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.

 

The would-be Woodlands

The Woodlands of the future could very well be the “Star Destination of the North” and home to 10,000 more new units as part of the Housing board’s (HDB) Remaking the Heartland (ROH) programme.
HDB Woodlands
Photo credit: HDB
There are 2 components to building the new Woodlands and the entire redevelopment is scheduled to take between 5 to 10 years. The remake will include Woodlands Central which will integrate commercial and community units at Woodlands Central and Woodlands North Coast public housing development. It is yet undecided if the residential units at Woodlands Central will be public or private ones though they are likely to be popular as the site is situated near Woodlands MRT station.
The Woodlands North Coast Land parcel will also house a business park, the first cluster in the North. The new commercial cluster will also provide ample spaces for small and medium-sized businesses. The Woodlands Regional Centre will also be revamped and expanded upon, structuring it to become a new hub for Malaysian and Asean-linked businesses.
Woodlands is in the third batch under the ROH scheme to undergo redevelopment, after Toa Payoh and Pasir Ris. It is set to change the landscape in the Northern region quite extensively with 3 new MRT stations coming up under the Thomson East Coast Line, a new Healthcare complex which includes a new acute care hospital, community hospital and nursing home, and the North South Expressway scheduled for completion by 2026.

What do you do with an ageing HDB Flat?

If you live in a HDB flat with less than 60 years left on its lease, or are looking at one which you really fancy, what can you make of its limited lifespan?

HDB flat Jurong WestHDB flats have life spans of 99 years and in mature estates, many of these flats were built in the 1970s and 1980s, which means they are now about 30 to 40 years old at the minimum. Recently, the National Development Minister Lawrence Wong has raised concerns about the high prices paid for HDB flats with very few years left in the leases. The value of HDB flats decreases towards a zero mark on its expiry and will then eventually have to be returned to the Housing Board (HDB).

The issue of ageing HDB flats has also raised concerns for the elderly as they are unable to then monetise their HDB flats. The government has however offered up solutions to aid senior citizens in preparing for retirement. Three schemes are in place to do just that:

1) Silver Housing Bonus Scheme

2) Lease Buyback Scheme

3) Subletting the HDB flat

HDBFlatRentalThe first – the Silver Housing Bonus Scheme – allows the elderly to sell their flat, downsize and receive cash bonuses of up to $20,00. Should they chose to sell their flat, they can also receive up to $100,000 upfront in cash and $500 monthly retirement income.

The Lease Buyback Scheme allows owners of 4-room or smaller flats to sell the remaining years of lease back to the HDB for a cash bonus and regular retirement income. Though the cash amount is lesser than that of the Silver Housing Bonus Scheme, the scheme is more popular with 952 households taking up the scheme in within 10 months in 2016 and the flat owners can remain living in a familiar living environment.

The last option, while not offered directly by the government, is legal and permissible, giving the elderly an option of receiving passive income while still living in their own flat. As more flats age, it will become harder to sell older units, though some buyers are still willing to invest in an unit in a good location despite its shorter life span. It does ultimately boil down to the age-old rule of supply and demand.

Condominium rents up, HDB rents down

A brieft respite in the rental market presented itself in January and February as increases in condominium rental rates were recorded for 2 consecutive months. HDB rents however slipped slightly.

Draycott8Condominium rents rose 1.1 per cent in February as demand from expatriates is usually high in the first few months of the year. Private residential properties in the prime districts were particularly in demand with a rise of 1.2 per cent in rental rates, while the city fringe and suburban sectors saw a 0.8 and 1.2 per cent rise respectively.

Property analysts are seeing an increase in leasing demand not only due to the influx of a foreign workforce in the beginning of the year, but also because rents are now at a affordable levels and more tenants may be willing to take on larger properties or properties in a more expensive location. Though rents are still 18.1 per cent lower than the peak in 2013, sales volume has increase by 12.6 per cent in comparison to the same period last year.

JurongWestCentralHDBFLatThe number of HDB flats being leased has also increased by 1.2 per cent with 1,477 units rented in February. HDB flat rents have however slipped by 0.8 per cent overall, falling 1.3 per cent in mature estates and 0.3 per cent in non-mature estates. Industry experts are expecting further decline in rents this year, while harbouring hope that 2017 will stabilise the market and bring about a recovery early next year.

