Your search results

Four Things to Avoid When Renting Out an HDB Flat

Posted by Jayson Ang on February 23, 2024

| All

| 0

TLDR

Renting out an HDB flat in Singapore can be a lucrative source of secondary income. Key considerations include adhering to a minimum rental duration of six months, respecting the Minimum Occupation Period (MOP), and complying with occupancy limits. Potential tenants must meet specific eligibility criteria, including being Singaporean citizens, permanent residents, or non-citizens with valid documentation. Understanding these regulations is crucial for HDB flat owners to avoid pitfalls and ensure a smooth rental process.

For many residents of Singapore, offering their HDB flat for rent is a lucrative source of secondary income.

Viewed from an investment perspective, HDB flats tend to yield impressive returns. The rental income from these properties is often higher than that from private residences due to the prohibition on foreign ownership of HDB flats. This restriction in ownership fuels a heightened rental demand, resulting in increased yields.

Additionally, given the policy that restricts Singaporean households to owning only one HDB flat, the majority of families presumably reside in their own flats. This scenario reduces the available supply for rental, further driving up the potential yield.

To illustrate, consider the median resale prices for 4-room flats in Punggol and Jurong East, which stand at $590,000 and $492,000 respectively as of the second quarter of 2023. Concurrently, the rental rates for these locations amount to $3,380 and $3,200 respectively. These figures correspond to a gross annual yield of 6.8% and 7.8%.

Furthermore, if you are servicing a housing loan, your monthly HDB flat installment can be covered using your CPF OA savings, with the rental income being received in cash.

However, to prevent exploitation of HDB flats for monetary advantage, HDB imposes certain regulations that homeowners wishing to rent out their flats must comply with.

In this narrative, we aim to highlight four critical considerations for homeowners intending to rent out their HDB flats, and underscore the importance of avoiding any pitfalls.

# 1 Short-Term Lease Of Less Than 6 Months Are Not Allowed

HDB flats serve as long-term residences, they’re not intended to function as brief lodging alternatives. Consequently, landlords who aim to let out their HDB flats or rooms must abide by a compulsory rental duration of at least six months. This contrasts with private domestic properties where the baseline leasing period is merely three months.

This stipulation implies that HDB flats and their individual rooms shouldn’t be leased to tourists or non-resident foreigners who are on temporary stays in Singapore. Similarly, these flats should not be leased to Singaporeans or Permanent Residents seeking housing solutions for less than the mandated six-month period.

# 2 Abusing The HDB Minimum Occupation Period (MOP)

The Minimum Occupation Period (MOP), a policy instituted by the Housing and Development Board (HDB), is designed to ensure that HDB flat purchasers are acquiring these properties for personal habitation, rather than for profit-making purposes. Generally, the MOP spans a period of 5 years for the majority of flats.

During this stipulated MOP, HDB proprietors are prohibited from leasing the entire flat, although they are permitted to rent out separate rooms, barring those residing in a 3Gen flat. It is against the rules to seal off a room and lease the remainder of the flat without personally dwelling in it.

For those residing abroad, an exceptional authorization can be procured from the HDB to lease the complete flat. Nevertheless, the length of your absence from the country while subletting the flat will result in a corresponding extension of your MOP.

# 3 Maximum Number Of Individuals Staying In An HDB Flat

Let’s talk about the parameters of renting out your HDB flat or a single room. Every HDB flat comes with a cap on the number of residents it can accommodate. Currently, the maximum occupancy for an HDB flat on lease is four people for 1-room and 2-room flats, and six individuals for 3-room and larger apartments.

When you lease out individual rooms, bear in mind that one room needs to be kept for personal use. Therefore, with a 3-room flat, only one room can be rented out, while two rooms can be leased in a 4-room or larger flat. Remember, only the original bedrooms built by HDB are eligible for rental. You cannot convert other areas of the flat, including partitioned spaces, into bedrooms for tenants. The total number of residents must also adhere to the maximum limit allowed in each HDB flat.

Now, if you have a 1-room or 2-room flat, it’s not possible to lease out the bedroom as these flats come with only one bedroom.

However, this maximum occupancy rule does not extend to families living together. If you aren’t leasing out your HDB flats or rooms, the number of family members residing in the flat is unrestricted. This regulation is only applicable when the flat or rooms are rented out to non-family members.

If you decide to rent out a room or your entire flat, it’s necessary to share your tenant’s details with HDB.

# 4 Certain Groups Of Individuals Cannot Rent An HDB Flat/Bedrooms

As a property owner, it’s crucial to understand that not every potential tenant qualifies to lease your HDB flat or room.

Eligibility criteria for leasing an HDB flat or room are quite specific. Prospective tenants must be either:

– A citizen of Singapore, – A permanent resident of Singapore, or – A non-citizen legally residing in Singapore with valid documentation such as an Employment Pass, S Pass, Work Permit, Student Pass, Dependant Pass, or Long-Term Social Visit Pass. These documents should have at least six months’ validity from the date the flat owners submit the application.

A crucial point to consider is that individuals in possession of work permits from fields such as construction, marine, and process are required to be of Malaysian nationality. This nationality requirement is equally applicable to those with work permits from the manufacturing industry who wish to lease a full HDB flat.

