In this chapter of Eugene Koh’s Property Guide, I want to share tips on how to rent out your HDB flat in Singapore. Many HDB owners in Singapore are turning to rental income for investment and financial relief to cope with the rising cost of living. Retirees with adult children who have their own house may choose to live with them and rent out their flats for extra income.
If you wish to rent out your HDB flat, here are the steps you need to take:
1. Check your eligibility
Have you met your 5 years minimum occupation period (MOP)?
You need to have stayed in your flat for the Minimum Occupancy Period (MOP) of 5 years before you can rent it out.
What is your citizenship?
Both Singapore Citizens and Singapore PR HDB Owners can rent out their spare bedrooms. But, only Singapore Citizens are allowed to rent out their whole flat. (Sorry, PRs!)
Do you know what is your HDB model type and no. of occupants allowed?
To rent out your flat your, your HDB needs to be 3-rooms or larger. If you are renting your whole flat, only a maximum of 6 occupants is allowed to reside in the flat.
Once you are sure, get a printed confirmation of your eligibility to rent out your flat or bedroom from the MyHDB page. Then, log in with your SingPass and go to “My Flat > purchased Flat – Renting out Flat” to print out this page or take a screenshot if you want to save the trees:
2. Set your asking price
Do a quick search on what are the asking prices for your HDB estate. You may want to take a look at property portals such as property guru, carousell or refer to past HDB rental transaction median prices or market rental statistics on the HDB website.
Here are the main factors that determine the rental price of your home:
- Location and convenience
- Size of the unit
- Furniture provided or not
- Aircon or fan only
- Home appliances provided or not
💡 Pro tip: Most tenants looking for HDB flats are extremely price-sensitive. They will not mind having a simple apartment so long as it is close to amenities. However, if your flat is far away from amenities, you may want to consider sprucing up your flat to entice tenants who prefer nicer-looking homes
Alternatively, at this point, you may simply consult a property agent to handle all aspects of the rental procedures. hint hint
3. Advertise your flat
Once you have settled at an asking price, place adverts on across different platforms such as Newspaper, Facebook, Carousell, Property portals etc.
💡 Pro tip: Newspaper ads are no longer as effective in today’s digital day and age. Use online portals for low to zero-cost. Make sure to use bright and clear photos that depict how the house looks like.
4. Arrange viewings for prospective tenants
Alas, you have decided to rent out on your own. That’s great! I shed a single tear for losing yet another landlord to the increasing DIY movement. Next is to arrange a viewing with your potential tenant, but before we get to that, here are some essential questions you will need to ask your tenant to fast track the transaction.
- How many tenants
- Nationality/ Work pass type
- Lease Term
- Targeted Move-in date
You will most probably receive Calls/SMS/Whatsapp/Messenger/Wechat/ letter carrier birds asking you about the availability of your flat. Respond with a brief description of your flat such as the level, number of bedrooms and whether it is furnished or not. Here is an example of how I reply to prospective tenants,
You do not need to go into full-length details, just go straight to the point as you may have multiple parties be interested in renting your flat. Normally, it will take about an average of 2-4 weeks for you to find your tenant depending on how particular you are about tenant profile and the demand you garner.
💡 Pro tip: If times are bad, consider lowering your asking price as it is the main push factor for most tenants. It makes more financial sense to rent out earlier rather than wait endlessly for the perfect tenant with the budget that you want. They may go and rent your neighbour’s house instead, after comparing the prices.
5. Check tenant’s eligibility and verify documents
After viewing, you and the prospective tenant have come to a mutual agreement on the rent price and terms. The next step is to verify the tenant’s eligibility by checking their identification documents.
Under the Singapore law, HDB owners can only rent out their flats to:
- Singapore Citizens
- Singapore Permanent Residents
Non-citizens legally residing in Singapore who are holders of Employment Passes (EP), S Passes (SP), Work Permits (WP), Student Passes, Dependant Passes, or Long-Term Social Visit Passes. These passes will need to have a validity period of at least 6 months as at the date of your rental application
Do note that WP holders from the construction, manufacturing, marine, and process sectors must be Malaysians only. Tourists are also not allowed as tenants of HDB flats.
💡 Pro tip: Collect a copy of their work permit or passes and check these documents with MOM inquiry. Double confirm plus chop that your tenant is legit.