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.

 

 

Resale HDB flat market’s continued stabilisation

For 2 consecutive years now, the sales volume of resale HDB flats have been on the rise. Since 2014, the number of transactions recorded for resale HDB flats have been increasing, from 17,318 in 2014 to 19,306 in 2015 and then 20,813 last year.

ToaPayohHDBflatResale flat prices are showing signs of stabilisation, with only a 0.1 per cent fall in 2016 from the year before. Though last quarter’s transaction figures fell 9.1 per cent, it could be due to the usual year-end lull as most were away for the school holidays. Akin to buyers’ sentiments and reactions in the private property market, HDB flat buyers have also been increasingly keen on closing deals as prices have been falling steadily since 2013. Most consider the market currently nearing or at the bottom of the property cycle and are thus more confident or willing to make the purchase at what they consider lowest-possible prices.

Despite the government ramping up supply of new BTO (build-to-order) flats for young couples and families, even including singles in their bigger scheme of things by providing them the option to purchase 2-room units directly from HDB instead of previously restricting them to only units in the resale market, there are still those who will require a unit sooner rather than later or do not quite qualify for new flats. These buyers will be the ones who prop up the market, though with the current cooling measures still in place, prices are unlikely to rebound anytime soon.

ClementiHDBflatProperty analysts are however hopeful that the number of resale flats transacted this year will be closer to the 21,000 to 23,000 mark. Resale prices have fallen to a level at which young couple and families find attractive or affordable enough to commit. A large number of HDB flats and suburban condominiums will also reach completion this year, which could mean more HDB upgraders will be looking to sell their existing flat in the resale market. And as rents are expected to fall as well, for the same reasons, the most optimistic outlook could be a 1 to 2 per cent price increase by end 2017.

January 2017 – New HDB subletting rules kicks in

A new regulation in the subletting of HDB flats has kicked in, allowing non-Malaysian work permit holders from the manufacturing industry to only rent rooms and not entire HDB units. In force since the first of January this year, the rule may impact not only the workers, but also employers, companies and HDB flat owners who are leasing their units. The impact may be beneficial to some, and not so much to others as the government hopes that this move will push employers to provide better workers’ living quarters and also move them to purpose-built dormitories where their needs can be catered to more efficiently.

BukitBatokHDBAn estimated 3.5 per cent of HDB households will be affected by the rule-change though those currently renting a unit are allowed to continue with their current living arrangements until their leases expire. This is not the first time a change was implemented in terms of the leasing of HDB flats. In 2006, the same rule was first implemented with regards to non-Malaysian work permit holders from the construction industry, and again in 2015 to the marine and process sectors. Malaysian work permit holders are still able to lease entire flats or rooms.

Service sector non-Malayisian work permit holders are however still allowed to sublet entire HDB flats and the government will continue to monitor the balance between landlords and sub-tenants closely in order to make further adjustments when and if required.

Fall of private home rents put dampener on market

Hana CondoFor the 6th month in a row, private home rental rates have fallen with an even sharper 1.3 per cent drop last month. In the HDB market, rental prices have however edged up by 0.2 per cent. The overall decline in rents is smaller in this market, at 3.7 per cent for the entire year of 2016. In the private property market however, for the whole of last year, rents have fallen 6.2 per cent and in a year-on-year comparison with January 2013, almost 20 per cent.

Not in particular good news for those who have been counting on rental yields to help with their multiple property mortgages. Plus a probable interest rates hike this year, the market could be looking at more sellers putting their property in auction sales or banks being more active in their mortgage auction sales. This could however work in the favour of buyers who have been looking for a home to live in. The closing price gap between private housing and higher-end resale public housing may also cause some contention and competition, with location and floor area possibly being the deciding factor for many.

KatongRegencyNot only has rental rates fallen, so has leasing volume. The number of condominium apartment leases fell to 3,691 last month, down 2.2 per cent from November’s 3,775 units. Last December’s leasing volume however is 17.1 per cent higher than in the same period in 2015. Overall, the rental market is weakening and investors can no only rely on rental yields to help tide them over.