The Republic will cap the amount of time that permanent residents can sublet their Housing and Development Board flats, according to new rules aimed at deterring PRs from buying flats for investment or rental yield.
Analysts say the move could lead to a slight, short- term spike in HDB rental rates, although the overall impact should be muted.
Currently, Singapore citizen and PR flat owners may sublet their flats after meeting the minimum occupancy period, which is five years for most cases and three years for resale flats purchased without the CPF Housing Grant.
The approval to sublet is granted for up to three years per application, and owners can seek to renew the approval at expiry without limit.
Under the new rules, which take immediate effect, PR owners will be allowed to sublet the flats after a minimum occupancy for just one year, instead of three.
After that year, an extension will be granted only if there are extenuating reasons. The total period of subletting during the flat owner's entire duration of ownership is capped at five years. There will be no change in policy for citizens.
"The revised rule is to reinforce the policy intent of providing HDB flats as homes to SPRs, and to deter those who are buying the flats for rental yield or investment," HDB said in a statement.
"While HDB allows SPR owners who have met the (minimum occupancy period) to sublet their flat, the subletting should be on a temporary basis. If the SPR families no longer need the flats for their own occupation, they should sell the flat instead of subletting them."
SLP International Property Consultancy head of research Nicholas Mak said that there are about 5,000 flats owned by PRs that have been approved for subletting, making up about 5 per cent of the HDB sublet market.
While "there could be an increase in the supply of HDB flats" as some PR owners are induced to sell, "I think the impact will be small", he said.
ERA key executive officer Eugene Lim noted that the number of subletting approvals has risen rapidly by almost 89 per cent, or almost 7 per cent per quarter, from 2009 to 2012.
"The rapid increase in subletting approvals means less flats are put on the resale market and this could have contributed to the continued increase in HDB resale prices despite the government's efforts of making more BTO (build-to-order) flats available," he said.
The supply of flats available for subletting might diminish in the coming quarters, which would drive up HDB rents in the short term.
"However, as policies on the employment of foreign manpower are also being tightened, the resulting reduction in demand for renting HDB flats may just prevent HDB rents from a runaway increase," Mr Lim said, adding that the rise in HDB rents might just be a temporary phenomenon over the short term.