HDB rents increase due to demand from PRs

According to the Singapore Real Estate Exchange (SRX), which collates transactions by major property agencies, accounting for more than 80% of the Housing Development Board (HDB) rental market, median HDB rentals rose 10% in the 12 months to June to S$2,200 per month. The rental rates were the highest since Q1 of 2006. Monthly median rents for five-room units are currently about S$2,500 monthly.

In addition, landlords in popular, mature estates like Geylang, Marine Parade and Toa Payoh are able to charge a premium. Median monthly rents for five-room HDB flats in these estates are S$2,900, with some choice units close to the MRT stations even exceeding the S$3,000 mark.

A recent Ministry of Trade and Industry statement about June’s inflation rate noted that accommodation cost increases, have been stronger than expected, with leasing contracts continue to be renewed at considerably higher rates, especially in the HDB segment.

Demand from Singapore permanent residents (PRs) has been contributing to the rising rentals, as the slew of residential cooling measures has made renting more attractive than home purchase.

Under rules just unveiled in July, PRs who want to sublet their HDB flats will also find it harder to do. This is the deter those who are buying the flats for investment. The entire duration PRs can sublet their flats, is now capped at five years. They are also not allowed to keep their flats unoccupied after hitting the cap. If PRs no longer need the flats for their own occupation, they will have to sell the flats.

Furthermore, HDB owners can rent out their flats only after the five-year minimum occupation period, unless prior HDB approval is given. They must also dispose of their overseas properties within six months of an HDB purchase.