Limits placed on tenancy of private homes

From today on, private homes can no longer be tenanted by more than 6 unrelated persons. This is 2 lesser than previous cap of 8 persons.

Enforced by the Urban Redevelopment Authority (URA), the new ruling kicks in today but existing tenancy agreements of 7 or 8 persons will be allowed to carry on until May 15, 2019 regardless of the tenancy contract’s expiration date.

TownervilleThis change was made to keep the integrity and character of the local community and to ensure that residential premises integrate with the neighbourhood. The move will also better engage the services of student hostels and company dormitories. There are differing views to this change. Property agents, some landlords and even tenants may welcome this shift towards quieter and less disruptive living environments. Others who are relying on rental income to prop up their finances may have opposing views. The loss of 2 tenants could very well surmount to $1800 to $2600 in potential monthly rents.

This shift to tenancy regulations will also affect home-sharing market such as Airbnb. The URA has been considering the creation of new leasing category for short-term rentals such as those publicised on home-sharing sites. And for those wondering if a huge bungalow and a small private studio may have different restrictions? The answer is no. URA has stated that there is no “stratified occupancy cap control based on unit sizes”.

Aura83For HDB flats which are sublet, the number of sub-tenants allowed remain unchanged at 6 and 9 for 3-room and 4-room or bigger units respectively. Property analysts are however expecting this new tenancy rules to soon apply for the HDB market.

 

Will rental market climb back up this year?

The private rental market has made a bit of a turnaround last month, posting a 1.3 per cent rise after months of lacklustre demand and declining prices.

MillPointCondoIn the prime districts, rents have rise 0.9 per cent, while the most obvious change was in the city fringes where prices rose 1.6 per cent. In the suburbs, a 1.3 per cent price increase was recorded. Rental volume also rose by 5.8 per cent in January with 3,813 units leased. That is 0.7 per cent higher than the 3,785 units leased in January 2016.

With the year leaning on this positive note, could the private residential leasing market be climbing its way out of the gloom? While property analysts are not expecting any drastic or quick decline in prices, neither are they predicting a recovery in the near future. As more new completions from 2015 and 2016 hit the market, the increase in available leasing options will make it more a tenant’s market. What are more popular are shorter leases, and the authorities may even begin to reconsider making shorter leases legal as more tenants are leaning towards these preferences. Previously 2-year tenures were common, but of late, 1-year leases are now becoming the new norm.

HDBFlatRentalFor HDB flats, rents have been falling almost entirely across the board with the 5-room flat segment leading the way with a 1.5 per cent decline. 3-room flat rental prices have however risen by 0.2 per cent. Rental volume for HDB flats have also fallen 16.1 per cent last month.

 

 

HDB flat and private condo rental prices evening out

The difference between renting a HDB flat and a private condominium unit used to be $1,000. Today, the difference stands at only $500. The gap between HDB flat and private property rental prices have narrowed considerably, due not to the rise in HDB flat rents but in the drop in private apartment rents.

Qbay ResidencesIn the past, renting a suburban condo would cost you $3,100 to $3,300 a month. Now, it is possible to rent a suburban unit at $2,700. HDB executive flat and 5-room flat rental prices have remained around the $2,200 to $2,400 range for the past 5 years now.

HDB flatMuch of the rental drop comes from the sudden increase in supply of new private condominium units, with more landlords now jostling for the same or shrinking tenant pool. Many HDB upgraders will also join the HDB rental pool as they seek to rent out their HDB flats.

Property analysts are putting it up to the shrinking apartment sizes. The psf rents have remained the same, but tenants are now getting less floor area than they used to for the same amount of money. They are however picky about location and may be willing to accept a smaller-sized accommodation in a central located as opposed to a larger one further away from their workplace or town.

As the gap narrows, will the HDB flat rental market take an indirect hit as tenants opt for private properties over public housing?

Rental market bodes well for HDB flats

The rental market has been on the downhill slip as a fresh crop of completed new private homes hits the market this year. Competition for an increasing limiting tenant pool will prove to be tough for private property landlords, but HDB flat rental prices are holding out well despite the softening rental market.

Paterson SuitesCore central region private apartments seem to be suffering the most with the global finance, oil and gas sectors in turmoil. Expatriates working here and their families have been moving out of the country, scaling the tenant pool for luxury and high-end prime properties down even further. For example, a 3-bedder in a 1,600 sq ft unit in Paterson Suites which would have tenanted at $7,000 in January is now offering $5,800 in rent.

Serangoon HDB flatPrivate property rental prices fell 1 per cent in March, while HDB flat rents fell just 0.1 per cent. Changes in immigration policies have reduced the foreign workforce in Singapore and those remaining may have to work around a smaller housing allowance, hence many private properties may be out of their rental budget. HDB flats are a fair and affordable option. For locals or HDB upgraders who have to rent a home while waiting for their new BTO flat or condominium to be built, private units often prove to be too expensive as well. Will the positive rental yields for the HDB flat market boost the sales figures for this sector?

 

 

Tenants calling the shots

Tenants are now calling the shots in the private apartment rental market. From lower rental prices and shorter leases to property renovations, some are even demanding specific furniture, new utensils and linen.

SeaHorizonEC

Photo: Sea Horizon executive condominium in Pasir Ris

Property rental prices have been coming down, especially as property prices have fallen over the last few years, and supply have increased substantially. Landlords are now finding it harder to find tenants willing to sign the standard 2-year leases which were commonplace in the past. Now most tenants are asking for shorter leases of 6 months as they know they are able to secure another place at a cheaper price should they wish to do so after the lease period. Private property rents have fallen 4.6 per cent in 2015, with rents in the outside central region (OCR) feeling the heat more with a 5.6 per cent fall. Rental prices of city fringe properties fell 4.9 per cent.

Property experts are expecting a 9 to 10 per cent vacancy rate this year, with rental prices falling 8 per cent. There will be approximately 26,467 new private property and executive condominium units made available this year, pushing supply up to an record high. Coupled with the authorities clamping down on immigration and a weak global economy, the prospects may seem a little dim. With investors and landlords not able to secure rental yields, the market may see an influx of units being sold; mortgage auctions may also find themselves having quite a few more units at hand.