Monday, June 15, 2009

Divide & Prosper?

Source : The Straits Times, June 12, 2009

Some landlords are partitioning apartments and renting them out for a larger profit even though it is illegal

THE practice of illegally partitioning apartments to create more units for rent is widespread, said real estate agents.

At one apartment in Holland Crest, paper labels have been placed next to the doors leading to the partitioned units in order to distinguish them. -- ST PHOTO: MUGILAN RAJASEGERAN

Checks by The Straits Times at 20 developments found 11 had apartments or houses that had been subdivided into smaller rental units or broken into many rooms, in areas such as Orchard, Chinatown, Little India and Bukit Timah.

Last year, the Urban Redevelopment Authority (URA) acted on 400 such cases, most of which involved illegal refurbishment of dwellings for unauthorised use as workers' dormitories. This year, there were 90 cases from January to April.

The practice was highlighted recently when tenants at The Grangeford in Leonie Hill were asked to move out of their illegally subdivided units.

The Grangeford case was unusual because so many units in the condominium had been subdivided.

This overflowing shoe rack parked outside a room in one of the illegal units is a tell-tale sign of how many tenants are being crowded into the room. -- ST PHOTO: ANG YIYING

But up to 10 per cent of developments in areas popular with renters - such as Geylang, Joo Chiat or near Chinatown - might have partitioned or subdivided apartments, said Dennis Wee Group vice-president Alex Leow.

Checks by The Straits Times at 20 developments islandwide found that such units had attracted not only foreigners working in the service industry, but also visitors needing short-term accommodation such as medical tourists, students and office workers who wanted cheap rental accommodation near town.

Some apartments were divided into two, with the kitchen on one side. Other apartments were partitioned to create more bedrooms; the toilets and kitchen were shared. Some did away with the kitchen to allow for an additional room.

Another agent said subdivisions were more common in older apartments, especially those up for collective sale. Such apartmentsare unpopular with expatriate families, who are put off by the ageing facilities and uncertain leases. Subdividing them makes them attractive shorter-term accommodation.

Claiming that subdivisions were the norm in popular rental districts, real estate agent Benny Teo, 37, said: 'Don't talk about poor foreign workers. Even office workers earning up to $5,000 are looking to save a lot on rent by sharing a large partitioned unit with a friend as it might cost them only about $1,400.'

Another property agent, Mr Tan Weixiong, 36, said demand for such units is so great that a day after a subdivided or partitioned apartment is advertised, all the units are snapped up.

At The Grangeford, URA discovered in April that 600 units had been carved out of 140 apartments. -- BT FILE PHOTO

This practice of converting individual homes into boarding houses is not condoned by URA, which says it poses safety issues for other residents. URA has said it will step up enforcement measures to stamp out the practice.

At Kimsia Court, located in the Orchard area, the management has dealt with such cases before, taking action by informing the authorities about the subdivided units, said resident and management corporation treasurer Tony Thong.

He said that at one of the apartments there, two of the bedrooms and the maid's room had been divided into six rooms last year. Each subdivision had its own lock and key.

Agents said such housing 'solutions' had sprung up because of the increasing number of foreign workers in Singapore who need cheaper accommodation. Last year, the island's foreign population surged past the one million mark for the first time.

Many tenants are attracted by what they see as a good deal - affordable rates, convenient locations, more exclusive accommodation and condo facilities.

Thai postgraduate student May Eddison, who has lived in a partitioned unit in Holland Crest since December, said the $1,800 she pays in rent is worth it because the condo has a swimming pool and is located near Holland Village and the National University of Singapore.

'We also get a fairly big unit, with a bedroom, a kitchen and a small living room. But I feel rather trapped sometimes as there is no window, and it's inconvenient having to leave my unit to go to the toilet, which we share with the other tenants,' said Mrs Eddison, who lives there with her husband.

At Moonstone Apartments in Bendemeer, a 40-year-old IT professional from the Philippines who rents a subdivided unit there said he liked the quiet environment, which he said he would not find in an HDB estate.

Property agent A.L. Tay, 41, noted: 'If you clamp down on these places, where are these people going to go?'

However, URA said there was enough accommodation to go around, including affordable rental homes. 'There are currently about 240,000 private residential units in the market for owner occupation or for rental.

'As rentals of private properties have been moderating since peaking in the second quarter of 2008, a wider range of private housing has become more affordable, meeting the different budget needs of foreign residents.'

But where there is demand, there will be supply, it seems. Dennis Wee Group's Mr Leow estimated that a 2,000 sq ft apartment in Katong or Chinatown could rake in $3,000 if rented out whole, but could fetch $5,000 altogether if broken up into five subdivisions asking $1,000 each.

'Of course, if you have more rooms, you get more money,' said one landlord, who wanted to remain anonymous.

No comments: