Flats much sought after because of spillover demand from private homes market, but agents say rents are unlikely to rise much more
The rental market for Housing Board flats remains hot, with rents up in the first quarter as more home owners apply for permission to rent out whole flats.
Rents for some executive flats in Queenstown have gone as high as $2,900 a month, a price previously seen only with private apartments.
Property agents say that although prices are flattening out, rental demand for HDB flats remains strong, thanks partly to spillover demand from the private homes market, where rents surged dramatically last year.
More Western expatriates can be found renting HDB flats these days. However, demand for HDB flats still comes mainly from Malaysian, Chinese and Indian nationals working in Singapore, says Mr Eugene Lim, an assistant vice-president of ERA Realty Network.
'Although HDB rentals have gone up, HDB flats are still among the cheapest forms of rental housing for them,' he said.
'Demand will continue to rise mainly because of the continuous influx of foreign talent, especially with the upcoming casino and international events such as Formula One,' said Mr Steven Tan, the executive director of the residential division at OrangeTee.com.
Nevertheless, rentals are unlikely to surge from current levels. 'We are starting to see some resistance,' said Mr Tan.
In Toa Payoh, which is close to town, first-quarter median rents ranged from $1,400 for a three-room flat to $1,780 for a four-roomer and $2,150 for a five-roomer, going by HDB data.
How much an HDB flat can fetch in rent depends on its location. Rents for some executive flats in Queenstown have gone as high as $2,900 a month, a price previously seen only with private apartments. -- ST FILE PHOTOA little farther up north, first-quarter median rents in Ang Mo Kio started at a lower $1,300 for a three-room flat and moved up to $1,880 for a five-roomer.
While Tampines might be some distance from town, median rents for flats in the regional commercial hub ranged from $1,480 for a three-room flat to $1,950 for a five-roomer.
How much a flat can fetch depends on its location. Those next to MRT stations tend to command more, agents say.
Five-room flats in Choa Chu Kang fetched a median monthly rent of $1,480; those in Bukit Merah, $2,000.
Executive flats, some of which used to fetch monthly rents similar to those for five-room flats, now go for more, starting from $1,530 and going as high as $2,900.
'HDB rentals are quite high now. I think this is the limit,' says property agent Germaine Ng. 'I already saw resistance two months ago. Fewer tenants are coming to the market.'
Even if rents remain at current levels, HDB flats would make attractive investments, albeit only for those who are eligible to rent them out. Flat owners can rent out their entire unit after occupying it for three years. This minimum occupation period goes up to five years if they bought the flat with a subsidy or housing grant.
For instance, a five-room flat in Ang Mo Kio might be worth just $400,000 but it could fetch a monthly rent of $1,800, which would give a yield of 5.4 per cent.
'This is a very good yield considering that rental yields for private homes usually fall below 4 per cent,' said Mr Lim.
This explains why more and more people want to rent out entire flats. In the first three months of this year, 3,581 flat owners - most of them with three- or four-room flats - were given approval to rent out their flats.
Last year, 12,808 sub-letting approvals, of which about a third were for three-room flats, were given. In 2006, 8,544 approvals were given.
HDB flat owners can apply online for sub-letting approvals. Those who want to rent out just the rooms do not need HDB approval to do so, but they must continue to live in the flat and comply with other sub-letting conditions.
QUICK TIPS
How you can improve your rentals
# The flat should be in move-in condition, with a fully fitted kitchen, washing machine and television set. Air-conditioning will be a plus.
# Keep the flat simply decorated. Do give it a fresh coat of paint if it needs one.
# Flats with interiors that resemble a condominium's can fetch more. A three-room flat near Tanjong Pagar MRT station was rented out at $2,600 a month after the owner spent $40,000 to renovate it.
'When you walk into the flat, it feels like a condo,' says agent Germaine Ng.
Source: Agents
What you need to know as a landlord
# While you can rent your flat to several people, there is a limit you must observe.
HDB allows a maximum of four occupiers in one- and two-room flats, six in three-room flats and eight in four-room or bigger flats.
# Make sure your sub-tenants do not further sub-let the flat, which is not allowed.
# If you rent your flats to foreigners, make sure they entered Singapore lawfully and are remaining here lawfully. Otherwise, you might be guilty of harbouring immigration offenders.
Source: HDB
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