New cap on tenants for private homes, deadline looms for agents, landlords to ink deals

Existing tenancy agreements with seven or eight tenants will be allowed to run their course until May 15, 2019, but after that, the rules will kick in, says the URA.
Existing tenancy agreements with seven or eight tenants will be allowed to run their course until May 15, 2019, but after that, the rules will kick in, says the URA.ST PHOTO: KUA CHEE SIONG

From Monday, landlords can rent out to no more than six unrelated persons; no change to HDB cap

When she moved out of her family home last year, Ms Yvette Lim, 34, thought she could eventually sublet her old bedroom to help her family pay the rent.

With a floor area of 4,500 sq ft, her spacious Choa Chu Kang house, where six of her family members now live, could easily accommodate a few more tenants, she calculated.

But her plans have been dashed.

From Monday, landlords can rent out private homes to no more than six unrelated persons. If there are six related people living in the residence, no tenants are allowed.

The move reduces the occupancy cap from eight previously.

Existing tenancy agreements with seven or eight tenants will be allowed to run their course until May 15, 2019, but after that, the rules will kick in regardless of the contract's expiration date, said the Urban Redevelopment Authority (URA) in a letter on Thursday to registered property agents .

REASONABLE NUMBER

Private properties are meant to be exclusive, with owners of the development having the quiet enjoyment of the facilities and lifestyle. In order to maintain this exclusivity, the cap of six tenants is reasonable.

PROPNEX REALTY CHIEF EXECUTIVE OFFICER ISMAIL GAFOOR

For HDB flats, the maximum sub-tenants allowed for a three-room unit and a four-room or bigger unit remain unchanged, at six and nine respectively.

Ms Lim, an administrative assistant, told The Straits Times: "Eight was just nice for us, but it's a pity now because the house will be quite empty. One of the five bedrooms will be unused."

Responding to queries from The Straits Times, a URA spokesman said the rule change ensures that residential premises are "consistent with the character of the local community and integrate better with the neighbourhood".

He added that it takes into account "the strong supply of alternative accommodation" that caters to non-familial groups of occupants, such as hostels for students and dormitories for company employees.

Some residents and property watchers The Straits Times spoke to welcomed the move, saying it will reduce disruption and noise caused by overcrowded units.

PropNex Realty chief executive officer Ismail Gafoor said: "Private properties are meant to be exclusive, with owners of the development having the quiet enjoyment of the facilities and lifestyle. In order to maintain this exclusivity, the cap of six tenants is reasonable."

However, landlords such as Mr Peter Chiado not agree. The retiree, who is in his 60s, relies on rental income from his four-bedroom unit in Pacific Mansion in the River Valley area. He lives there with five tenants and hopes to get two more.

Mr Chia will have to take down his advertisement if he is unable to rent out the empty bedroom in his 1,500 sq ft apartment by Monday. This is a loss of $900 to $1,200 in potential monthly rent, he said.

The new rule will also affect home-sharing such as Airbnb. The URA is studying the option of creating a new category of private homes that will allow short-term rentals.

An occupancy cap of six means that future home-sharing hosts will not be able to lease out an apartment to, say, two large families, said International Property Advisor CEO Ku Swee Yong.

Some analysts wondered if the occupancy cap could have better reflected the size of the home.

Said Cushman & Wakefield research director Christine Li: "A better implementation could have been to peg occupancy caps to the number of bedrooms, similar to that for HDB flats."

URA said this is not the case as there are various types of private property, from small apartments to bungalows. Said a spokesman: "We have simplified the control for greater clarity to the public by not adopting a stratified occupancy cap control based on unit sizes."

Thursday's announcement gave three days for real estate agents to react and could trigger a surge in rental contracts being renewed or signed over the weekend, said ERA Realty key executive officer Eugene Lim.

On social media, some agents have started asking landlords with a sizeable number of tenants to quickly renew their tenancy pacts.

Said Mr Lim: "We have not seen any surge of sign-ups yet, but we do not rule out that some landlords will try (to do so) over the next few days, before May 15 arrives."

Mr Lim believes HDB occupancy caps may soon follow suit.

"There is a possibility that HDB may align the caps accordingly since the spirit of this rule change is to prevent overcrowding within residential units," he said.

A version of this article appeared in the print edition of The Straits Times on May 13, 2017, with the headline 'New cap on tenants for private homes'. Print Edition | Subscribe