If you are a new landlord. I will suggest downloading the SGworkpass app to quickly check work passes or visit passes simply by scanning the QR code on the card.
Step 6: Use a Letter of Intent to collect Good Faith Deposit
Verbal agreements are not indicative of a sure thing even if you pinky promise. The best way to secure an offer by way of signing a letter of intent (LOI)
An LOI is basically a formal agreement written by the tenant to the landlord, stating important terms and conditions for the landlord’s consideration such as:
- Rental price
- Security deposit amount
- Diplomatic Clauses if any
- Additional requests by the tenant
You may use this LOI template to fill in all the details and upon signing, the tenant will have to put down a good faith deposit (usually 1-month rental) to make it official.
💡 Pro tip: Only delist your property after LOI is signed and deposit is well-received. In the event of the tenant decides not to proceed, you may still look for other interested tenants.
7. Apply for approval from HDB
HDB requires landlords to submit an application for renting out your HDB. If you are doing this on behalf of the flat owner, do take note that you will require his/her Singpass to log in.
Pay the $20 application fee via HDB portal and remember to save the acknowledgement letter which looks something like this,
8. Sign the Tenancy Agreement
The next step is to sign the legal agreement that binds both parties. The landlord will have to prepare a lengthy tenancy agreement which will be more detailed than the LOI. You may wish to use a standard template HDB flat tenancy agreement for this. I seriously recommend using this template as it is prepared by a bunch of industry experts that know their stuff.
The Tenancy Agreement (TA) is a must include details such as,
- Landlord’s particulars
- Your Full Name
- NRIC/Passport Number
- Current Address
- Tenant’s particulars
- Tenant’s full name
- Tenant’s NRIC/passport number
- Tenant’s current address
- Registered occupier name(s)
- Registered occupier NRIC/passport number(s)
- Lease details
- Address of property for rental
- Date of Lease Commencement
- Duration of Rental
- Monthly rent amount and its mode of payment
- Security deposit amount
- Inventory list and defects
- Who pays for the utilities and phone bills
- Who pays for repairs and ceiling amount
- Who maintains the air-conditioner and minor repairs
- Other house rules to be observed
- When the landlord can start property viewings as the lease is approaching its end
- An agreement that the landlord continues to pay property tax and insurance
- What is the interest payable for late rental payments
- Can the tenant renew before the lease is up?
Also, you may want to include the following clauses:
1. Diplomatic Clause
Is your tenant an expat?
You could throw in a clause that allows them to terminate the lease after 12 months by giving you 2 month of notice. This applies to a situation where they are let go from their job in Singapore or get transferred out of the country.
If this happens, ask to see proof of employment termination or transfer from your tenant.
Most landlords will only include this clause for a lease longer than a year.
2. En-bloc Clause
When your property is nearing the end of its 99-year lease, an en-bloc may take place.
Include a clause to clarify that your tenant will need to end his lease prematurely uncompensated should this happen.
💡 Pro tip: If your tenant has previously paid you a good faith deposit, you can turn this into a Security Deposit upon the signing of the Tenancy Agreement.
9. Stamping the Tenancy Agreement
Done with the TA? Next, you have to get it stamped. In most cases, the tenant has to bear the stamping cost but this can be negotiated between both parties. The TA is a legal binding contract which abides laws set by the Republic of Singapore therefore, it is crucial that stamp fees are paid.
This can be paid by logging on to the IRAS website or taking the Tenancy Agreement to any Service Bureau.
10. Tenant inspection and handover
Finally, the tenant is about to move in but before that, do a thorough mutual inspection of the unit. You should prepare an inventory list detailing all the furnishings, fittings and appliances and their working conditions to facilitate this process. Remember to take many photos and videos before handing over to the tenant as it will be useful to settle any disputes at the end of the lease.
💡 Pro tip: You can print the photos on A4 paper and attach it to the inventory list. It can be used as a basis for comparison to ensure all your furniture and appliances are still in the same condition in appearance at the end of the lease.
Renting out your HDB Flat
If you have successfully rent out your HDB flat with proper paperwork and due diligence, congratulations!
However, if you still have unanswered questions or is still looking for suitable tenants, feel free to contact us. Our team at Lovelyhomes is committed to assisting homeowners with all their real estate needs, we are dedicated to providing you with the highest level of service as we value you, our lovely clients!
Eugene Koh +65 90405508