For years, the Housing Development Board (HDB) has been telling you that you can’t rent out your flat to tourists. You can only rent out your flat to Singapore Citizens, Permanent Residents (PRs), and Non-Citizens holding employment, dependent, and visit passes for a period of no less than six months.
Of course, nobody takes HDB seriously when it comes to punishing people who rent out their flats to tourists on a short-term basis.
Well, that might be changing. Recently, HDB repossessed the flats of two home owners for renting out their rooms to vacationers for $25 to $75 a night. Yes, HDB made an example out of those two as a warning, but it isn’t just HDB flat owners who have to worry – private residential property owners are under similar rules when it comes to short-term rentals.
Although there’s no further information on the flat owners other than the fact they rented out their homes to tourists using a holiday rental site like Airbnb, it’ not hard to guess why HDB chose to make an example out of them by repossessing their flats.
Here are 3 very probable reasons why they lost their flats:
1. They Shouldn’t Have Run a Full-Time Hostel
It’s one thing to rent your spare room out to tourists for a few days a month (yes, it’s still illegal, you’ll probably stay below HDB’s radar). But, it’s an entirely different matter to turn your flat into a 24/7 short-term rental enterprise that’s serving 50+ tourists a month.
Although I’m not certain as to why those two jokers had their flats repossessed, my gut feeling tells me it’s because they turned their flats into money making businesses by advertising them on sites like roomorama and Airbnb.
Plus, the fact that they were charging hostel-like rates of $25 to $75 a night strengthens that hypothesis. So if you’re running a full-fledged hostel out of your flat/private residential property, don’t be surprised if the next knock at the door you hear is from HDB/URA.
2. They Should Have Been on Good Terms with Their Neighbors
It’s amazing how respectful and patient Singaporeans can be when it comes to their neighbors. It takes A LOT of anger and frustration for someone to call the authorities to investigate a neighbor, especially for Singaporeans living in HDB flats.
In private residential properties however, the patience level is much less forgiving when it comes to neighbors turning their properties into hostels for vacationers or foreign workers.
In fact, the number of home owners being investigated has steadily increased:
- HDB: case investigations of illegal short-term rentals in HDB flats have jumped from 106 in 2012 to 184 in 2013.
- URA: case investigations of illegal short-term rentals for private residential properties reached 2,100 cases in 2013. As of April 2014, 350 cases have already been investigated.
My feeling is that the two jokers who had their flats repossessed were turned in by neighbors who alerted HDB that there were too many transient foreigners staying next door. Perhaps if they had better relations with their neighbors, they might not have been ratted out (too soon) to the authorities.
3. They Should Have Been More Selective of Who They Were Renting to
There’s no denying how popular holiday rental sites like Airbnb and Roomerama are booming in Singapore. Right now there are more than 1,000 listings for spare rooms and even entire flats on Airbnb alone!
The problem with many home owners listing their rooms/flats on holiday rental sites is that they will rent to just about anyone as long as they have the cash to pay.
This is a problem for two reasons:
- This can lead homeowners down the path of turning their flat into a hostel to increase profit (and ultimately, the chance of getting turned in and caught by HDB/URA).
- This can lead homeowners to become minimally selective of who they rent out to, which leads to a greater chance of having “misbehaving” tourists as guests (who will piss off the neighbors into turning you in to HDB/URA).
I’m willing to bet that the two jokers who had their flats repossessed were turned in by neighbors because they got sick and tired of noisy, disruptive, misbehaving tourists staying next door.
Think about it, that’s a huge consequence of not being selective enough when it comes to renting your room/flat out. You’re really taking a gamble on whether you’ll have a respectful and quiet tourist as a tenant, or a drunk and rowdy idiot who will antagonize your neighbors (who will ultimately rat you out).
Do you think HDB will start cracking down on short-term rentals soon? Share your thoughts with us on Facebook! Also, don’t forget to subscribe to our newsletter for more great articles and moneysaving tips!
Subscribe to get weekly updates on personal finance
You'll also get a special promo code for $30 Shell vouchers upon purchasing an FWD Car Insurance plan by 30 April 2019!
We promise never to spam you!