Before You Hand Over Your Keys

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You’re thinking of renting out your flat to earn the extra buck, but the rules are constantly changing and it might not occur to you that taking on the role of a landlord without constantly updating yourself on the housing scene can cost you.

Before you rush to pass the keys to your subtenants, you should first be aware of the restrictions set by Singapore’s Housing & Development Board (HDB).

An important question to ask yourself when making subletting decisions is whether you’re intending on renting out your entire flat or just a bedroom.

Careful considerations have to be made so to abide by HDB’s stringent criteria for subletting of flats.

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Minimum Occupation Period (MOP)

You’ll need to have met a Minimum Occupation Period (MOP) before you’re eligible to rent out your whole flat.

Depending on whether your flat purchased was a subsidized or non-subsidized flat, and depending on the date upon receiving the application for purchase, a MOP has to be met before you can sublet your flat.

If your flat was subsidized, meaning you’d bought it either directly from HDB or from the open market with a housing grant from the Central Provident Fund (CPF), you’ll have to meet a MOP of at least five years.

If your flat was non-subsidized, you’ll have to take note of when you receive your application for the purchase of the flat. Owners who’ve their applications received before 30 August 2010 will have to meet a MOP of at least three years, while applications received after will have to meet a MOP of at least five years.

To rent out your whole flat, you’ll need to obtain an approval from HDB.

National Day Rally 2010: PM Lee announced changes

The reason why you will need to know when your applications were received is because Singapore’s housing laws are ever-changing. Constant changes are made to ensure different interests of Singaporeans are met.

In HDB’s 30 August 2010 press release, it’s stated that the current changes were made to protect first-time home buyers and to ensure that there is an ample supply of flats for them.

One of the measures is to ensure HDB buyers intend on long-term occupation of their flats. Thus the changes in legislations regarding MOP.

“I just want to rent out a room!”HDB Flats

Renting out of rooms doesn’t require a stamp of approval from the authorities. However, you are required to register within 7 days and are also required to notify HDB when you renew, terminate or have any changes with regards to the subletting of bedrooms.

This was announced by HDB on 12 January 2010 and has been in effect since 1 February 2010.

Failure to register is a breach of the Housing and Development Act, and HDB can impose a penalty of up to SGD$3000.

Unfortunately, not all HDB owners can sublet their bedrooms. You can only rent out a room in your flat if it’s a three-room flat or bigger.

HDB also requires flat owners to be physically occupying the flat during the subletting period if owners decide to only sublet bedrooms.

A common question that pops up in rental conversations is:

“Can I lock just one bedroom for myself? Many people seem to do that.”

Well, it’s true that many people are doing this.

Unfortunately, this also happens to be illegal.

If you’re considering locking a bedroom and living away from your flat while renting out a bedroom, you’ll have committed what HDB refers to as “unauthorized subletting”.

You’ll be liable for a monetary penalty and your flat might be repossessed.

Subtenants

Alright, so you’ve gone by the book up till now. But have you done a thorough check on the background of your subtenant? You wouldn’t want to endure all the trouble of applications and approvals from HDB, only to be penalized for housing an ineligible subtenant.

According to HDB, subtenants must be citizens, permanent residents or non-citizens legally residing in Singapore. Landlords also have to be meticulous in ensuring that the number of occupants in the flat does not exceed the maximum number allowed.

Similarly, subtenants have to be careful when they scouting for a flat or room to rent.

Asking for documented proof of flat ownership as well as HDB’s approval letter for flat rental, and being meticulous with the terms and conditions agreed between tenant and subtenant will ensure that both parties’ interests are kept.

Understanding HDB’s restrictions and rules regarding subletting of your flat will have you avoiding unnecessary conflicts with HDB. You will be able to hand over your keys to your subtenants in full confidence.