Bedok Point Closure Lesson – Keep up or ship out

Back then, Bedok Point, newly opened in 2011, with 80,985 sq ft of retail space had all the advantages - a 10 minute walk from Bedok MRT station and interchange, and a slew of food and beverage outlets.

But then Bedok Mall, 220,000 sq ft of leasable floor area, came alone in 2013. Everything changed for Bedok Point since then. It could not compete – in terms of retail spaces, proximity to transport hub and even anchor tenants. It went downhill dying a slow death. Eleven years later, Bedok Point called it a day. A 10 minute walk from the station is considered too far for the modern Singaporean urbanite. That’s how it is. Even shopping malls need to keep up with expectations. Bedok Mall’s with its anchor tenants such as FairPrice Finest and Best Denki (electronics retailer) are a case in point.

Sold for $108 million, Bedok Point, with its four floors of retail space, will be torn down. It will make way for a residential development with commercial units on the ground floor.

New ABSD (Trust on Residential Properties) Kicks In

Think one can outsmart the authorities when buying properties in Singapore and not pay extra levies. Think again. In a move to close the loophole, the government has imposes Additional Buyer’s Stamp Duty (ABSD) of 35% on residential homes transferred into a trust where there is no identifiable beneficial owner, effective 9 May 2022, the Ministry of Finance reported.

Points to Note:

·         Prior to the newly minted 9 May 2022 ruling, when a residential property is transferred into a living trust, Buyer’s Stamp Duty (BSD) is payable. ABSD may also be payable, depending on the profile of the beneficial owner(s) of the residential property transferred into the trust.

·         Additionally, where the living trust is structured such that there is no identifiable beneficial owner at the time when the residential property is transferred into the trust, ABSD currently does not apply.

Well that has changed.

1.       ABSD will now be payable, even if there is no identifiable beneficial owner at the time the residential property is transferred into a trust. ABSD aims to promote a stable and sustainable residential property market, and as such, it should apply to transfers of residential properties into all living trusts, irrespective of whether there are identifiable beneficial owners of the residential properties transferred into such trusts.

2.       ABSD (Trust) needs to be paid up front, when the residential property is transferred into any living trust.

As a concession, a trustee may apply to IRAS for a refund of ABSD (Trust), provided that the following conditions are met:

a) All beneficial owners of the residential property are identifiable individuals;

b) Beneficial ownership of the residential property has vested in all of these beneficial owners at the time of property transfer into the trust; and

c) The beneficial ownership cannot be varied or revoked, or be subject to any condition subsequent, under the terms of the trust.

The application for a refund must be made to IRAS within six months after the instrument is executed. The refund amount will be the difference between the ABSD (Trust) rate of 35% and the ABSD rate applicable to the beneficial owner’s profile, with the highest applicable ABSD rate.

Housing shortage threatens to drive up prices in Singapore

Singapore’s recent price surge and fewer new homes for sale this year is somewhat deterring the government’s efforts to calm the market.

The market turnaround from 2019 is the direct result of resilient demand, delayed construction works and supply shortage. Indirect causes include Covid-19 induced labor shortages; home buyer’’s longer waiting time, and increased costs for developers staring down at inflation and higher taxes. In 2021, property prices surged the most in over a decade.

Singapore had 14,087 unsold units under construction in 1st quarter 2022, down from an overhang of 30,162 units in 2020; and the lowest available inventory since 2006, according to research data Cushman & Wakefield Plc. Even with government plans to release more land sales this year, the supply crunch will still hold out for a while, because everything (construction and such) takes time.

Analysts estimate the launch of possibly 7,000 to 8,000 new private apartments this year.

For comparison, the average launch numbers was 10,750 new units annually between 2012 and 2021.

Thus another new round of property cooling measures took effect from 16 Dec 2021.

Singapore Property Cooling Measures effective 16 December 2021

·         Additional Buyer’s Stamp Duty (ABSD) rates will be raised

·         Total Debt Servicing Ratio (TDSR) threshold will be tightened.

