How to avoid getting into trouble with the law when renting out your apartment

Facebook, the world’s most famous social media platform, creates zero content. Alibaba, the most profitable retailer, does not carry any inventory. Similarly, Airbnb is also part of this ongoing phenomenon – Airbnb, the world’s most renowned accommodation provider, owns no real assets. In this age of digitalization, profits lie in the interface.

This has resulted in a huge shift in the tourism industry; gone are the days where people visit local travel agents to plan for their holidays. In this digital age, we are our own travel agents. With breakthroughs in technology and high-speed internet, travellers can now book their own flight and accommodations online. With a rise in the number of accommodation options, lodging preferences have also shifted.

Though Airbnb has no physical properties, it has gained a lot of popularity since its inception over a decade ago. A survey found that more people who use Airbnb refuse to go back to hotels.

Property owners are also taking advantage of this P2P platform to make a quick buck from renting out their properties. While listing your property on Airbnb may be quick and easy in other parts of the world, leasing policies in Singapore are more stringent.

Before you eagerly list your property, read on to find out how you can avoid getting into trouble with the law and yet be able to capitalize on renting your property out on short-term leases.

Short-term rentals, a booming industry

A couple of years ago, the short-term rental industry in Singapore was just beginning to pick up. Industry players like Airbnb, Roomorama and travelmob saw positive responses from travellers and property owners alike.

While property owners are allowed to enjoy the benefits from democratizing of the marketplace by rental websites such as Airbnb, Singapore’s Housing Development Board (HDB) and the Jurong Town Council (JTC) has warned that it is unlawful to sublet properties for a period less than six months. The imposition of such a rule was to protect the well-being and peace of other residents as ‘transient occupiers’ may disturb and inconvenience them.

It is crucial to understand how you can run-in with the law so that you know how to avoid doing so. We have summed up the 3 ways your property listing on Airbnb can get you into trouble with the authorities here:

3 ways you can get into trouble with the law by listing your property on Airbnb

  1. Renting HDB flats to tourists

It is safe to say that people looking for accommodation options on Airbnb are usually tourists. Nevertheless, HDB flat owners are not permitted to rent out their flats to tourists. Flats can only be rented out to foreigners who possess passes such as Student Passes or Long-Term Social Visit Passes.

  1. Rental period too short

In Singapore, property rentals need to meet the minimum occupancy duration, depending on the type of property held.

For public housing, HDB flat owners are not authorized to rent out their flats for less than six months. Failure to comply will result in a fine or have their flats compulsorily acquired by the HDB.

On the other hand, as of 30th of June 2017, owners of private residential properties are not allowed to rent out their property for less than three consecutive months. Owners of private residential properties are required to comply unless they have acquired permission from the Urban Redevelopment Authority (URA) to do so.

Private residential property owners who are found guilty of renting out their property lesser than the stipulated period of three consecutive months can be fined up to SGD200,000. Furthermore, if the rental continues even after his/her declaration of guilt, the owner can be fined up to SGD10,000 for each additional day of rental after conviction (or part thereof).

Repeat offenders are liable to the same consequences, in addition to probable imprisonment of up to twelve months.

  1. Property rented to too many people at one instance

Lastly, there are legal constraints on the number of people allowed to stay in a property at any one time. This will negatively affect property owners as it limits the number of people they can rent their property out to.

As of 1 May 2018, the number of people who can stay in the same HDB flat (not excluding the flat owners and his/her family) are:

  • Six persons, for 3-room flats; and
  • Six persons, for 4-room flats and bigger (down from nine previously).

Bear in mind that owners of 1- and 2-room HDB flats are prohibited from renting out their flats.

Failure to keep to such restrictions will result in a fine or have their flats compulsorily acquired by the HDB.

As of 15th May 2017, up to six unrelated people are allowed to stay in a private residential property at any one time. Owners of private residential properties are required to seek permission from the URA if they wish to accommodate more people.

Property owners who reside in their properties with their families (not excluding domestic workers and caregivers) are only allowed to accommodate tenants until the total number of people living in the property reaches 6. If the number of family members under one roof already exceeds six, the owner will not be able to accommodate any tenants.

Private residential property owners found to have breached the occupancy limit can be fined up to SGD200,000 and/or jailed for up to twelve months. Additionally, if rental continues even after an owner is declared guilty, he/she be fined up to SGD10,000 for each additional day of rent after conviction (or part thereof).

Future of short-term rentals

While listing your property on Airbnb may seem like a feasible option to earn extra income on the side, one should be aware of the restrictions imposed by the Singapore government. Having acknowledged that the home-sharing economy is here to stay regardless, the government is looking into allowing short-term rentals for certain types of private housing.

Thomas Chew
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