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Everything About the Temporary New Occupancy Cap in S’pore That’ll Make Rents Cheaper in Singapore

2023-12-21 , 1:00 pm

Singapore Temporarily Raises Occupancy Cap to Eight Individuals in Larger Homes to Address Rental Demand

Starting from 22 January 2024, a temporary measure will allow up to eight unrelated individuals to reside in larger public flats and private homes in Singapore.

The Housing and Development Board (HDB) and the Urban Redevelopment Authority (URA) said in a joint statement that they have increased the occupancy cap from the existing limit of six unrelated people, extending it until 31 December 2026.

This adjustment is a response to the surge in residential rents against exceptional tightness in the rental market, influenced by COVID-19 construction delays.

The Ministry of Finance reports a significant increase of approximately 20% in market rents for both HDB and private residential properties since 1 January 2023.

Prior to this, private rents experienced a remarkable year-on-year surge of 29.7% in 2022, marking the swiftest annual growth since 2007. In the same period, HDB rents achieved their fastest growth in 15 years, rising by 28.6%, as highlighted by OrangeTee & Tie.

National Development Minister Desmond Lee in a Facebook post, “We will review the need to extend this temporary measure depending on the rental situation in end-2026.”

What Does this New Measure Entail?

The expanded occupancy cap encompasses HDB flats with four rooms or more, living quarters of HDB commercial properties equal to or larger than a four-room flat, and private residential properties exceeding 90 sqm.

Property owners currently accommodating up to six unrelated individuals must seek approval from HDB or URA before including additional occupants.

The term “occupancy” includes both property owners and occupiers, along with tenants.

Existing requirements, such as seeking board approval for tenancy commencement dates, will continue for HDB flats, HDB commercial property owners, and tenants.

Online applications for renting HDB flats or bedrooms include an administrative fee of S$10 per bedroom or S$20 per whole flat.

HDB commercial property owners and tenants can apply through the GoBusiness Licensing Portal, incurring a S$100 administrative fee.

Owners of larger private residential properties wishing to rent to eight unrelated individuals must register with URA, paying a S$20 administrative fee for each registration.

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

Who Will Benefit from this New Cap?

Mr Desmond Lee said in the same Facebook post, “This measure aims to better meet the demand for rentals, catering to households waiting for new homes and younger Singaporeans seeking independent living spaces.”

Due to each tenant paying less rent sharing the unit with more occupants, Ms Christine Sun, senior vice president of research and analytics at OrangeTee & Tie also noted that the new measure is expected to “benefit lower-income groups, students, blue-collar foreign workers, some Singaporeans and big families”.

“Wouldn’t the landlords be operating at a loss, then?” you may wonder.

Well, that may not necessarily be the case.

Head of real estate intelligence of data and software solutions at PropertyGuru Lee Nai Jia, said that the impact on market is “indeterminate” as the listing supply may rise correspondingly while enhanced affordability increases demand.

“Asking rents for the whole unit may rise in the short term, even though each individual renter pays less. That said, we expect the impact to be limited to some segments of market,” said Lee.

Lee Sze Teck, senior director of data analytics at Huttons Asia, also predicts that the change is unlikely to significantly impact rents due to a shortage of large private and HDB homes.

However, it may offer tenants additional options for shared living spaces, stabilising the rental market temporarily.

Moreover, while the overall rental volume may decrease slightly due to fewer leased units, the resale prices of larger condos and older HDB flats may rise.

Ms Christine Sun explained that this is due to such units being able to accommodate more tenants and the higher demand may lead to better rents and higher yield. This could potentially make them a more attractive option for rental income in the future.

Not Everyone is Happy with the New Changes, However…

While expert analysts agree that the changes would not significantly impact the rental industry in Singapore, not all residents are as positive or receptive to the change.

Comments on Mr Desmond Lee’s Facebook post express incredulity and concerns regarding the increase in the occupancy cap, especially regarding the issue of noise and overcrowding.

A netizen critiques, “We lose our privacy. We lose our sense of belonging. A residential estate is just that, a place for families to live in, not one that is converted into a co-living space, dorm, hostel, condotel arrangements.”

A reddit thread dedicated to discussing the changes also shows similar sentiments from Singaporeans, decrying that it is unfair that regular working class citizens have to put up with more crowded neighbouring units while “boomer landlords be laughing to the bank, squeezing more foreign immigrants into a small HDB flat.”

However, HDB has also emphasised that they will monitor the situation closely and take action against any infringements or serious dis-amenities, including revoking the homeowner’s rental approval.

Mr Desmond Lee also clarified in his Facebook post that the increased cap targets larger properties capable of accommodating more occupants with minimal impact on the community, maintaining a conducive living environment.

He encouraged anyone having enquiries to reach out to HDB or URA respectively via feedback forms.

In the Meantime…

To address housing challenges, the government has increased public and private housing supply, collaborating with the construction industry.

A significant housing supply is expected over the next few years, with nearly 40,000 homes set to be completed in 2023 alone.

Affordable options are also available for low-income families across non-mature estates!

An estimated 100,000 public and private residential units are expected to be completed from 2023 to 2025, alleviating rental market tightness.

HDB has doubled the supply of flats under the Parenthood Provisional Housing Scheme (PPHS) from 800 units in 2021 to around 2,000 units today, with plans to double it further to 4,000 units by 2025 to support eligible Singaporean families awaiting new flats.