·         LTV will tighten limit for loans from HDB from 90% to 85%.

·         Government will increase public and private housing supply to cater to demand.

Singapore residential market is regarded as a safe-haven because of its political stability, and developed legal and financial services. For many, private property remains an instrument for wealth growth and preservation.

Sentosa Cove – The Super Niche Property Market For Foreigners

Sentosa Cove, the high-end, ultra posh waterfront enclave, started out as a residential zone in 2006. The area has 2,160 homes - from high-rise condominiums to luxury bungalows with berthing facilities. It is the only enclave where foreigners can own landed property, subject to approval of course. Foreign buyers reportedly snapped up landed homes between 2009 and 2011, causing a spike in prices. Apparently, the super-rich find its ‘resort living lifestyle’ appealing.

Current prices at Sentosa Cove are now looking somewhat tempting - hovering at $1,394 per square foot (psf) for non-landed homes; 40% down from its 2010 peak; and not far from $1,176 psf seen in 2006.

Despite its falling prices, 77% of Sentosa Cove resale transactions were still profitable. Since Additional Buyer's Stamp Duty (ABSD) kicked in, on Dec 8, 2011, the number of profitable resale transactions has been halved. Profits ranged from $500K to almost $5 million (excluding stamp duties and taxes).

Losses and Gains

Property investment is a double edge sword. Investors walk a fine line. Some make money and some lost. But that is life.

A 4,822 sq ft unit at Seven Palms bought by a British owner at $16 million in 2010 was sold for $8,880,000. The Seven Palms owner decided to relocate back to his homeland and sold it at a monetary loss of $7.12M.

Relocation, default on bank loans, financial stress, unemployment are some of the reasons for negative property sale.

On the flip side, a Singaporean entrepreneur chalked up a capital gain of $18M when she sold her Sentosa Cove bungalow for $26M in June 2013.

SC Global Developments' Seven Palms set a record of $4,200 psf for a 99-year leasehold development when an Australian paid $57 million for two units In 2012.

The average holding period for a condo unit in Sentosa is 4.1 years and 3.6 years for a landed home

Sentosa is a very niche market. Sentosa Cove buyers come with deep pockets. They are generally less price-sensitive.

Hong Kong Stays “Hong Kong - One Of The World's Most Expensive Property Market Place”

Hong Kong rents have stayed high - despite political turmoil, severe recession and the global pandemic. The economy is expected to shrink up to 8 per cent, and unemployment at six per cent in 2020. The rent has pulled back roughly 9 per cent over 2019. High rents and surge in joblessness are making it harder for workers and working poor to find and hold on to even meagre living spaces. The average rent for a bed space of 18 square feet rose 15 per cent over last year. Yet life must go on. Hongkongers are survivalists. They are not strangers to hardships. If anything, they will continue to make a living out of life, and a life out of living.

Housing inequality, cages homes, street living, unemployment, failed businesses, high rentals, pandemic, and what nots, what is there that the average Hong Kong man has not seen?

In Hong Kong, the official homeless count - "street sleepers" helped by NGOs is 1,423. The uncounted numbers are way higher. Hundreds of thousands are just scraping by - people who live in spaces under 100 square feet, cage homes; people who gathered in rooftops, tunnels and footbridges; people who do not have their own living space.

Sounds depressing - don’t be, because life is not a bed of roses; because from the dumps, there will come another ‘Rag to Riches’ story waiting to break out, waiting to be heard.

Hong Kong, ‘the world's most expensive place to buy a property’ is not about to lose its prestigious status.

Shoebox apartments hit by market recession

Shoebox apartments, (506 sq ft or lower) have taken a hit. The Covid 19 pandemic, recession and wage cuts have all taken their toll on sales. Volume transactions for shoebox units were 710 units (primary market); and 272 units (resale), in the period January to August 2020 - down 25.6% and 11.1% respectively, year-on-year. The economic recession has also hit rental demand for such units.

