Renting Out HDB Flat Illegally? Fine $50,000, forfeit HDB flat, or face jail term

One of the hottest topics in Singapore's property market recently? HDB repossessed a 5-room HDB flat after the homeowner was found to be illegally renting out the house.

According to The Straits Times on 3 Dec 23, the homeowner bought a new HDB (presumably a BTO) and rented it out before the 5-year Minimum Occupation Period (MOP) was fulfilled. It gets better - the homeowner found a property agent who was willing to market and rent out this HDB flat illegally.

Content

• Rent out my HDB flat
• Eligibility requirements for renting out my HDB flat
• HDB rental guidelines
• Fine for renting HDB flat illegally

Rent out HDB Flat

So, why are these Singaporean homeowners so bent and desperate in renting out their HDB flats? Well, for obvious reasons - money.

Renting out an HDB flat can provide homeowners with a steady stream of passive income. This can be particularly beneficial for homeowners who are looking to supplement their income or save for a down payment on a new property.

In fact, according to a 2022 survey by HDB, 15% of all HDB flats are rented out. The average monthly rental rate for an HDB flat in Singapore is $2,500. The total rental income generated from HDB flats in Singapore is estimated to be over $50 billion per year.

Extra rent income

Renting out HDB flats is a significant and growing source of income for Singaporean homeowners. With this excess amount of disposable cash on hand, these homeowners can offset their home loan mortgage payments, and maximise the property's space in a red hot rent climate in Singapore.

• Offset home loan: The rental income can be used to help offset the mortgage costs of the HDB flat. This can make it easier for homeowners to afford their monthly mortgage payments, especially if interest rates are rising.
• Maximise investment: Many Singaporean homeowners have spare bedrooms or even entire apartments that they are not using regularly. Renting out these spaces can help them to maximize their investment in their HDB flats.
• Take advantage of rental demand: Rental demand in Singapore has been increasing in recent years due to factors such as an aging population, a growing number of foreign professionals, and a shortage of affordable housing. This has made it easier for homeowners to find tenants and charge higher rents for their HDB flats.

Of course, there are also some potential downsides to renting out an HDB flat. These include the need to deal with tenants, the potential for damage to the property, and the risk of vacancy. However, for many homeowners, the potential benefits outweigh the risks.

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Eligibility requirements for renting out HDB flat

There are several circumstances under which HDB homeowners are not allowed to rent out their HDB flats. These restrictions are in place to ensure that HDB flats are primarily used for residential purposes and to protect the interests of tenants.

Minimum occupation period

Homeowners must have occupied their flat for at least 5 or 10 years before they can rent it out. This restriction is in place to prevent homeowners from buying flats for speculative purposes and then immediately renting them out.

If a homeowner has purchased their flat from the resale market with a CPF housing grant, they must occupy the flat for at least 10 years before they can rent it out. This restriction is in place to ensure that homeowners who have received housing subsidies use their flats for primary residential purposes.

Citizenship

Only Singapore Citizens (SC) or Singapore Permanent Residents (PR) are allowed to rent out their HDB flats to tenants who are either SCs, PRs, or Malaysian citizens. This restriction is in place to ensure that HDB flats are primarily occupied by Singaporeans and Malaysians.

Short-term rentals illegal

Homeowners are not allowed to rent out their HDB flats on a short-term basis, such as for daily or weekly stays. This restriction is in place to prevent HDB flats from being used as tourist accommodations.

Non-residential use

Homeowners are not allowed to rent out their HDB flats for non-residential purposes, such as for commercial filming or goods storage.

Subletting HDB flat

Homeowners are not allowed to sublet their entire flat if they have purchased it directly from HDB or if they have purchased it from the resale market within 5 years. This restriction is in place to prevent homeowners from immediately subletting their flats after purchasing them.

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HDB rental guidelines

HDB homeowners who wish to rent out their flats must apply for permission from HDB. Failure to comply with the HDB's regulations can result in penalties, including fines and the forfeiture of the flat.

Here is an overview of the HDB rental guidelines:

Eligibility for HDB rent

• You must be a Singapore Citizen (SC) or Singapore Permanent Resident (PR) to rent out your HDB flat.
• You must have occupied your flat for at least 5 years before you can rent it out.
• You can only rent out your flat to tenants who are either SCs, PRs, or Malaysian citizens.
• You cannot sublet your entire flat if you have purchased it directly from HDB or if you have purchased it from the resale market within 5 years.

Apply to rent HDB

• You must apply for permission from HDB to rent out your flat.
• You can apply online or by mail.
• The processing time is typically 2-3 weeks.

HDB Rental Agreement

• You must enter into a written rental agreement with your tenant.
• The rental agreement must include the following information:
  
  The names and addresses of the landlord and tenant
  
  
  
  The rental period
  
  
  
  The monthly rent
  
  
  
  The security deposit
  
  
  
  The termination terms

Do I need to provide furniture?

• You are not required to provide furniture for your tenant.
• However, if you do provide furniture, it must be in good condition and meet safety standards.

Tenancy Management

• You are responsible for managing your tenant and your rental property.
• This includes collecting rent, addressing maintenance issues, and enforcing the terms of the rental agreement.

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Fine for renting HDB flat illegally

Homeowners in Singapore who rent out their HDB flats illegally face a range of potential consequences, including fines, forfeiture of their flats, and even imprisonment. The severity of the penalties depends on the specific circumstances of each case, but they can be significant enough to deter homeowners from breaking the rules.

Fines for renting HDB illegally

The most common penalty for illegally renting out an HDB flat is a fine. The amount of the fine can range from $5,000 to $50,000, depending on the severity of the offense. In some cases, repeat offenders may be fined even more.

Forfeiture of HDB flat

In more serious cases, the HDB may order the forfeiture of the flat. This means that the homeowner will lose ownership of the flat and will be forced to sell it at market value. The proceeds from the sale will be used to pay the HDB's legal costs and any fines that the homeowner has been levied.

Jail for renting HDB illegally

In the most extreme cases, homeowners who illegally rent out their HDB flats may be imprisoned. This is typically only for cases where the homeowner has been convicted of multiple offenses or has caused significant harm to the tenant.

In addition to these penalties, homeowners who illegally rent out their HDB flats may also face other consequences, such as:

• Being barred from renting out any other HDB flats in the future
• Having their names listed on a public register of offenders
• Facing civil lawsuits from tenants

The HDB takes a very strict stance on illegal rental, and it is important for homeowners to be aware of the risks before they consider renting out their flats without permission. If you are unsure about whether or not you are allowed to rent out your flat, you should contact the HDB for clarification.

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