat by HDB.

Therefore, flat owners must obtain the necessary approval to rent their flats, including future lease extensions. And they should stay vigilant by conducting regular checks to ensure all the rules and regulations are met.

Now You Are A Landlord, You Are Required To Pay Taxes 

Congratulations, you are now a landlord. However, before you start counting the dollars, know that you must now pay tax on your rental income earned from renting out the flat or bedrooms.

If the Property is under sole ownership, then the sole owner of the HDB flat will be taxed at 100% of the rental income. If the Property is under joint tenancy, the rental income is taxed based on their legal share in the HDB flat. Assuming it is a Joint Tenancy, the husband and wife will be taxed 50% each for the rent income they are receiving.

On the upside, property owners who lease their residential flats will enjoy the convenience of pre-filled rental expenses of 15% of the gross rent in their online tax form, unlike the manual submission the homeowners that includes:  

1) the expenses for making good of the Property (please note this does not include renovation cost), 

2) Agency fees when you appoint a salesperson

3) Mortgage interest for the Property.

With that, you now have an overview of the requirements for renting your HDB flat.

WING TAI HOLDINGS team, recently have rented out 5-Room at 1 Pine Close, 4-Room at 312 Sembawang Drive, 3-Room 501 Bedok Street 1 and the list just gets longer. Contact us today.

The post Can I rent out my HDB? appeared first on Wing Tai Holdings Singapore.