In August this year, the average unit price stood at S$1,960 per square foot (psf). It was S$1,919 psf in July 2020 and S$1,779 psf in August 2019. For the first eight months of 2020, the average transacted price of small units was S$2,003 psf - 10.6 per cent higher than the S$1,810 psf over the same period in 2019.

Buyers’ affordability, budget limitations, and financing have kept this category though somewhat buoyant. Average transacted price of small units was S$2,003 psf for 2020 (first 8 months) up from S$1,810 psf over the same period in 2019.

Sentosa Cove: The Silver Lining For Foreign Buyers of Landed Properties

Buying activities have of late revved up in the bungalow market on Sentosa Cove, the only place in Singapore where a foreigner may seek approval to buy a landed home for their own use. Thus far, 10 villa deals in the waterfront housing district have been sealed this year.

In the last two months, Pearl Island, one of five man-made islets in Sentosa Cove, has seen three villas sales transacted at between S$16 million and S$21 million each, working out to S$1,725 per square foot (psf) to S$2,000 psf on land areas of about 9,270 sq ft to 11,667 sq ft.

The foreign Chinese buyers of all three units paid an additional 20 per cent in ‘Additional Buyer's Stamp Duty (ABSD) on top of the standard buyer's stamp duty of up to 4 per cent.

Pearl Island, which holds 19 bungalows with a 99-year leasehold tenure, was developed by Ximeng Land (S) Pte Ltd. Completed in 2012. All 19 bungalows in the project have three storeys and a basement and come with its own private lift, a swimming pool and berth.

The Covid-19 situation has taken down most owners expectations to a more realistic price level. Bungalow prices in Sentosa Cove have eased by about 40 per cent from the peak in 2010-2012. Thus it is a good time to enter the Sentosa Cove market.

2020 may well close the year potentially with at least 15 deals. Buyers from China, Indonesia, Malaysia, India and Singapore have expressed interest.

Super Duper Penthouse In Singapore Fetched S$73.8M

A three-story "super penthouse" perched atop Wallich Residence, Singapore's tallest building has found a buyer in the person of James Dyson, a Bristish billionaire and the inventor of the bag less vacuum cleaner

 Reportedly sold for a bagful of dollars - S$73.8 million to be precise – the 5 bedroom super duper penthouse with 21,000 sq ft of floor space has its own private lift, replete with pool, jacuzzi and a private garden overlooking the city and Marina Bay Sands. Singapore's most expensive apartment originally came with S$100 million price tag in 2017.

 Wallich Residence, a development with 181 residential units comprises one-bedroom to four-bedroom units, four penthouses and one "super penthouse".

 At 72, Dyson plans to relocate his company's head office from Britain to Singapore where he aims to build its first electric car here.

Property Prices In Tokyo Are Bubbling Up

Nothing stays forever. Jobs come and go and economies rise and fall. This too is reflected in the Japanese property market.  The asset bubble of the late 1980s saw property prices skyrocketing to touch a peak at 3.08 million yen in 1990. Then wage growth stagnated and the economy languished. Japan underwent a long period of deflation. Since the bottom of 2002, real estate prices are again on the rise and is about to hit peak levels once again in Tokyo.

Data from Real Estate Economic Institute showed that new condo prices averaged about 2.87 million yen ($25,974) per tsubo (3.3 sq. meters) or the equivalent of $731 per sq ft, in the greater Tokyo region. This is a direct result of rising raw materials cost, increased wages for Japanese construction personnel and aggressive bidding prices for land parcels and an ultra-easy monetary policy from the Bank of Japan since 2013. Therefore Tokyo condo prices are inching towards 30-year highs, spurred on by low interest rates, easier housing loans and increased demand for new condos.

At the property peak in 1989, some condos in Tokyo fetched above the 1 billion yen mark. During the slum, real estate price per tsubo in 2002 were down 50 per cent from their peak.

The volume of units sold for the past three years numbered below 40,000 units per year.

