I’m amazed people try anything illegal in their HDB flats. I mean, it’s not exactly spacious: a few inches of wall separates us from the most intimate details of our neighbours. The lady next door can’t even hide when she’s had too much chilli, because I wake up every time she flushes. And yet people still lose their flats, because they think they can get away with these:
1. Illegal Subletting / Renting Out of Flats
There is a three or five year Minimum Occupancy Period (MOP) before you can sublet.
The MOP is three years if you bought the flat without subsidies i.e. from the open market, without the use of the CPF Housing Grant. Otherwise, it’s five years. Until then, you’re not supposed to sublet / rent out your flat – even through sites like Airbnb.
The record breaker for this one was in 2010. A real estate agent, Mr. Poh Boon Kay, had three flats repossessed by HDB. He’d rented them out before the MOP. One was even used as a meditation center by monks from Myanmar (which is not impressive. Given the size of flats, it’s impressive that anyone could live in them without being meditative monks).
Poh’s defence was to claim ignorance of the rules, which may have worked for anyone who, you know, isn’t a real estate agent.
But even if he wasn’t, don’t count on proclaimed ignorance as a defence. That’s the kind of gamble that can end in a permanent void deck vacation.
2. Buying Private Property Before the MOP
There are rules about when a HDB flat owner can buy private property. You’re supposed to stay for the duration of the MOP before buying a condo, bungalow, etc.
Singapore Permanent Residents (PRs) have to sell their HDB flat within six months of buying private property.
In 2011 there was a huge kerfuffle over this – a family who were affected by the Selective En-Bloc Redevelopment Scheme (SERS) were supposed to get a replacement flat. But in the process of filling in forms, they indicated they’d purchased private property in Malaysia.
(Before you judge, note that the husband in the family is Malaysian)
They ended up with no flat, and $192,000. Check it out here.
3. Renting Out to Illegal Immigrants
I personally know something who got busted for this.
My buddy Alex (not his real name) got into serious trouble in ’02, when his tenant turned out to be an overstayer. He face the very real prospect of losing his flat.
“I assumed that the property agent would check, which in hindsight was negligent of me,” he says, “So neither of us know the tenant was an overstayer. And according to the agent, she did ask to see the tenant’s papers; but later we found out all she (the agent) did was photocopy the tenant’s documents and skim through them.”
Alex didn’t lose his flat. But till today, if you yell “ICA” next to him he turns so white he can pass for that snowman in Frozen.
When you’re renting out, you need to verify the tenant’s identity yourself. Find the instructions here. Note that, while your property agent will also be penalized, it doesn’t absolve you of blame.
4. Just Don’t Pay
Public housing is far less charitable than you’d imagine. And this really comes down to an issue of home loans:
In theory, a HDB concessionary loan gives you more leeway if you can’t make loan repayments. The government might let you pay a little bit late, or work out an alternative repayment scheme. It helps them look merciful, even as they sip from their thermos of poor people’s tears.
But that leeway has a limit. Ultimately, HDB can still repossess the flat. You may also be encouraged to sell your flat and downgrade, if it seems your family can manage in a smaller home (The technical term for that should totally be “moving into a no room flat”.)
Banks give you a lot less leeway. Fail to pay, and they won’t hesitate to repossess your flat. So while bank loans may be cheaper – and have been for a long time – they remain the privilege of the financially stable.
As to whether you’re in a safe enough position for a bank loan, ask a mortgage specialist.
Do you think flats are too easily repossessed? Comment and let us know!