More HDB owners can rent out flats

The Sunday Times, March 4, 2007
By Tan Hui Yee


TAPPING that HDB home for cash is going to be easier.

Rules on subletting HDB flats have been relaxed further to allow even those who have lived in them for just five years to rent them out.

And it does not matter whether they have paid up their home loan or not.

The previous rules specified that those with outstanding HDB loans would have to wait 10 years to do so, and five if they have paid up.

A new rule is in place for those who have bought their HDB homes without any subsidy or grant from the Government: They can do the same if they have lived there for just three years.

The changes, effective immediately, mean that about 650,000 of the more than 800,000 HDB homes dotting the island can be put on the rental market.

HDB rules on subletting have been gradually relaxed over the years to let people monetise what is, for most, their single most valuable asset.

Before 2003, flat owners were not allowed to do so unless they were working abroad, for example.

That year, the HDB decided that owners could rent out their flats after 10 years if they have paid up the loan, and 15 years if they have not.

In 2005, this was cut to five and 10 years.

The result: About 12,600 HDB households out of 537,000 eligible have taken advantage of the changes.

This time, the HDB is not linking the rules with the status of the flat's mortgage.

National Development Minister Mah Bow Tan, who announced the changes in Parliament yesterday, noted that the elderly stood to benefit.

They could move in with their children while earning rental income from their flat, said Mr Mah.

He also listed other ways for the elderly to monetise their flats.

They could downgrade to a studio apartment, rent out a room in their existing flat, or pledge their property for a regular stream of income in what is known as a reverse mortgage.

Property agents said that the relaxed rules on subletting would well stir up some mild investor interest in the HDB resale market.

More flats for rent could also rein in the rates, which have risen by about $200 to $300 per unit in the past year, said ERA Realty's assistant vice-president Eugene Lim.

A three-room flat in Tampines now fetches about $1,000 a month in rental.

Property agent Geoffrey Tan, 35, bought a four-room flat in Ang Mo Kio with his wife in 2004. They are still paying off their loan.

The couple moved into a private apartment in Katong about a year later, but held on to their flat because its price had not risen.

'I was thinking of selling it off before this, but now that I can rent it out, I will,' he told The Sunday Times.