New subletting quota likely to affect Simei, Yishun, Bt Merah first

The new subletting quota for foreigners is likely to hit estates such as Simei, Yishun and Bukit Merah earlier than other areas.

This is because a larger non-citizen crowd is employed in offices and other places of work located in these estates, according to analysts.

The Housing and Development Board (HDB) announced the quota on subletting of whole flats to non-citizen subtenants some two weeks ago.

The quota is set at 8 per cent per neighbourhood and at 11 per cent per block.

From January 16, flat owners are not allowed to sublet their whole flats to foreigners, other than Malaysians.

Those who are currently subletting their flats may continue to do so until the contract expires or is terminated.

HDB said some towns are already seeing more foreigners renting whole units. These include the central area, Clementi, Jurong West, Queenstown and Sengkang.

Property analysts Channel NewsAsia spoke with expect more areas to hit the quota, such as Changi, Simei, Tampines, Kallang, Bukit Merah, Yishun, Buona Vista and Toa Payoh. These areas are where workplaces of foreigners are typically located.

Eugene Lim, key executive officer at ERA Realty Network, said: “Near employment centres, near hospitals, near centres of learning — estates in these locations will probably hit the quota earlier than other towns.”

Two weeks after the new rule was implemented, analysts said landlords are still coming to terms with it.

Chris Koh, director of property consultancy Chris International, explained: “For areas which have hit the quota, the pool of tenants is smaller and therefore landlords have to be more realistic in their prices. But for others, they will think that they are not affected yet and can still (dictate) the rent they want.”

HDB said with the quota, it hopes to prevent the formation of foreigner enclaves in estates and maintain the Singaporean character of the heartlands.

But analysts said as rental incomes fall, some flat owners may try to circumvent the rules.

Colin Tan, director and head of research and consultancy at Suntec Real Estate Consultants, said: “They may get a Malaysian to rent it, and others (foreigners) may then come in to stay.

“Some landlords may take the chance and say that they rent only two rooms when actually they are renting all three rooms. So to make sure that this policy is effective, there should be spot checks.”

Currently, flat owners are allowed to sublet only two bedrooms per flat.

Mr Koh added: “I am also concerned that as more private properties achieve their TOPs, many of these properties are bought by HDB upgraders.

“So when they start collecting their keys to the new condos in the next two years, majority would prefer to rent their flat, and move into the condos. And that is when the supply issue kicks in — we end up with more flats for rent, and that would have definitely have an impact on prices.”

Analysts said the authorities will be closely monitoring the market reaction and may tweak the quota accordingly.

Source : Channel NewsAsia – 3 Feb 2014

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