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Make money from subletting HDB flat.

Wednesday, August 13, 2014

I have always believed that HDB flats should be for Singaporeans who need them. HDB flats are subsidised public housing, after all. If we do not need subsidised public housing to stay in, don't be a dog in a manger. What do I mean by this?

Well, I have heard quite a few accounts of how some people buy HDB flats only to rent them out without ever staying in them. The rental yield can be as high as 10% per annum! Really, I am not kidding. This is an amazing yield. Imagine that in 10 years, that flat is virtually free. Then, imagine a high yielding asset for passive income for the next 89 years. From subsidised public housing?Something sounds very wrong, doesn't it?

So, do I think that HDB should compulsorily acquire such flats from errant owners? Yes. Obviously, they do not need the flats. Why shouldn't they be evicted?

Of course, "eviction" is probably not the right word to use. The flat owners weren't even staying in the flat. How do we evict phantom occupiers?

Then, there is the matter of owners renting out a room or two in their HDB flats, flouting some guidelines on short term rentals and possibly disturbing the peace in the process. What about those people? Where would they stay upon being evicted?

Well, apparently, HDB would arrange alternative accommodation in the form of rental flats. So, these people would not be homeless, contrary to some popular belief. Pretty decent of HDB.

For those of us who care enough to listen, there is something we should remember:

Even as we think to improve our quality of life, we should not compromise someone else's.

For those who are in doubt, this is from HDB's website:

HDB allows flat owners to sublet their whole flats after they have fulfilled the Minimum Occupation Period (MOP)... Flat owners who wish to sublet their whole flats after meeting the MOP must obtain written approval from HDB before they do so. While the approval of HDB is not required for the subletting of rooms, flat owners must register the subletting with HDB within 7 days of doing so.

Subletting of the entire flat without approval from HDB is an infringement of the lease. Those who commit the infringement can have their flat compulsorily acquired by HDB, or face a financial penalty.

There also have been cases of flat owners who try to circumvent HDB’s rules by locking up one room and subletting the rest of the flat without physically staying in the flat. Such cases will be treated as unauthorized subletting of flats if home owners did not meet the minimum occupation period and did not seek HDB's approval to sublet their flats.

HDB takes a serious view of unauthorized subletting and cautions home-owners against allowing moneylenders to use their flats for illegal activities. Flat owners are also reminded to seek HDB’s approval if they intend to sublet their flats. They must also register their subtenants if they sublet rooms.

Source: HDB

There will be people who would rant about such rules being unfair. Why can't they decide what they want to do with their HDB flats?
Hey, a reminder, these flats are subsidised public housing. They are subsidised by the State. The State is able to subsidise these flats partly because of taxes which are collected from the people.
When we buy subsidised housing which is made possible because of public funds, we have to think of the collective good. Now, that is being fair.

Related post:


Singapore Man of Leisure said...


Hear the lion roar!


If you need to borrow my maggi-mee pot, I'll be glad to lend you.

Quick! Dodge!

AK71 said...


Helmet not enough. Need a shield too. -.-"

I might need to borrow your mee goreng wok as well. ;p

Steven Yap said...

Everyone's definition of "fair" is very different. Some want it to be more "fair" for them...

Best Regards,

coconut said...

ak, let me know if you need any security/body guard!

coconut said...

smol will be the first to throw his maggi mee pot at you, throw not lend! so don't say yes!

AK71 said...

Hi Steven,

You mean it has to be fairer than fair for some people? So desu ne.

My apologies. I am so slow. -.-"

AK71 said...

Hi coconut,

You volunteering to mobilise your gang? I didn't know you were a pai kia tao. ;p

coconut said...

hello, ligitamate security service, not gangster la haha..

one of my relatives is running one.

AK71 said...

Hi coconut,

Aiyoh, that one sounds expensive liao. Cannot just buy them some beer and cigarettes as payment in kind. -.-"

coconut said...

back to the point, there are many HDB owner rent or sublet their flat in s'pore, HDB is closing one eye on it, only less than 20% (aga aga only) register with the HDB. many are their livelihood!

AK, i suggest you delete the post?!

AK71 said...

Hi coconut,

Since you are not a pai kia tao, I am not scared of you liao. I shall not give in to public pressure!

SMOL says, "Hear the lion roar!"

I learn from the best! ;p

coconut said...

haha, smol is the lion! i'm trying to "protect" you la!

ok, i wash my hand haha...

Singapore Man of Leisure said...


You go on roaring!

coconut is a teddy bear. Body full of ang kong; but heart like marsh mellow. He is sweeter than xiao tian tian.

I'll harmonise with your roar.

Meow, meow.

pf said...

Very difficult to say fair or not fair. Those ppl who bought hdb also pay taxes. GST at least.

Of coz I'm not saying ppl should flout hdb rules. If we want to buy hdb and be in the game, we should play by the rules.

But many ppl think owning a hdb flat is their birth right. Which i also partly agree as there really isn't much benefit to be a Singaporean citizen.

