Occupancy cap for larger HDB flats and private homes to go up to help ease rental pressure

Meanwhile, owners of larger private properties of at least 90 sq m who wish to rent out their properties to up to eight unrelated people are required to register with URA, via its e-services. An administrative fee of S$20 is payable with each registration.

Upon successful registration, the owner will be informed that they can use the residential property to accommodate up to eight unrelated people, each subject to a minimum stay duration of three consecutive months.

Mr Lee Sze Teck, senior director of data analytics at Huttons Asia, said the move is “not expected to have a significant impact on rents”.

“Large private and HDB homes are in short supply,” he said. “Allowing unrelated persons to stay in one private home and HDB flat offer tenants another option.”

He added that the increased cap may offer a “short-term fix” to stabilize the rental market while supply catches up, but rents might increase if there is more demand for larger private and HDB homes.

“On the other hand, some tenants may give up the smaller private homes and HDB flats to rent a bigger one,” he said. “Rents for smaller homes may face some pressure.

“On balance, rents are likely to stabilize and possibly face downward pressure in the short term.”

Ms Christine Sun, senior vice president of research and analytics at OrangeTee and Tie, said allowing more people to share rental units can help reduce the cost of living.

“This will not only benefit these individuals but also help to attract and retain foreign workers who are essential in supporting sectors such as manufacturing, nursing, service, and retail industries,” she said.

“Furthermore, optimizing living space by accommodating more individuals within a single residence has the potential to increase space utilization, particularly within larger units such as maisonettes, landed properties, and executive apartments that may be underutilized.”

Ms Sun said that as bigger units can now accommodate more people, the overall rental volume may “drop slightly” due to fewer units being leased.

On the upside, the resale prices of bigger condos and HDB flats – in particular older units – may “climb higher”. “This is because such units can now accommodate more tenants and the higher demand may lead to better rents and higher yields, making them a more attractive option for rental income in the future,” he added.

“HDB flat owners, commercial property owners and private residential property owners, including their tenants, are required to adhere to the occupancy cap and minimize dis-amenities to the public. The authorities will take strict enforcement action against any infringement of the occupancy cap,” HDB and URA said.

“In the event of serious dis-amenities, the approval or authorization to rent up to eight unrelated people will be revoked or ceased.”

Any extension of the relaxed occupancy cap beyond 2026 will be subject to review, taking into account the demand and supply of open market rentals, they added.

MORE HOUSING ON THE WAY

HDB and URA noted that the government has increased the supply of public and private housing, while also working closely with the construction industry to address supply-side challenges.

A “significant housing supply” coming onstream over the next few years will help meet rental demand as well.

Nearly 40,000 homes are expected to be completed across the public and private residential markets this year alone, the highest number of home completions in the last five years, HDB and URA said.

About 100,000 public and private residential units are also expected to be completed from 2023 to 2025.

“As these units come onstream, Singaporeans who are currently renting while awaiting the completion of their new homes will vacate their rental units,” they said. “This will alleviate the tightness in the rental market by increasing the available supply of units for rental.”

Additionally, HDB more than doubled the supply of flats available under the Parenthood Provisional Housing Scheme (PPHS), from 800 units in 2021 to about 2,000 units today.

“We will further double PPHS supply to 4,000 units by 2025,” the agencies said. “This will support eligible Singaporean families who need interim housing while awaiting the completion of their new flats.”