Monday, March 4, 2024
HomesingaporeOccupancy cap for larger HDB flats and private homes to go up...

Occupancy cap for larger HDB flats and private homes to go up to help ease rental pressure

SINGAPORE: From next year, up to eight unrelated people will be allowed to live in larger public flats and private homes, a temporary move to help meet rental demand.

The occupancy cap will be increased from the current limit of six unrelated people – defined as those not from the same family unit – from Jan 22, 2024, to Dec 31, 2026, the Housing and Development Board (HDB) and the Urban Redevelopment Authority (URA) announced on Wednesday (Dec 20).

“The sharp increase in residential rents from 2022 reflected exceptional tightness in the market due to COVID-19 disruptions, coupled with a robust rental demand,” the agencies said.

The increased occupancy cap will cover HDB flats that are four-room or larger, as well as living quarters of HDB commercial properties where the living quarters are equivalent to or larger than a four-room flat.

It will also include larger private residential properties of at least 90 sq m (969 sq ft).

Residential property owners who currently house up to six unrelated people will need to apply to HDB or URA – for HDB flats and private residential properties respectively – to include the additional occupants.

Occupancy includes the property owners and the occupiers, as well as the tenants.

Minister for National Development Desmond Lee said the increased cap will only apply to larger properties as these can “accommodate more occupants with minimal impact on those around them, in order to maintain a conducive living environment for the larger community”. 

He added that this measure would “better meet” the demand of those looking to rent, such as households waiting to move into their new homes and younger Singaporeans who desire to rent their own space.

“We will review the need to extend this temporary measure depending on the rental situation in end-2026,” said Mr Lee.

After the increased cap is implemented, the authorities will “monitor the situation closely and take action against any infringements or serious dis-amenities, including revoking the homeowner’s rental approval”.

Owners of HDB flats, as well as owners and tenants of HDB commercial property owners, are currently required to seek the board’s approval before the tenancy commencement date. This requirement will continue to apply.

Applications to rent out HDB flats or bedrooms may be submitted online via its e-services, with applicants required to pay an administrative fee of S$10 per bedroom or S$20 per whole flat rented out.

HDB commercial property owners and tenants who wish to rent out their living quarters can apply via the GoBusiness Licensing Portal. They must pay a S$100 administrative fee when doing so. 

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Meanwhile, owners of larger private residential properties of at least 90 sq m who wish to rent out their properties to up to eight unrelated people are required to register with URA, via its e-services. An administrative fee of S$20 is payable with each registration.

Upon successful registration, the owner will be informed that they can use the residential property to accommodate up to eight unrelated people, each subject to a minimum stay duration of three consecutive months. 

Mr Lee Sze Teck, senior director of data analytics at Huttons Asia, said the move is “not expected to have a significant impact on rents”.

“Large private and HDB homes are in short supply,” he said. “Allowing unrelated persons to stay in one private home and HDB flat offer tenants another option.”

He added that the increased cap may offer a “short-term fix” to stabilise the rental market while supply catches up, but rents might increase if there is more demand for larger private and HDB homes.

“On the other hand, some tenants may give up the smaller private homes and HDB flats to rent a bigger one,” he said. “Rents for smaller homes may face some pressure.

“On balance, rents are likely to stabilise and possibly face downward pressure in the short term.”

Ms Christine Sun, senior vice president of research and analytics at OrangeTee and Tie, said allowing more people to share rental units can help reduce the cost of living.

“This will not only benefit these individuals but also help to attract and retain foreign workers who are essential in supporting sectors like manufacturing, nursing, service, and retail industries,” she said.

“Furthermore, optimising living space by accommodating more individuals within a single residence has the potential to enhance space utilisation, particularly within larger units such as maisonettes, landed properties, and executive apartments that may be underutilised.” 

Ms Sun said that as bigger units can now accomodate more people, the overall rental volume may “drop slightly” due to fewer units being leased.

On the upside, the resale prices of bigger condos and HDB flats – in particular older units – may “climb higher”. “This is because such units can now accomodate more tenants and the higher demand may lead to better rents and higher yield, making them a more attractive option for rental income in the future,” she added.

“HDB flat owners, commercial property owners and private residential property owners, including their tenants, are required to adhere to the occupancy cap and minimise dis-amenities to the public. The authorities will take strict enforcement action against any infringement of the occupancy cap,” HDB and URA said.

“In the event of serious dis-amenities, the approval or authorisation to rent to up to eight unrelated people will be revoked or cease.”

Any extension of the relaxed occupancy cap beyond 2026 will be subject to review, taking into account the demand and supply of open market rentals, they added.

MORE HOUSING ON THE WAY

HDB and URA noted that the government has increased the supply of public and private housing, while also working closely with the construction industry to address supply-side challenges.

A “significant housing supply” coming onstream over the next few years will help meet rental demand as well.

Almost 40,000 homes are expected to be completed across the public and private residential markets this year alone, the highest number of home completions in the last five years, HDB and URA said.

About 100,000 public and private residential units are also expected to be completed from 2023 to 2025.

“As these units come onstream, Singaporeans who are currently renting while awaiting the completion of their new homes will vacate their rental units,” they said. “This will alleviate the tightness in the rental market by increasing the available supply of units for rental.”

Additionally, HDB more than doubled the supply of flats available under the Parenthood Provisional Housing Scheme (PPHS), from 800 units in 2021 to about 2,000 units today.

“We will further double PPHS supply to 4,000 units by 2025,” the agencies said. “This will support eligible Singaporean families who need interim housing while awaiting the completion of their new flats.”

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