Landlords split apartments into studio units to lower rents and maximise returns
HOW can you earn more rent in this bullish property market?
Simple - by putting in a few partitions. Instead of renting out a three-bedroom apartment for say, a forbidding price of $5,000, some owners are now dividing their properties into three or four smaller units to rent out individually.
The result: More money for both owner and agent.
And lower and more affordable rents for tenants.
The New Paper on Sunday was shown a 93 sq m, two-bedroom apartment in Simei, divided into three small studio units.
The cost of dividing the apartment? Only $20,000, said property agent Steven Lim.
The sole proprietor of Steven Lim Realty helped the owner nearly double his rental income.
As the condominium is just a five-minute walk from Simei MRT station, Mr Lim saw a demand for smaller and more affordable units from young professionals who cannot afford to rent in prime districts.
‘These young professionals can’t afford to pay $3,000 a month for a two-bedroom apartment (in Simei) either,’ said Mr Lim, 48.
‘So I suggested to the owner to divide the space and create three studio units with attached bathrooms and kitchenettes. Then he can rent each unit for between $1,600 and $2,000 a month.’
An Urban Redevelopment Authority spokesman said the conversion of a single residential unit into two or more separate units requires planning approval.
Mr Lim, who claimed he has handled eight such projects, said that not all apartments can be easily subdivided. The renovation cost also varies.
He explained: ‘This particular unit is located on the ground floor, with a mini-garden, which provides a second entrance.
‘It was quite easy to divide the space and create private entrances for all three studio units.’
The apartment has three toilets, one attached to the master bedroom, a common toilet and a maid’s toilet. So each studio unit has its own attached bathroom.
The washbasins were replaced with sinks for the kitchenettes. And space was found for washing machines.
LIGHT PARTITIONS
Gypsum boards are used for the partitions as they are light and can be knocked down easily.
Under the Builder Control Act, putting in light partitions does not require a permit.
The owner declined to be interviewed or to allow The New Paper on Sunday to take any photographs of his apartment.
Mr Lim’s idea is not new, but with property prices rising, it is becoming a market trend.
He said: ‘The first time I did this was 10 years ago, during the last property boom. I was then marketing a studio apartment in Tanjong Pagar, a very hot district. I noticed it had two entrances, so I thought of converting it into two smaller studio units.’
Both 37 sq m units were rented out at $2,600 a month. ‘They were snapped up on the day I placed the advertisement,’ Mr Lim claimed.
Another agent, who wanted to be known only as Mr Tan, said: ‘There’s a demand for such partitioned units, especially in hot locations like Outram and Tanjong Pagar.’
Mr Tan, who has been in this line for 10 years, added: ‘It used to cost only $1,500 a month to rent a studio apartment in The Plaza on Beach Road. Today, the monthly rent is $3,200 to $3,500, depending on the condition of the unit.
‘For many young expats or professionals, renting HDB flats is usually a last choice. Such partitioned studio units are considered better since they cannot afford to rent a whole apartment in this booming property market.’
Mr Lim said: ‘Usually it takes a few weeks to find the right tenants for a whole apartment. But the demand for smaller units is so good owners get to choose their tenants.
‘I just need to place one small advertisement and I get more than 10calls asking to view the unit.’
What happens when the market goes downhill?
Mr Lim replied: ‘There is always a demand for small units. Of course the price will have to drop. But the rental income from the three partitioned units will still be more than renting the apartment as a whole.’
He said it’s a worthwhile idea for those who plan to let out their apartments for at least 10 years.
After the last property bubble burst, Mr Lim went into the renovation business to supplement his income.
Today, he is able to put his interior designing skills to good use.
Not only does he provide professional advice to homeowners, he also helps them draft their renovation plans.
Mr Lim said: ‘All the plans have to be submitted to the condominium’s management for approval.
FACTORS TO NOTE
There are many factors to note when subdividing an apartment, like the TV and power points.
‘With proper planning, tenants may not even be able to tell that these are makeshift studio units.’
Malaysian Shirley Tan, who has been renting a studio unit, said she initially felt cheated when she was told that her studio unit was subdivided from a bigger apartment.
But she rented it anyway because she could not afford anything else.
Miss Tan, 29, a financial consultant, is paying a monthly rent of $1,700 for her 30 sq m unit.
She said: ‘I like the apartment for it’s accessibility to the MRT station and the amenities in the area. There are also full coned facilities and I am not in an HDB flat.’
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