Higher occupancy cap to benefit landlords, tenants

New ruling: Residential property under construction in Singapore. The government is allowing more tenants to stay in a rented property. — Bloomberg

SINGAPORE: Landlords of larger Housing and Development Board (HDB) flats and private residential properties will soon be able to grow their tenant base and rental income after a policy change takes effect in January to relax the rental occupancy cap for such properties for about three years.

But those who earn more rental income after raising their tenant headcount, and in turn see higher annual values of their properties, will likely be liable for higher property taxes, said Chia Siew Chuin, JLL’s head of residential research for Singapore.

Meanwhile, the policy change could benefit larger households in need of interim housing, lower-income groups, as well as students and workers in sectors such as manufacturing, nursing, food and beverage and retail, analysts said.

These tenants will have the option of sharing a unit with more people and saving on rental costs, said Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics.

From Jan 22 next year to Dec 31, 2026, owners of four-room or larger flats and private homes of at least 90 sq m will be allowed to house up to eight unrelated people who are not from the same family unit, up from the current cap of six, said HDB and the Urban Redevelopment Authority or URA on Dec 20.

Chia said some operators of co-living residences may also benefit from this temporary flexibility, as they are governed by the same occupancy cap.

The increased cap could result in landlords charging higher rent for a larger unit with more tenants, but each tenant may end up paying less, Sun noted.

She gave an example of how a landlord of a five-room HDB flat in Bedok that previously charged S$4,200 for six people – S$700 per person – may now charge S$4,800 for eight people, or S$600 per person.

“This benefits both landlords and tenants as each tenant pays less while landlords earn higher overall rent,” she said.

Landlords of smaller homes could be affected if potential tenants switch to renting bigger units with their friends or colleagues, Sun added. — The Straits Times/ANN

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