Policy makers are not anxious. Rising property prices is aiding the economy to chug along.

Hong Kong Is The Most Expensive City To Buy Property

There is no better place on Earth to set a world property record than in Hong Kong, where it seems real estate values continue to soar upwards. For example, two of the most expensive apartments in this Asian city were sold for $149 million, last November.

Housing affordability in Hong Kong is absolutely ridiculous. The average price of a Hong Kong property is roughly upwards of $1.2 million, approximately 5.5% up over last year, and prime property about nearly $6.9 million, according to a CBRE report on Global Living. In Hong Kong,  the median price of a home corresponds to about 20 times the annual median household income.

Parking spaces in Hong Kong are likewise insane. In fact, it may well be the most expensive place on Earth to park your car. Buying a parking lot for $433,000 in 2017 and selling it 9 months later in June 2018 for $760,000 in the Ultima Apartment complex in Kowloon, has ushered in another new world property record in Hong Kong.

Welcome to the city of the unaffordable, a city built on blood, sweat and tears and a conviction that if you don't push ahead, you will be left behind; people are there simply to make money, to survive and to acquire the property they covet.

Shanghai Earthscraper: China opens world’s 1st underground hotel

Reshaping the relationship between city and nature

10 years in the making, Shanghai’s ‘Earthscraper,’ Shimao Quarry Hotel built vertically along the precipice of an underground, water-filled quarry has opened its door.

Cost of construction: 2 billion yuan ($287.9 million)

Height: 88-meter-tall

Location: Songjiang district.

Designer: British architect Martin Jochman.

The 336-room building comes with sports and recreation facilities that provides for rock climbing and bungee jumping. Rooms with cliff views in The Intercontinental Shanghai Wonderland, allow guests the luxury to stare into the abyss.

The quarry site, used during World War II, was shut down in 2000 due to new environmental protection regulations.

Plans are afoot for a shopping center to be built on the site next year.

More Preventive Measures: ABSD Elevated, Loan To Value Tightened, As Property Prices Surged

In the Rule Book, equilibrium is a good thing. At least that is how the Singapore government see it. It will not allow property prices to run up too fast and too soon. So, effective 6th July 2018, additional buyer stamp duty (ABSD) will rise a further five percentage point for some home buyers and housing loans will also tighten. These are steps the authority has adopted as preventive measures to align the property market with economic fundamentals.

Since the third quarter of last year, property prices have surged by 9.1% over the past year. The Singapore government stated, "The sharp increase in prices, if left unchecked, could run ahead of economic fundamentals and raise the risk of a destabilizing correction later, especially with rising interest rates and the strong pipeline of housing supply." Additionally, the demand for private residential property has also resulted in an increase in the volume of transactions.

Stamp duty will remain unchanged for Singaporeans and permanent residents buying their first home, but those buying their second or more properties will have to pay 5 percent more.

Foreigners will have to pay stamp duty of 20% instead of 15%, while entities will now pay 25% instead of 15%.

Developers buying residential properties for development will now pay an additional 5% stamp duty.

All housing loans issued by financial institutions will see a 5% tightening of loan-to-value limits.

Revised ABSD Rates as at 6th July 2018

Developers will come under the additional buyer stamp duty (ABSD) rate of 25% for entities. They may apply for ABSD remission, subject to conditions (which include completing and selling all units within the prescribed periods of 3 years or 5 years for non-licensed and licensed developers respectively.

Frantic Rush For Affordable JB Dream Homes

A pilot housing scheme for 1,840 Johor Baru (JB) homes received 265,000 applications. The project, offered buyers a chance to own their own home at a fraction of the market price. Launch by the Johor Sultan, a total of 1,840 landed properties and apartments were up for grabs under the Bangsa Johor/Sultan Ibrahim Dream Home project. However, buyers must fulfil certain conditions such as Johor being their place of birth. They must form a family unit with children and have a household income of less than RM4,000 a month. They, and their parents, must not currently own a house.

