Rental scams on the rise here

Ruses are now rife; foreign nationals the main targets

WHEN factory worker Zhang Wenfang and his five friends found a five-room Housing & Development Board (HDB) flat in Jurong West that they liked, they paid the property agent $9,300 – six months’ rent.

But, when they tried to move into the flat on July 1, they found it locked.

“We had trouble contacting our agent; he didn’t return our calls. I never expected such things to happen; I thought the laws were very strict in Singapore,” said Mr Zhang.

A few weeks later, they learned that a bank had repossessed the flat.

Rental scams such as this are on the rise, and foreigners are the prime victims. Last year, the Consumers Association of Singapore (Case) received 177 complaints – 54 more than in 2006. So far this year, the watchdog has received 194 reports. It is always a variation of the same story: A prospective tenant pays an agent rent and deposit, but on the day he or she wants to move in, the owner had given the tenancy to someone else. Or alternatively, a few people turn up, each claiming tenancy, but the owner says the flat was never for rent in the first place. Sometimes, both the agent and the owner are in on the ruse.

Property agents say that with the HDB’s relaxation of its sub-letting rules last year and more foreigners in Singapore, the opportunists are striking.

Said Mr Mohamed Ismail, chief executive of property agency Propnex: “The demand for affordable housing exceeds supply and this has driven up rentals for HDB flats. Some unscrupulous people are taking advantage of the market to exploit the gullible.”

Foreign nationals make for easier targets because they are unfamiliar with Singapore’s housing regulations and have to compete with so many others for a tenancy. And even if they do their due diligence, in the case of repossessed flats, the HDB does not provide information about the status of these flats to potential tenants.

Property agents and lawyers told Today that many of these rental ruses involve owners in financial difficulties.

“Foreclosure, loan sharks – these force ordinary people to take extreme measures,” said Mr Gary Lee of Alister and Lee Properties.

According to Mr Lee, what sometimes happens is that the property agent lends a cash-strapped owner money and charges a potential tenant six months’ or a year’s worth of rent, with a “discount” thrown in, that more than covers his loan to the owner. So, the agent makes a profit and the owner can pay off his debt. Tenancies often get terminated early.

These practices of a few rogue agents are making other property agents see red.

“They’re spoiling our market and giving us a bad name. It’s not worth the hassle of doing such deals because not only is it criminal, I have to return the commission; I have to accompany the tenants to make a police report,” said property agent Tony Phua.

Yet, there is often scant recourse for tenants. Lawyers told Today there must be sufficient evidence to prove cheating has taken place in order to file a criminal claim. Otherwise, it will be treated as a civil dispute or a breach of contract.

According to the HDB, the aggrieved party can claim against the owner in the courts or the Small Claims Tribunal, depending on the quantum and if they can engage a lawyer.

Most foreign nationals take the more affordable option: The Small Claims Tribunal. But property agents and lawyers say the tribunal’s edicts lack teeth.

“It may not be effective in getting the redress they want. The tribunal may order the owner to pay the aggrieved party, but it can’t do anything if the owner is made bankrupt or if the owner absconds,” said lawyer Mark Goh, who runs his own law firm.

It all leaves a sour taste in the mouth – and the loss of hard-earned savings – for some foreigners who have come to Singapore for the first time. Still, these scams are the exception. As of August, 21,000 flats had been rented out by Singaporeans, a near 60-per-cent spike from the 13,200 units early last year.

“The repercussions would be far wider if, say, a CEO of a huge company or a high-net-worth individual was ripped off, but the people getting cheated are your little guys or your factory workers,” said lawyer Edmond Pereira.

What can be done?

So what more can be done to prevent foreigners from being bilked?

There have been cases where the victims did their homework – checked documents of ownership of the flat, talked with existing tenants as to when their lease would expire and other claims made by the agent and the landlord, for example – and were still cheated.

The Institute of Estate Agents is all for greater regulation of the industry, although it stresses that most agents are responsible.

Its council president Jeffhrey Foo said: “In Singapore, only real estate agencies are licensed. In turn, these licensed agencies can have as many agents working under their umbrella … Most importantly, there is no entrance barrier. Anyone can be an agent.

“When an agent does something wrong or is terminated by company ‘A’, there’s no stopping him from joining licensed agency ‘B’. This is the area where accountability and responsibility is lacking.”

Others suggest a landlord registry – making public the names and addresses of landlords for people to contact the owner. Case executive director Seah Seng Choon does not think, however, that a registry alone would help resolve the rental woes of foreigners in Singapore.

Source : Today – 13 Oct 2008

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