HDB rents soar as tenants flee private flats

Straits Times: Mon, Aug 20

TENANTS moving into Housing Board flats to escape pricey private accommodation have driven up rent levels. Overall median HDB rents rose 10 per cent in the 12 months to June, to $2,200 a month, according to the Singapore Real Estate Exchange (SRX) - the highest since it started collecting data in the first quarter of 2006. Landlords in popular, mature estates like Toa Payoh and Marine Parade are asking for much more. Median monthly rents for five-room HDB flats in Toa Payoh, Geylang and Marine Parade are $2,900 with some choice units close to the MRT station eclipsing $3,000, agents say. Islandwide, monthly median rents for five-room units are about $2,500. The SRX collates transactions by major property agencies, which account for more than 80per cent of the HDB rental market. A Ministry of Trade and Industry statement about June's inflation rate noted that accommodation cost increases, while moderating, have been stronger than expected. It added that "leasing contracts continue to be renewed at rentals that are considerably higher, especially in the HDB segment". PropNex chief executive Mohamed Ismail said the gain is largely due to the strong Singapore economy that has seen continued employment of foreigners across various sectors. Demand from permanent residents (PRs) is also propping up rents, as the slew of residential cooling measures has made renting, rather than buying, the preferred choice for some. For instance, HDB home buyers are now required to fulfil a minimum occupation period of five years. They must also dispose of their overseas properties within six months of an HDB purchase. This has deterred many PRs from buying flats, with many choosing to stay in rented units instead, Mr Ismail said. HDB flats have also become popular with foreigners because private home rents have gone up, said Chris International director Chris Koh. Housing budgets are also being reduced across the board due to firms tightening their belts, prompting many employees to opt for the more affordable HDB option. Mr Koh expects HDB rents to hold firm over the next six months, despite competition from an increasing number of private home completions. Tighter immigration policies are also likely to cap further rental gains. Ms Hwa Hui-en, 26, a social worker, has been renting a four-room flat with her siblings in Dover for $2,500 a month since October last year. This is well-up from the $2,000 they paid for a similar-sized flat in Ghim Moh the year before. There are other units at her block with asking rents of up to $2,800, she added. "This location is convenient and close to some of our work- places so we are hoping that the rent will not rise further. "But if it does, whether we shift to another place or not depends on how much the increase is," she added. There are various rules governing the rental of HDB flats. HDB owners can rent out their flats only after the five-year minimum occupation period, unless prior HDB approval is given. PRs who want to sublet their HDB flats will also find it harder to do so under rules unveiled last month to deter those who are buying the flats for investment. For instance, the entire duration PRs can sublet their flats will now be capped at five years. They are also not allowed to keep their flats unoccupied after hitting the cap. In a written reply to MP Ang Hin Kee's question in Parliament last week, the Ministry of National Development said PRs who have reached the five-year cap for subletting will be required to resume occupation of their HDB flats. If they no longer need the flats for their own occupation, they will have to sell up. [e-mail]  Source: The Straits Times