Thursday 12 July 2012

Stricter rules for PRs to sublet HDB flats

By Joanne Chan, Channel NewsAsia, 11 Jul 2012

Singapore permanent residents (PRs) who want to rent out their public flats will now face stricter subletting rules.

The Housing and Development Board (HDB) on Wednesday announced several revisions to the rules, which take immediate effect. Singapore citizen homeowners will not be affected by the changes.

Among the changes for PR flat owners is a shorter rental period of one year, subject to discretionary extensions.

When the one-year period expires, HDB said application for any extension will be assessed on a case-by-case basis, adding that approval will be granted only if there are extenuating reasons.

Under the old rules, all flat owners -- both Singaporeans and PRs -- who meet the minimum occupation period could apply to rent out their flats for a period of three years.

They could then ask for an extension, with no cap on the number of renewals, or the total period of subletting.

However, PRs can now only rent out their flats for a total period not exceeding five years.

So what do the changes mean for PR homeowners who currently rent out their flats? HDB said that those who had secured approval under the old rules will be allowed to see out the three-year agreement.

But once that expires, the homeowner will then be subjected to the new rules. This means that any requests for extensions will be given on a case-by-case basis.

HDB said the revised rule is to reinforce the policy intent of providing HDB flats as homes to the PRs, and to deter those who are buying the flats for rental yield or investment purposes.

It stressed that while it allows PR owners who have met the minimum occupation period to sublet their flats, the subletting should be on a temporary basis.

If the PR families no longer need the flats for their own occupation, they should sell the flat instead of subletting them.

HDB said that as of April this year, 49,190 flats are owned by Singapore PRs. Of this number, 2,142 owners currently sublet their flats, making up just five per cent of the total approved sublet cases.

However, property firm ERA said that based on its figures, more PRs are renting out their HDB flats. It said this trend might have prompted the revision of the rules.

Key Executive Officer of ERA, Eugene Lim, said the new rules are "just to put a check on the potential numbers of PR households that would actually consider renting out their flats".

"So it's basically to send a message that if you are a PR, and you are buying an HDB flat, it should be for owner occupation and not with the intention of investment."

He added: "If you are a PR, why are you renting out your flat? You are here to stay, to work. If you have ability to buy another house, then you actually don't need a public flat and you should not be owning one."

Another market watcher feels that the changes will better fit the housing needs of PRs.

Lee Sze Teck, senior manager of Research & Consultancy, Dennis Wee Group, said: "The needs of Singapore PRs may change more frequently than Singapore citizens. After all, citizens live here, whereas SPRs may only be here for work-related purposes. And if their reasons change, one year is good enough for them."

Responding to queries from Channel NewsAsia, chairperson of the Government Parliamentary Committee for National Development, Lee Bee Wah, said: "PRs have to appreciate that Singaporeans (have) worked over the years, from the time of their forefathers, to build up this country to what it is today."

She added that "as a PR, you just walk in at some stage in your life and you should therefore not be entitled to the same privileges or benefits that Singapore-born citizens enjoy."

Dr Lee said she welcomes the tighter regulations, adding that "this will also resolve some of the concerns residents have pertaining to an influx of strangers and foreigners in their neighbourhoods as a result of their neighbours subletting their flats freely."

The latest changes come two days after the Manpower Ministry tightened the criteria for work pass holders to sponsor dependents. This is in line with the overall direction to moderate the growth of Singapore's non-resident population.

HDB has also stepped up its enforcement against illegal subletting.

Last year, the authority carried out 7,000 inspections and took action against 56 flat owners.

Reasons included renting out their flat without fulfilling the minimum occupation period and using the flat as a lodging house for tourists.

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