840 homes will be built at Bandar Dato' Onn and Bandar Baru Majidee suburbs. 1,000 more units will rise at Bukit Saujana, near Johor Baru city centre which will cost RM297,000 to RM429,000, reflecting the value of prime estate. Such homes can fetch up to RM1 million in the market. The most affordable homes will be at Bandar Dato' Onn, with a mix of landed homes at RM80,000, RM85,000 and RM95,000 for a terrace, semi-detached house and bungalow respectively.

The development will be undertaken by Johor Land, a unit of state investment arm Johor Corporation. There were talks of housing loans of up to 100% where eligible buyers need to pay only RM $1 as down payment.

Hong Kong Parking Spots Outgun Living Spaces In Investment Returns

In a vastly crowded city like Hong Kong, oftentimes, owning a tiny block of concrete can make your day.

For over 18 consecutive months now, the price value of parking spaces in some areas of Hong Kong has been growing faster than the prices of homes.

During the last several months, a parking spot at Provident Garden appreciated 257% in value while residential prices in the same area rose by 27%, according to a local media report

Parking spaces transacted at above $256,000 is normal, while $128,000 is just about the entry level for parking spaces in Hong Kong - SCMP.

The high rates for parking spots is a direct consequence of a shortage of parking space. The number of private cars registered in Hong Kong increased some 48% between 2006-2016 while the number of parking spaces for private cars is up only 9% in the same period.

As reported, this month, a parking space at Festival City in Sha Tin sold for $320,043, while a space at Tseung Kwan O Plaza went for $266,276.

Meanwhile, an 88 sq ft parking space in Sai Ying Pun was sold for $663,129 in June, making it the world's most expensive parking spot.

Private car ownership is steadily growing. There is also a growing desire by high-net-worth people to purchase prestigious vehicles, according to SCMP.

URA Rules Short Term Rental Of Private Residential Properties Is Out

Quick Guide:

Effective 15 May 2017 - the maximum number of unrelated occupants allowed is six.   

Minimum tenancy period is 3 consecutive months.

Short-term rentals on a daily or weekly basis is ruled out.

Any internal partitioning works should not compromise the integrity of the residential property with essential features such as a living / dining area and kitchen.

Seller Stamp Duty and TDSR Rule for Retirees Adjusted

Govt will make calibrated adjustments to the Seller’s Stamp Duty (SSD) and Total Debt Servicing Ratio (TDSR) framework.

Adjustments to take Effect from 11 March 2017

a) SSD holding period is adjusted to 3 years, down from the current 4 years;

b) Lower the SSD rate by four percentage points for each tier. The new SSD rates will range from 4% (for properties sold in the third year) to 12% (for those sold within the first year).

This will apply to all residential property purchased on and after 11 March 2017.

Additional Buyer’s Stamp Duties (ABSD) and Loan to Value (LTV) Limits

1.       The Government is retaining the current ABSD rates and LTV limits so as to encourage prudent borrowing by households. Under the current TDSR framework, property loans extended by a bank cannot exceed a TDSR threshold of 60 per cent.

2.       However, this 60 per cent threshold will no longer apply to mortgage equity withdrawal loans with LTV ratios of 50% and below. These refer to loans where borrowers in their retirement years will borrow against the value of their properties to obtain more cash. This move is expected to affect only a small group of owners.

Closing the loophole for stamp duties for share transfer through equities.

Significant owners of residential property-holding entities (PHEs) will be subject to the usual stamp duties when they transfer equity interest in such entities, similar to what would happen if they were to buy or sell the properties directly.

The Stamp Duties (Amendment) Bill will be tabled in Parliament today to give effect to this policy intent.

credit: MND

Source: Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore

10 MARCH 2017

Turning Adversity Into Gains: A Hunter’s Game In The Property Market

Bold and savvy property buyers will not miss an opportunity to step in to relieve high end property owners wanting to let go of their assets, given the right price.

