MND to cap HDB flats rented to foreigners

THE Ministry of National Development (MND) will impose a cap on the number of flats that can be sublet to foreigners in each Housing and Development Board block.

While the appropriate cap has yet to be decided, Minister of National Development Khaw Boon Wan said in his blog post, Preventing Foreigner Enclaves, yesterday that he was "mindful of the need to balance the impact on those who rely on subletting for additional income, especially the elderly".

Said an HDB spokeswoman: "We are finalising the details of the cap, which will exclude Malaysians, in view of their close cultural and historical similarities with Singaporeans. The cap will only be applicable to the subletting of whole flats. MND and HDB are targeting to finalise all the details soon. We will announce the details once they are ready for implementation."

The way the cap is ministered could be similar to the way quotas on the number of Singapore Permanent Residents (SPR) allowed to purchase resale flats are measured, said Eugene Lim, key executive officer at ERA Realty. For resale flats, the SPR quota is set at 5 per cent and 8 per cent at the neighbourhood and block levels respectively, and is applied in addition to the existing Ethnic Integration Policy limits.

"To the HDB owner who is subletting his unit, if the foreigner ratio is filled for his block or his neighbourhood, it simply means he can only sublet to locals. By having less tenants to choose from, you may end up with lower rentals," said Mr Lim.

Alternatively, the ratio could be calculated based on the owner's leasing history in terms of how frequently the flat owner has leased the flat to foreigners in the past, said Ong Kah Seng, director at R'ST Research.

Currently, more than 35,000 flats, representing less than 4 per cent of all HDB flats, are sublet to foreigners, excluding Malaysians. This figure refers to the subletting of the entire HDB flat, and not rooms. However, the proportion could go up to 9 per cent in some areas, or even 18 per cent in some blocks, Mr Khaw said on his blog yesterday.

There is no existing cap on the number of HDB flats sublet to foreign tenants.

With tighter caps, however, more foreigners might move to private residential properties, particularly older apartments which tend to have lower rents, suggested R'ST Research's Mr Ong.

"Also, the size of an old apartment's bedroom is usually larger, so it can cater to foreigners who still wish to co-share a bedroom to defray occupancy costs," said Mr Ong.

Mr Khaw had said earlier this year during a debate on his ministry's Budget that the government would implement a quota. This was in response to a call from West Coast GRC MP Foo Mee Har for a quota of 10 per cent to address her worry that foreign enclaves were sprouting.

"I agreed with MP Foo Mee Har that we need to maintain the Singaporean character of our heartlands. In principle, MND has agreed to impose such a cap. The question is at what level," said Mr Khaw.

Mohamed Ismail, chief executive of PropNex Realty, reckoned that 10 per cent was a good level, adding that he did not expect the cap to have any impact on the rental market.

"This will mainly even out the foreign enclaves in each estate," said Mr Ismail. "However, as there is a need to fulfil some of these criteria, rental of the flats may take a longer process."

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