Most Singaporeans looking to rent their whole flat out tend to think only about the issue of finding tenants. Of course the marketing aspect is very important when it comes to any HDB subletting whole flat endeavors, but in a lawful society such as Singapore, it is paramount that you do not get off on the wrong footing.
So back in Jan 2012 to December 2014, the HDB actually repossessed 202 flats due to issues like illegal subletting or repeated failure to pay up the housing mortgage. You might think that the HDB would be lenient in these cases, particularly when it comes to a sensitive topic such as housing. But in 2010, a Singaporean was penalised for illegal subletting.
So in the case of Mr Poh, who the HDB said had bought his flat in 2007 at $150,000, the HDB is considering a fine of $25,000 and returning him $125,000. The flat would fetch about $320,000 in the current market, according to property analysts cited in media reports.
Source: Sunday Times
There is a British saying that goes, “penny wise, pound foolish.” A 6 figure sum loss is pretty eye watering, and would be crippling to most people’s finances. So with that being said, here are the 5 things you should not do when it comes to any HDB subletting whole flat scenario.
Yield tables and rent charts are useful reference points, but the units that actually rent well and continue to attract tenants over time aren't always the ones at the top of a yield table.
The more important question is whether the investment still makes sense once you factor in holding costs, vacancy and your long-term plans. That's often where buyers find a second opinion most valuable.
Over time, that's also why we decided to work with agents who shared the same data-driven and advisory-led approach behind our editorial, consultants who could help readers think through decisions more objectively, rather than simply push transactions.
Today, the team has worked with more than 2,000 clients across over $5B in property transactions.
1. Don’t rent before your 5 year MOP is up
MOP should be a common term amongst Singaporeans. However for the sake of the uninitiated, it stands for Minimum Occupancy Period. If you have just bought an HDB flat you will not be allowed to sublet the whole flat before the 5 year MOP is up. You can sublet the rooms out but of course this will come at the expense of your own privacy. Do not forget that HDB will do occasional spot checks but this is also assisted by tip-offs from neighbours. If you must know, these tell-tale signs that will tip your neighbours off are things such as frequent coming and going of foreigners and foreign accents.
2. Do not lock up one room
So one way many people try to circumvent the 5 year MOP is by keeping one room locked and renting out the rest of the rooms. They have tried to use the excuse that they are still staying in that locked room by “occasionally visiting”, but HDB has stipulated that you have to be physically staying in the unit. Remember, the walls have eyes (nosy neighbours) so do not try to keep on the right side of the law.
Another way that people try to get past this is to forge a closed door deal with the tenant. So the tenant will pretend to be the landlord in the event of any checks from HDB. Sounds pretty foolproof but really, as seen in the case of Mr Poh above, the repercussions when you do get found out is really not worth the risk.
3. Do not try and squeeze more people in
Another method that Singaporeans try to maximise their gains from their HDB flat is to squeeze more people into the flat. The maximum number of people allowed in one HDB flat is now 6, and this is irregardless of whether your HDB is an executive flat or mansionette. You could easily be fined or worse having your flat repossessed if found guilty for unauthorised subletting of your HDB flat so please do not flout this rule!
As always, feel free to reach out to us at stories@stackedhomes.com or leave a comment below!
Yield tables and rent charts are useful reference points, but the units that actually rent well through a cycle, after vacancy, holding costs, and your intended exit, aren’t always the ones at the top of the list.
If you’d like to discuss how this applies to your own circumstances, you can reach out for a one-to-one consultation here.
And if you simply have a question or want to share a thought, feel free to write to us at stories@stackedhomes.com. We read every message.
Frequently asked questions
Can I sublet my entire HDB flat before the 5-year minimum occupancy period is over?
Is it okay to lock one room and rent out the rest of my HDB flat to avoid the 5-year rule?
What are the risks of trying to rent out more people than allowed in my HDB flat?
Can I pretend that I am still living in the flat if I rent it out?
What are some common mistakes to avoid when subletting an HDB flat?
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