Is it time to go treasure hunting for property? 

In the current sluggish market, the high-end property sector which was buoyed by luxury home collectors in the mid to late 2000s, is beginning to lose some of its sparkle. 

Huge losses have been reported for a handful of properties in the high end residential areas.

The Top 10 2016 property losses, all high end homes from the City Central Areas and Sentosa Cove, were bought during the boom years - seven in 2007 and others in 2011 and 2013. 

At that time, foreign interest in the high-end home segment peaked because of the exciting plans envisaged for the integrated resorts and the plans to transform the Central Business District.

Big Financial Losses
 

Year 2015
A Japanese tycoon took a whopping hit, losing over S$15 million in a penthouse sale at St Regis Residences.
Loss: $15.8M

Year 2016
Seascape Condo at Sentosa Cove: ultra-luxury apartment with sea view.
Bought for $11M in 2011 and sold for $6.35M in October 2016.
Loss: $4.65M

The Ritz Carlton Residences
A luxury apartment in Cairnhill Road was sold at a loss of over $3M in March 2016.
Loss: $3.7M

Turquoise in Sentosa Cove
 A unit was sold at a loss of over than $3M in June.
Loss: $3.3M

In a cyclical downturn where market sentiment and employment prospects are poor, unprofitable property deals will become increasingly common.

With a slowing economy, more than 800 condo transactions were sold at a loss this year, double the figure in 2015.

Sales of condo units with losses upwards of $1 million rose to 48 transactions this year, compared with 31 in 2015, according to data from SRX,

Going forward, expectations of a US interest rate hike by the end of the year may drive down prices and drive up these loss-making sales.

 

Mitigation of multi million loses
 

Luxury properties have and will remain a status symbol. The higher the cost of the luxury home, the higher will be its prestige value. Bragging rights, the indulgences of living in these luxurious apartments and the savings in rent, will go in no small way to ameliorate part of its monetary losses.

Foreign exchange gains from a strong Sing dollar will help to offset some of these losses.

Additionally, by liquidating a property, the bulk of the proceeds could be rewarded by a more profitable investment elsewhere. Seen in this light, a loss may not end up as a loss because it could be mitigated or managed. But it will take a very smart investor to play this game.

In its Financial Stability Review released last month, the Monetary Authority of Singapore has cautioned property investors to take note of rising vacancy rates, declining rentals and impending interest rate increases.

Urban Redevelopment Authority (URA) statistics show that there were nearly 6,000 resale non-landed private property transactions in the first three-quarters of this year.

Turning Adversity Into Gains

When there is doom and gloom, when confidence is low and there appears to be no light at the end of the tunnel, it’s time to step up.

As the saying goes, “One man’s loss is another’s gain.”

10 Top Property Losses For 2016

Project	Purchase Price	Sales Price	Loss	Purchase Date
Seascape	$11M	$6.4M	$4.7M	Dec 2011
Ritz Carlton Residences	$10.9M	$7.1M	$3.7M	Jun 2013
Turquoise	$7.2M	$3.8M	$3.4M	Nov 2007
St Regis Residences	$12M	$8.9M	$3.1M	May 2007
Parkview Eclat	$10.9M	$7.8M	$3.1M	July 2007
Paterson Suites	$6.5M	$3.6M	$2.8M	Sept 2007
Ritz Carlton Residences	$10.8M	$8M	$2.8M	Mar 2013
Paterson Suites	$6.5M	$3.6M	$2.8M	Sept 2007
Leonie Parc View	$7.7M	$4.9M	$2.8M	Jun 2007
Turquoise	$5.7M	$3M	$2.6M	Nov 2007
Cliveden at Grange	$7.1M	$4.5M	$2.6M	July 2007

Singapore Dominates Latest OECD PISA Global Education Survey

Topping the charts - Singapore has done it again

Singapore excelled over the rest of the world in the latest OECD’s PISA 2015 survey.

Singapore reigned at the very top in every one of the three categories evaluated - Science, Reading, Maths.