To illustrate, if you are a work permit holder in the construction, marine, or process industries and you’re not a Malaysian, you’re restricted from leasing an HDB flat or bedroom. The same restriction holds true for tourists.

For those who are already occupants of a public rental HDB flat or owners of other HDB flats, you also have limitations on renting an HDB flat or bedroom. However, an exception is made for those who are divorced or legally separated. In such instances, one party can lease an HDB flat from another owner.

Owners of HDB flats should also note that they cannot lease another HDB flat unless they lease out their own flat, or do so within a month of leasing another HDB flat.

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

All Opinion Reports

NUS Real Estate Survey Reveals Growing Optimism Among Industry Leaders

Jayson Ang – January 17, 2025 –

TLDR A recent survey by the National University of Singapore (NUS) highlights increasing optimism among real estate industry leaders. The...

All Blog Posts Buying Tips

6 Myths About Using Your CPF For Housing

Jayson Ang – February 2, 2023 –

TLDR When it comes to purchasing a house in Singapore using CPF funds, there are several myths that need to...

Mandarin Top 5

Top 5 Tips : How to Avoid Scams in Singapore’s Property Market – Expert Tips and Warnings!

Jayson Ang – March 21, 2025 –

The property market in Singapore is a thriving and lucrative industry, attracting both local and foreign investors. However, with the...

Mandarin Top 5

Singapore’s Property Insights : Where to Find 5 Hidden Gems?

Jayson Ang – June 14, 2023 –

Singapore's Property Insights : Where to Find 5 Hidden Gems? With its booming economy, vibrant culture and attractive regulations, Singapore...

All Blog Posts Buying Tips Opinion

How Can You Prepare for Retirement in an Expensive Real Estate Market? Discover Your Options Now!

Jayson Ang – June 30, 2023 –

TLDR The article discusses the challenges of investing in a second property for retirement amidst Singapore's real estate market conditions....

Mandarin Top 5

Top 5 Reasons : Why Does Singapore Have Such Extensive Restrictions On Foreigners Purchasing Residential Property?

Jayson Ang – November 9, 2024 –

Singapore, a thriving city-state in Southeast Asia, is known for its stable political climate, strong economy, and strategic location. As...

All Reports

Finding Your Dream Home In The Near Future. Exciting Upcoming Property Launches In The First Half Of 2024

Jayson Ang – December 25, 2023 –

TLDR The real estate sector in 2023 saw significant policy shifts affecting both private and public housing, with various changes...

Mandarin Top 5

Top 5 : Questions Should Investors Be Asking Before Investing In Singapore’s High-End Rental Market

Jayson Ang – February 1, 2025 –

Singapore's high-end rental market has been a hot topic of discussion among investors worldwide. With the city-state's robust economy, excellent...

Mandarin Top 5

Top 5 Places to Learn About Singapore’s History

Jayson Ang – August 9, 2024 –

Singapore, a thriving metropolis with a rich history and diverse cultural heritage, offers numerous opportunities for visitors and locals alike...

All Blog Posts Buying Tips

Ultimate Handbook on HDB Income Ceilings for BTO, Resale Flats, and Executive Condominiums

Jayson Ang – December 23, 2024 –

TLDR Owning an HDB home in Singapore depends largely on income ceilings. The HDB income ceiling limits monthly household earnings...

Blog Posts Mandarin Top 5

Unforgettable Vacation: The Ultimate Guide To Singapore’s 5 Best Hotels

Jayson Ang – July 6, 2023 –

Unforgettable Vacation: The Ultimate Guide To Singapore's 5 Best Hotels It's 五新房产, Singapore is a vibrant and exciting destination, known...

All Buying Tips Opinion

Are Early Bird Discounts At New Launches Genuine Or A Marketing Gimmick?

Jayson Ang – November 20, 2023 –

TLDR When considering investing in new property projects, understanding developers' pricing strategies is crucial. Early bird discounts are not just...

All Buying Tips Opinion

I Wouldn’t Rely Too Heavily On Discounts Related To ABSD This Year

Jayson Ang – February 28, 2025 –

TLDR The ABSD discount arises when developers approach their five-year deadline to sell 90% of units, facing a 40% penalty...

Mandarin Top 5

5 Secrets To Successful Property Investing In Singapore

Jayson Ang – March 29, 2024 –

Investing in property is a popular option in Singapore, with many investors seeing it as a lucrative way to build...

Mandarin Top 5

Top 5 Best Hidden Photography Locations in Singapore

Jayson Ang – October 3, 2024 –

Singapore, a vibrant city-state known for its iconic landmarks and bustling urban landscape, is also home to numerous hidden gems...

Mandarin Top 5

5 Proven Strategies for Increasing the Value of Your Singapore Property

Jayson Ang – February 27, 2024 –

In Singapore's competitive real estate market, adding value to your property can be the key to making a profitable investment....

Mandarin Top 5

Top 5 Seafood Restaurants in Singapore

Jayson Ang – April 3, 2024 –

Singapore, a melting pot of cultures and culinary delights, is well-known for its diverse food scene. With its strategic location...

Mandarin Top 5

Top 5 Factors : Why Now Is the Perfect Time to Invest in Singapore’s Real Estate Market – Insider Analysis!

Jayson Ang – March 15, 2025 –

Singapore's real estate market has always been an attractive investment destination for both local and international investors. The city-state's stable...