HDB and URA introduce temporary eased occupancy caps for larger HDB flats and private homes to ease rental pressure

SINGAPORE:  In response to the uptick in rental demand, the Housing and Development Board (HDB) and the Urban Redevelopment Authority (URA) have temporarily relaxed the occupancy cap for larger HDB flats and private residential properties.

Starting from Jan 22, 2024, until Dec 31, 2026, the occupancy cap for larger public flats and private homes will be raised to allow up to eight unrelated individuals to reside together.

This marks an increase from the current limit of six unrelated individuals, as defined by those not belonging to the same family unit.

This decision was announced through a joint statement issued by HDB and URA on Wednesday (20 Dec).

“The sharp increase in residential rents from 2022 reflected exceptional tightness in the market due to COVID-19 disruptions, coupled with a robust rental demand,” the agencies said.

The revised occupancy cap will encompass HDB flats that are four-room or larger, including the living quarters of HDB commercial properties that match or exceed the size of a four-room flat.

Additionally, this relaxation will extend to larger private residential properties measuring at least 90 sq m (969 sq ft).

MND Minister: the relaxed occupancy cap beyond 2026 will undergo a thorough review

Residential property owners currently hosting up to six unrelated individuals will be required to seek approval from HDB or URA, depending on whether it’s an HDB flat or a private residential property respectively, to accommodate additional occupants.

The term ‘occupancy’ encompasses both property owners and occupants, including tenants.

Minister for National Development, Desmond Lee, highlighted in a Facebook post that to counter the surge in rental demand due to COVID-19-related construction delays, HDB has significantly increased housing supply.

Nearly 100,000 homes are slated for completion by 2025. Lee emphasized that this initiative aims to enable Singaporeans currently renting homes, awaiting the completion of their new residences, to expedite the transition, freeing up rental supply.

Mr Lee emphasized that the recently announced measure seeks to accommodate more occupants while minimizing disruptions to the surrounding community, thus ensuring a conducive living environment for everyone.

He reassured the public that any extension of the relaxed occupancy cap beyond 2026 will undergo a thorough review, considering the balance between rental demand and supply in the open market.

Post-implementation of the increased occupancy cap, regulatory bodies will maintain vigilance and take stringent action against any breaches or severe disturbances, including revoking rental approval for homeowners.

Measures to address supply challenges

HDB and URA highlighted the government’s efforts in augmenting the supply of both public and private housing. They emphasized the collaborative efforts with the construction industry to tackle challenges on the supply side.

This year alone, close to 40,000 homes are anticipated to be completed across the public and private residential sectors.

“As these units come onstream, Singaporeans who are currently renting while awaiting the completion of their new homes will vacate their rental units,” they said.

“This will alleviate the tightness in the rental market by increasing the available supply of units for rental.”

Furthermore, HDB has substantially increased the availability of flats under the Parenthood Provisional Housing Scheme (PPHS), from 800 units in 2021 to approximately 2,000 units presently.

“We will further double PPHS supply to 4,000 units by 2025,” the agencies said. “This will support eligible Singaporean families who need interim housing while awaiting the completion of their new flats.”

MND Minister earlier dismissed call to regulate market rental fees proposed by Workers’ Party MP

According to a market report released by online property portal PropertyGuru on 16 Nov, rental demand, measured by the volume of inquiries across all rental listings on its portal, decreased by 10.4% quarter on quarter in Q3.

Conversely, the overall rental supply, gauged by the number of listings on PropertyGuru’s platform, increased by 11.3% in the same period.

Despite this data, both residents and expatriates have been expressing growing concerns about the mounting affordability challenges within Singapore’s rental market.

The Business Times even described that 2023 would be “another year of pain for tenants” as higher property taxes and interest rates are likely to contribute to more increases in rents.

In March, Singaporeans were astonished when a five-room HDB flat in Ang Mo Kio set a rental rate record of S$6500, sparking a sensation among netizens.

Merely three months later, another breakthrough took place in Choa Chu Kang, surpassing the previous record by S$100. This achievement stands as a notable highlight of the year 2023.

The Choa Chu Kang flat’s remarkable rental value is not an isolated incident, as another executive unit at Block 110 Tampines Street 11 has come strikingly close to breaking records, achieving an impressive S$6,550 in monthly rent — a mere S$50 away from setting a new benchmark.

In a parliamentary session held in July, MND minister Desmond Lee dismissed the proposal by Workers’ Party Member of Parliament Jamus Lim to regulate market rental fees.

Minister Lee contended that the implementation of rent controls could inadvertently diminish the availability of rentals, potentially leading to an imbalance where rental housing demand surpasses supply, thus giving rise to challenges in allocation and equity.

According to Minister Lee, the rental rates for open market HDB rental flats and private residential properties in Singapore are determined through private agreements between flat owners and tenants.

He emphasized that international experience has demonstrated that while rent controls may temporarily moderate rental increases for some tenants, they are likely to distort the housing market.

“Rent controls may inadvertently reduce rental supply, and cause rental housing demand to exceed supply, which could lead to issues of allocation and equity.”

“This may also distort property prices, and disincentivise landlords from maintaining proper upkeep of their rental units.”

Nonetheless, Desmond Lee assured that the Singapore government remains open to considering various options and will continue to monitor the situation closely and adopt such measures as may be necessary.