The PISA survey is an assessment of the quality, equity and efficiency of school systems. 

The OECD report unveils the policies that successful countries share: 

1. high and universal expectations for all students; 
2. a strong focus on great teaching; 
3. resources targeted at struggling students and schools; 
4. a commitment to coherent, long-term strategies.

The top OECD countries in the PISA report were Japan, Estonia, Finland and Canada.
Hong Kong and other affluent Chinese-majority entities have also topped the charts.

The OECD’s PISA 2015 tested around 540,000 15-year-old students in 72 countries and economies, on science, reading, maths and collaborative problem-solving, with science as the main focus.

A PISA case study on the module for Singapore historical success:

• Efficiently preparing students for its burgeoning manufacturing sector. 
• In recent years it has moved towards “increased flexibility and variety. 
• Current - each school in Singapore offers a range of learning experiences to develop students holistically.
• Teachers are the pillars of Singapore’s education system who inhabit “a culture of dedication, collaborative learning and professional excellence.

Top 10 PISA 2015 Survey

OECD PISA Latest Global Education Survey - more here

Li Ka-Shing Sells Billion Dollar Shanghai Complex

Business is like art. It is complex, colourful and challenging. If you happen to be a Maestro like Li Ka-Shing, then your achievements will make you an ultra rich magnate.

A commercial complex under construction in Shanghai's Pudong district has been sold for 20 billion yuan (US$2.95 billion). 

The sale of Shanghai Century Link Tower, a large office and retail complex comprising two 34-story office towers and a shopping mall by Cheung Kong Property Holdings to a company majority owned by China Life Insurance Co, is expected to draw in a profit of 6.2 billion Hong Kong dollars (US$799 million).

The commercial complex has a total floor area of about 220,000 sq. meters.

Cheung Kong Property Group is unloading its assets in mainland China and Hong Kong to transition into the infrastructure business in Europe and elsewhere.

Chinese state media has critiqued Li, the chairman of Cheung Kong Holdings for withdrawing capital in its latest deal. 

Cheung Kong Property has deemed the sale an ordinary transaction.

44 Illegal Short-Term Subletting Faced URA Wrath

Each in his own corner

Budget travellers want their holiday accommodation on the cheap. Enterprising home owners seek to earn a quick buck through short term leases. Hoteliers cry foul because they can't compete on an equal footing. The authority has yet to decide how far they want to go in curtailing this illegal subletting.

In the first six months of this year, Urban Redevelopment Authority (URA) has taken action on 44 cases of unauthorised short-term subletting in private residential homes, according to Business Times. 

Ministry of National Development (MND) reported that this was an increase from 36 cases in 2014 and 23 cases in 2015. 

Enforcement actions against errant home owners:
"Once URA confirms a case of unauthorised short-term subletting, it sends an enforcement notice to the offender requiring the unauthorised use to cease. In the vast majority of cases, offenders have complied with URA's notices and there has been no need to undertake further action against them," MND said.

Given the potential impact and disamenity of such rentals on neighbouring residents, careful and due consideration must be given to its implication, MND said, even as its review on short-term stays in these premises is still ongoing.

No conclusion has been reached on the hotly debated topic of the home-sharing. Current URA guidelines require private residential properties to be rented out for no less than six months. Private home offenders can be fined up to S$200,000 and jailed for up to a year.

More than a year after public consultations in early 2015, URA had said that it needs more time to consider the issue.

Housing & Development Board (HDB) has disclosed it has no plan to review the short-term stay rules for HDB flats.

Meanwhile local residential listings for short-term stay run rampant on Airbnb and HomeAway. Some accommodation service providers who rent flats from landlords, furnish the units and sublet them with limited services, have reportedly also rent out units with occupation periods lesser than six months.

It is understandable that hoteliers are unhappy because such rentals are not subject to similar business taxes and safety regulations. As a result, commercially run hotels with its higher cost of operations are unable to compete on price with private room rentals.