Minimum lease of private homes halved to three months
The shortest possible time to rent someone’s private home has now been halved – from six months to only three.
But that does not mean good news for homeowners who wish to sign up with home-sharing platforms such as Airbnb and Roomorama. Short-term stays of less than three consecutive months, including those facilitated by these platforms, are still not allowed, the Urban Redevelopment Authority (URA) said on Friday.
The cut from the present minimum stay duration of six months, which was in place in 2009, applies to all private homes approved for residential use.
The move came as demand from those seeking accommodation for periods of between three and six months in recent years grows. They were made by people such as academics and students visiting local institutions of higher learning, and professionals on short work assignments.
The feedback from this group has been that they prefer private residential properties, considering their choice of locations, range in unit sizes, and financial affordability, over hotels and serviced apartments.
In its statement, URA said the revised minimum stay period will not only provide them with more options, but also give more rental opportunities for property owners.
During URA’s public consultation exercise on short-term stays in 2015, a majority of the respondents wanted a reduction in the minimum stay duration and URA had considered this feedback when deciding on the current change. The authority said it will monitor the situation closely and assess the need for a further review.
According to the latest data from the Singapore Tourism Board (STB), about 60 per cent of visitors stayed in hotels in 2015 while about 20 per cent stayed at the homes of friends or relatives. The rest stayed in other accommodation options such as hostels and serviced apartments.
About a million Singaporeans have used Airbnb abroad, while 260,000 tourists have been hosted here. The average Singaporean host rents out his space for an average of 41 nights a year, and earns S$5,100 a year from it.
A search on the Airbnb website on Friday found about 300 listings in Singapore.
Under a new law passed in February, officials have the right to force their way into private homes to check whether residents are renting them out illegally, but it has not stopped the practice.
The revision is welcomed in the real estate market as it allows greater flexibility in terms of lease arrangements by landlords and tenants. In the current sluggish rental market, landlords now have the option of renting out at shorter durations at higher rental as short-term lease usually commands a premium of 20 per cent in comparison to longer leases. However, most landlords still prefer a long-term lease – due to the security of rental income and convenience of not having to scout for new tenants frequently.
For home upgraders or downgraders, the revised minimum stay of three months is positive news as they can now opt for short-term accommodation while in the midst of renovating their new homes, instead of the previous requirement of six months.
General manager and chief experience officer of Royal Plaza on Scotts and 8 on Claymore Serviced Residences Patrick Fiat told The Business Times the change may not have a great impact on 8 on Claymore Serviced Residences.
“Our guests, both corporate, project and leisure, prefer an accommodation with access to additional facilities and services, including complimentary breakfast and housekeeping. A team of talents are also available to provide assistance in many ways, from arranging transportation to providing advice on where to shop, dine and explore,” he said.
Mr Fiat added that both his properties “offer peace of mind with 24-hour security and access to facilities such as a swimming pool, gym and award-winning buffet restaurant, Carousel”.
Norman Lim, country general manager for Singapore at The Ascott Limited said: “To stay ahead of the curve, Ascott has been studying industry trends and stands ready to harness opportunities from the sharing economy. Late last year, Ascott launched our newest brand, lyf, designed for and managed by millennials, to seize opportunities in the rising trend of co-living and co-working. Millennials already form a quarter of Ascott’s customers and this segment is poised to grow exponentially.”
Singapore-based serviced apartments MetroResidences welcomed the news.
“Previously, we had people staying at our properties between six months and a year, but more and more EP (employment pass) holders are coming in for one to three months. So these changes are really in our favour,” its spokesman said.
Launched in mid-2014, the startup does not own the apartments, but taps private property owners or large asset management companies who have idle properties up for lease, “offering up to a 40 per cent discount on branded providers such as Fraser and Ascott”, the spokesman said.
“We function like a platform for business travellers and Singapore homeowners. We also provide cleaning services should the homes get rented out,” she said.
MetroResidences has over 400 apartments in its portfolio and to date, more than 115,000 room rights have been booked by more than 800 corporate clients through the platform.
It feels that Singapore lags behind Japan and Hong Kong, where the minimum period of stay in a private home is a month.
MetroResidences, which has expanded to Tokyo, after raising US$2.8 million in series A funding from Japanese e-commerce titan Rakuten, said it is in open communications with URA and is hoping changes to the rental space will converge with that of the two East Asian cities in the near future.
Adapted from: The Business Times, 1 July 2017