Short-term rental: It's in the phrasing of contracts

SOME accommodation providers have been using units in private condominiums to offer short-term stays here, and though this is prohibited under current rules for residential properties, they appear to have worked their way around this by clever wording of the tenancy agreements.

Standard contracts typically state a minimum lease of six months for documentation purposes, but add a "diplomatic clause" that provides for early termination of the lease without penalty. This way, these providers of accommodation may offer short-term stays of a matter of weeks - without technically flouting the law.

Such tenancy agreements seen by The Business Times included those issued by Uncharted Homes on behalf of BS Shenton Pte Ltd, and LMB Housing Services.

BS Shenton is controlled by Raymond Ng Ah Hua, executive chairman and controlling shareholder of Singapore-listed Enviro-Hub Holdings Ltd, through two companies, namely BS Capital and Shenton Capital, based on checks through Handshakes and Acra. He is the sole shareholder of boutique developer BS Capital, while he and his spouse Ng Sok Eng are shareholders of Shenton Capital.

Two condominium projects developed by companies he owns - Lumiere and Avant - are available for tenancy under Uncharted Homes.

In a tenancy agreement issued recently by Uncharted Homes on behalf of BS Shenton, the rental period was six months, but there was an "early termination date" seven days from the arrival date. "Reservation may be terminated without penalty beyond this date," the agreement read.

LMB Housing Services offers a minimum lease of six months in the contract without indicating the last date of stay. In such open-ended contracts, the last date of stay is based on the tenant's notice of termination of the lease, handed in 30 days before the departure date. Since the tenant can choose to submit a termination letter to LMB without penalty, the minimum stay in apartments managed by LMB can, in effect, be just a month.

Though these tenancy agreements seem to be keeping with the letter of the law prima facie, the Urban Redevelopment Authority (URA) clarified with The Business Times that there is a breach as long as residential units are rented out for under six months.

A URA spokeswoman told BT: "The URA does not regulate specific tenancy agreements with regard to private residential properties. We also do not simply rely on the tenancy duration stated on such agreements in determining whether the minimum-stay requirement of six months has been breached."

Enforcement though, is another matter.

Similar to the HDB rules on subletting, the URA's guideline says that renting out a private residential unit or individual rooms is allowed only for long-term stays of six months or more. The rationale for this - to safeguard the living environment of residents, and ensure safety and privacy for neighbours. A review of this restriction is underway, but the existing guideline remains applicable for the time being.

Even before local listings of residential units for short-term stay became rampant on Airbnb and HomeAway, some accommodation-service providers had long been in business in Singapore, their property listings spanning the island, including suburban areas.

Besides offering regular house-keeping services, some provide complimentary airport transfers.

BS Shenton was registered in 2005 and LMB in 2006; International Service Apartments (ISA) has been around since 1992, says its website. An ISA invoice seen by BT for a stay in a residential property for less than six months was issued under Fontainbleau (ISA) Pte Ltd, a non-GST registered firm incorporated in 2008.

Uncharted Homes' website does not explicitly mention property names, but for two of the apartments it manages, artists' impressions of the Lakeville in Jurong and The Palette in Pasir Ris are used.

However, Lakeville is due to receive its temporary occupation permit only in 2018; The Palette has been fully sold and is now being handed over to buyers.

Another accommodation-service provider Atas Residence, formerly known as OSPC (Overseas Students Placement Centre) Pte Ltd, manages short-term rentals for entire developments - Oxley Thanksgiving Residence, St Thomas Lodge and Devonshire Apartments near Somerset, which the URA says do not have the planning permission to be run as serviced apartments.

The URA said it received 375 complaints about short-term stays in 2014, and 377 in 2015, both figures up from the 231 complaints in 2013.

Private home offenders can be fined up to S$200,000 and jailed for up to a year.

The URA spokeswoman said: "Investigation to ascertain the actual usage of such properties is necessary and this can be a protracted process, particularly as it involves a number of different parties such as property owners, intermediaries and tenants/occupants.

"We will take enforcement action against all culpable parties, including the property owners, where unauthorised use of the premises has been determined."

Regulators globally are also grappling with the explosion in the home-sharing economy and examining how it fits into their existing regulations. In Japan, current regulations on short-term rentals are strict but the country is reviewing these rules.

Australia's local councils oversee short-term accommodation rentals such as bed-and-breakfasts. Such rentals are subject to strict regulations and include rules such as separate floors and lifts for tourist accommodation in residential buildings. Some local councils in Australia have taken tough action against offenders of local building and planning laws, with two councils in Perth considering banning Airbnb rentals.

In New York, it is currently illegal to rent out apartments in buildings with three or more independent units for under 30 days.

lynkhoo@sph.com.sg

This article was first published on April 9, 2016.
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