HDB lowers cap on number of tenants allowed in flats

New rules kicking in on May 1 unlikely to have adverse impact on landlords, say analysts

To prevent overcrowding, the Housing Board is reducing the number of unrelated tenants allowed to rent a HDB flat, in line with caps on private homes.

From May 1, owners of four-room or larger HDB flats will be able to rent out their property to a maximum of only six unrelated people, down from the current limit of nine.

In a statement yesterday, the HDB also announced it is cutting the number of occupants allowed in three-room and larger living quarters of HDB commercial properties, such as shophouses, from eight to six.

Families - even those that exceed six members - can continue to rent whole HDB flats. But those who rent bedrooms must stick to the new cap.

The changes aim to minimise the problems caused by overcrowding, and maintain "a conducive living environment" in Singapore's public housing estates, a spokesman said.

The policy is also in line with the Urban Redevelopment Authority's move last May which limited the occupancy cap from eight to six unrelated tenants, she added.

From May 1, the new provisions will also apply once a rental arrangement is renewed, or when there are changes in the flat's occupants.

Also, all flat owners, including commercial property owners, must get HDB's approval before renting out properties, to ensure eligibility conditions are met before tenancy starts. Currently, HDB commercial property owners need not do so.

The revised cap is unlikely to have an adverse impact on landlords, due to the relatively small number of affected home owners, property analysts said.

Of one million HDB home owners, 54,000 households rented out whole flats while 73,000 households rented out bedrooms, according to figures from Dec 31 last year.

Only 11 per cent of these landlord households have more than six tenants or occupants registered in the flat, the HDB told The Straits Times.

The two largest real estate agencies here, PropNex and ERA Realty, noted that having nine occupants in a HDB flat is "not common" as most owners believe having too many tenants could lead to faster wear-and-tear and affect future rentals. But they added that the change might see a slight increase in short-term rentals.

Said PropNex key executive officer Lim Yong Hock: "In some cases where a large group of tenants would rent a whole flat, they might now have to rent two separate ones."

ERA Realty key executive officer Eugene Lim said tenants renting HDB shophouses may be more affected, as most of those renting four-room or larger flats stick to six tenants or fewer. But rental rates are unlikely to rise by much, as there is "a lot of spare capacity" in private and public housing markets, he said.

ERA agent Chris Tan expects tenants to be badly hit. Of the 20 to 30 rental deals he closes a year, most in Jurong West and Buona Vista, more than half exceed six tenants. Most are leased by firms, many in service industries like nursing or car repairs.

"If the costs are too high, companies might decide not to hire so many staff altogether," he said.

A version of this article appeared in the print edition of The Straits Times on February 02, 2018, with the headline 'HDB lowers cap on number of tenants allowed in flats'. Print Edition | Subscribe