As the hdb resale prices are going down, i have 2 PR single friends who are changing their citizenship now to qualify for 35 yr old singles scheme for buying hdb flat.

AK71 said...

Hi pf,

If we were to buy the argument that being allowed to buy a HDB flat is a Singaporean's birthright, then, I would have plenty to complain about! -.-"

Of course, if we were to bring the argument a step further to say that buying a BTO HDB flat of any size is a Singaporean's birthright, then, less marginalised Singaporeans like you and SMOL would also have something to complain about. ;p

Anyway, like you said, if we want to play the game, we have to obey the rules. ;)

Julian Chan said...

Hi AK,
To me, HDB flats are for stay or to get rental returns are fine. As long as ppl abide by the rules and get approval from HDB to do so.
If ppl can earn money from their HDB legally, why not? Rental is a good source of income to supplement our CPF. So what if the yield is high. Note that, not every Singaporean is "smart" enough to own both a HDB and a private. Most ppl will sell their HDB and upgrade.
For ppl who want to flout the rules, good luck to them when they are caught. Such ppl should not complain about HDB repossessing their flats and such, when that happens.
The issue of not having enough HDB is quite real. But such demand and supply issue can be resolved by our Govt. Not easy, but it is do-able (amid some "complains"). At the end of the day, every thing will work out.
The fear of ppl being able to hog their HDB flat is true and untrue. Once the occupier of the flat passes away, the flat will need to be sold by the Will Administrator. There can no way a Singaporean can own more than one flat. So, eventually all public housing will be "Recycled" into our system. The issue of having not enough HDB is really no big deal. Oversupply/Undersupply of HDB will just allow prices to soften or strengthen, no big deal too. Such things happen. So, like any property, ppl need to plan their strategy on when to enter. HDB, private housing are no different.
AS long as HDB remains affordable and are not "Slum public housings". I see no issue in allow ppl to earn legitimate rental income from their HDB. If ppl is able to retire comfortably, why should the govt restrict this?
I am in support of HDB's current rules....

AK71 said...

Hi Julian,

Yup. I do not have any problem with people making money legitimately from their HDB flats too. I am all for working towards a secure financial future legally.

The problem I have is with people who never have any intention of occupying their flats and their primary and sole intention is to use their flats as an investment vehicle and who have no qualms breaking the rules in doing so. Many who are attracted to the high rental yield have done so. That is why I made mention of the high yield.

Do we want these "smart" people who really don't need these flats "occupying" them and driving up the prices?

I think not simply because HDB flats are subsidised public housing and they should serve this purpose and not serve unscrupulous, ok, "smart" people to let them profit at the expense of others with a genuine housing need.

Julian Chan said...

Hi AK,
For those ppl who did not apply to HDB to sublet rooms or entire flat, I am in agreement with your stance. Such ppl should not profit in such a manner.
HDB is already looking out for such HDB owners. However, it is impossible for HDB to "police" such activities. Like our "boys in blue", HDB will need help from neighbours to report such illegal renting out of HDB to their neighbours.
Do take note, there are also many legal renting out of HDB due to various reasons (eg. overseas, looking after aged parents, etc... I believe the current HDB rules are sufficient. The challenge is to "police" the illegal rentals.

AK71 said...

Hi Julian,

I am in agreement with you and that is what my blog post is trying to say too although not in the same words or the same way.

It seems that some might have misconstrued my blog's message and I said the following to a reader on my FB wall:

"Haha... Try reading my blog post again. Slower, this time. Don't speed read."


Julian Chan said...

I misunderstand too. becos your blog's "language" is forceful on the HDB rental. You didn't communicate effectively that the problem is with ppl who rent out their HDB without going through proper channels (HDB approvals). Thus, I was quite surprise initially. Becos, you always like ppl to know how to generate high yielding passive income. Why not for this instance...
Thanks for your clarification.
So, I guess AK also need to communicate better the next time. Not easy to be able to communicate effectively every time. If our govt can't communicate effectively 100% of the time, one must allow us (mere "mortals")some leeway too....

AK71 said...

Hi Julian,

Actually, the blog's message is not in question. It really depends on which part of the blog post readers wish to focus on. ;)

SMOL has this amazing ability to focus on the frills in my blog posts rather than the core messages, for example. LOL.

Having said this, I will try to go easy on the ingredient called mischief in future. No promises though. Read at your own risk. ;p

Actually, I believe what coconut said about how the vast majority of HDB owners who sublet their flats or rooms are not following the rules and my emphasis in the blog post in bold says:

"Even as we think to improve our quality of life, we should not compromise someone else's."

And, of course, the concluding paragraph:

"When we buy subsidised housing which is made possible because of public funds, we have to think of the collective good. Now, that is being fair."

Anyway, I am glad that I am an anonymous blogger. Otherwise, I might really have to ask coconut for help in arranging for bodyguards. -.-"

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