10 Ways To Make Money From Your HDB Legally: Rent as storage, photoshoot venue

For many HDB flat owners in Singapore, their home is built on a lifetime of savings. With the right planning, this asset can be used to create a financially comfortable retirement.

Every Singaporean homeowner knows they can rent out their HDB room. But did you know there are other ways to make money off your flat in Singapore?

With the right strategies, a house can practically pay for itself, if it generates more income than the mortgage repayments cost. Before you find your next tenant, here are several ways you can make money from your HDB legally:

1. Rent Out HDB Room As Storage Space

Some people want to make money off their spare rooms but are not ready to become landlords.

For this reason, it’s become increasingly popular to rent out a spare room for quality storage, instead of to a person.

Consider outfitting the spare room with proper storage racks or proper storage lockers. This caters to many people who have bulky goods that are not valuable, but still need lots of storage.

For example, a hobbyist painter may need more room to store canvases or someone may need to store extra clothes and appliances while waiting to move into a new home.

There are some legal considerations involved here. Always ensure that the renters understand they place items at their own risk, and that you are not liable for them.

You may want to get a contract drawn up for you (it will be a one-time cost).

Do not accept high-value items such as gold, jewellery, or luxury goods, as you do not want to be accused of anything if they go missing.

There is no “market rate” for this service, so charge whatever you’re comfortable with. We’ve seen everything from S$30 to S$120 per month.

Remember to keep good records of who has and hasn’t paid, to avoid disputes later.

2. Rent Your HDB As A Photoshoot Venue

If you've got a beautifully renovated HDB BTO with the trendiest furniture from Taobao, consider renting your spare room or living room out as a photoshoot or video shoot location.

There are websites such as Tag Venue that allow production companies, advertising agencies, television shows, and even independent KOLs and influencers to book out spaces to create content.

As a landlord, you will want to vet through the rental requests carefully to ensure that no illegal activities will be carried out in your flat, and that they won't mess up or destroy your furniture.

Chances are, you might be dealing with youngsters who are not homeowners and may not understand how to respect someone else's home. Ensure all rules and regulations are communicated clearly before you allow them to come to your place, for e.g. no smoking, no loud music, no eating and drinking, no extension of shoot time, no access into bedrooms and toilets (unless paid for).

3. Split HDB Flat Into More Rooms

If you’re lucky enough to have a whole unit to rent out, you might want to consider splitting the unit.

This can sometimes result in higher rental income, as you may find it easier to get separate tenants than a whole family to rent to.

Condo, Private Property Occupancy Cap

For example, a 1,400 square foot condo unit, with three bedrooms, could be divided up between three separate tenants.

We've seen condo units with up to seven or eight people living in tiny, partitioned rooms in Singapore. However, you must know that's illegal. Take note of URA's private property rental limitations of up to six unrelated persons per private residential property.

Private Property Rental Cap: 6 pax

HDB Rental Occupancy Cap

For HDB flats, you need to get approval if you are hacking down walls to divide the flat. It’s better to simply put up partitions, to divide the area between tenants. Always ensure that your plans are acceptable by HDB before taking action.

HDB's occupancy cap for 4-room and larger HDB flats is six persons (used to be nine pax prior to 2018). For 3-room, it's 6 persons. Anything else smaller will be 4 persons.

• 5-Room and above: 6 pax
• 4-Room: 6 pax
• 3-Room: 6 pax
• 2-Room and below: 4 pax

Check if you meet the requirements, such as falling within the maximum number of tenants allowed. This is helped by modular kitchen units, which can be found in home furnishings shops like IKEA.

These devices can turn almost any room into a functional kitchen, with some prices as low as $400.

Now. your tenants don’t even have to share the same kitchen (although that’s still possible if you insist).

One advantage to this is that you experience a lower risk of vacancies. Even if one room is vacant, the others could still be rented out.

4. Get Mortgage and Repairs Tax Deductions from IRAS

If you’re a landlord in Singapore, you should know you have a lot of possible tax deductions.

For example, you can claim tax deductions on the interest payment of your mortgage. More importantly, you can claim tax deductions for money spent on maintenance.

If repairs are needed on your property during the rental period, and you don’t make improvements* to the state of the house, you can save the receipt for a tax claim with IRAS.

*This means the repairs cannot be used to upgrade or improve the unit, only to restore it to its normal condition. For example, if you replace damaged vinyl flooring with the same material, it’s claimable. If you replace it with high-grade Italian marble, that’s an improvement that is no longer claimable.

5. HDB Lease-Buyback Scheme

If you are aged 65 and above, HDB's Lease Buyback Scheme is a great way to continue living in your flat while monetising it.

There is no need to change your lifestyle; the only difference is that you are selling part of your flat’s lease to HDB to receive a cash bonus of up to $20,000.

The scheme allows you to retain up to 35 years of the lease as long as you cover the youngest owner until they are at least 95 years old. In addition, you’ll need to top up your CPF Retirement Account with part of your proceeds. Doing this helps to ensure that your retirement monthly payouts received from CPF Life will increase.

If you’re not sure whether you’ll outlive the lease of your flat, HDB will make sure to provide a suitable housing arrangement based on your circumstances, taking into consideration your family support, health condition, and financial status.

If the HDB flat owner passes away within the lease period, the lease will be passed to the owner’s spouse or child who is living in the same flat to continue living in the flat for the remaining lease period or return the flat to HDB.

If the flat is returned, HDB will reimburse the beneficiaries for the value of the remaining lease based on factors like depreciation.

However, do be sure to check that you actually need this. If your CPF funds are already substantial, it may not be necessary for you to surrender any of your remaining lease.

6. HDB Silver Housing Bonus Scheme

The HDB Silver Housing Bonus (SHB) is another scheme that you can adopt to monetise your HDB flat to financially support your retirement years.

This scheme is for those who prefer to downsize to a smaller flat while putting a specified sum of their cash proceeds, capped at $60,000, from the sale of their existing flat into their CPF Retirement Account (CPF-RA).

With this top-up, the scheme would offer a cash bonus of up to $30,000. However, to qualify for this scheme, you’ll need to meet the eligibility criteria laid out by HDB.

7. Rent out your rooms/ flat

Finally, the last two points are pretty obvious. Another way to monetise your flat for retirement is by renting it out to the right tenants. In Singapore, as long as you are a citizen and have fulfilled the five-year minimum occupancy period of your HDB flat, you can rent out the entire flat. If your flat has at least 3 bedrooms, you can also choose to rent out any spare bedroom(s) while you’re still living in the unit.

Renting out your HDB can be relatively lucrative. According to The Straits Times, HDB rents saw a significant increase of 9.2 per cent compared to 2013. This is a great alternative especially if you have another place that you can call home.

10. Sell your HDB flat for profit

Mr. Obvious. But considering to sell your beloved home is easier said than done.

In today's hot property climate, you can easily sell your HDB flat for profit as long as you purchased a brand new property (that makes sense financially). Even if you own an HDB resale flat, there is still a chance that you’ll earn a sizable sum if you meet the right market conditions.

This is a good option to consider if you already have another place to stay, plan to invest in another property, or invest in another type of asset if that option is available to you.

Part of this article first appeared in ValueChampion. Singsaver.com.sg.