21,000 HDB flats sublet

Source : Today - 18 Sep 2008

CALL it a combination of financial need or greed, and exploding demand: As of last month, 21,000 flats had been rented out by Singaporeans, a near 60-per-cent spike from the 13,200 units just 17 months ago.

Coming as it does three years after subletting rules were relaxed, Housing and Development Board chief executive Tay Kim Poh attributes this recent surge to changing market dynamics. “Rentals for private housing have increased, and those previously renting private property are renting HDB flats,” he said.

The result: This demand is enticing more flat owners to sublet their homes.

Then, property agents said there are the growing numbers of foreigners and permanent residents looking to rent an affordable roof over their heads, as well as to a lesser extent, en bloc beneficiaries who have sold their condos and are waiting for the market to cool before buying a home.

One man who cashed in on the strong rental market trend was chef Chu Seng Poh, 43, who is leasing out his 3-room Jurong East flat for $1,500 ˜ even though it has meant moving back in with his parents after 15 years and sacrificing his privacy.

“Every month, $300 goes towards my flat mortgage from my CPF. I don’t have to dip into my pocket and I collect $1,500 in rent. This is sort of a semi-retirement plan for me,” said the bachelor.

In March 2005, rules were relaxed to allow homeowners who had not yet paid off their HDB loans to sublet their flats, so long as they had occupied it for at least 10 years. For those with no outstanding loan, the minimum period was halved to five years.

These days, in spite of the surge in supply, sublet HDB flats can fetch $2,600 for a 5-room unit. But with more new housing supply in the HDB’s pipeline, and the latest global financial turmoil, would rentals remain this buoyant?

A major crisis aside, property agents expect market rentals to rise 5 per cent next year. PropNex chief executive Mohamed Ismail said “outside factors” have little effect as demand for public housing will always outstrip supply, especially with the continued influx of foreigners.

But for others like housewife Hanifa Kadir, 57, subletting is more a matter of need than profit. A host of debts and medical problems lead her to rent out her paid-up, 3-room flat in Toa Payoh.

“I’m a diabetic, I have heart problems and gout, I have not been working my entire life and my (late) husband did not leave me with much,” said Madam Hanifa, who moved in with her son and daughter-in-law.

And there are others like taxi driver Mohamed Shamsuddin, 57, who bought his four-room flat in Aljunied during the property market peak in 1997, when he was an administrative manager.

He lost his job in 2001 and exhausted his CPF savings last year. Unable to afford the monthly payment of $950 on his current $2,000-a-month earnings, he sublet his flat. “I hope the good rental market continues as I still have 14 years on my loan to pay off,” he said. “The downside is I’m staying with my in-laws whom I don’t really get along with, and this has been a strain on my marriage.”