Rationale for and Impact of Increased Rental Occupancy Cap for HDB Units

Mr Pritam Singh asked  the Minister for National Development with regard to the increased rental occupancy cap for HDB units from January 2024 (a) whether the Ministry foresees a rise in neighbour disputes and community disamenity, given the rationale for a reduced occupancy cap in HDB flats from nine to six as previously announced in 2018; and (b) whether HDB is sufficiently equipped to resolve any rise in complaints from such disamenity.

Ms Denise Phua Lay Peng asked the Minister for National Development (a) whether the Ministry can provide details on why the number of unrelated occupiers in a residential unit is increased from six to eight; and (b) what mitigation measures are taken to address the concerns of neighbours as a result of this increase.

Mr Chua Kheng Wee Louis asked the Minister for National Development in each of the last five years (a) what is the number of cases of infringements of the occupancy cap on the number of persons allowed in (i) HDB flats and (ii) private residential properties respectively; and (b) what is the number of cases of unauthorised renting out of HDB flats.

Ms Foo Mee Har asked the Minister for National Development whether HDB will limit the number of flats in each HDB block that will be allowed to house up to eight unrelated people under the new occupancy guidelines in order to ensure the existing infrastructure such as lift operations and bicycle parking space can cope with increased density of occupants in the block.

Sir, my response will also cover matters raised by Mr Gan Thiam Poh scheduled for a subsequent Sitting. So, I invite the Member to seek clarifications if need be. If the question has been addressed, it may not be necessary for him to proceed with the question for future Sittings.

Since 2022, we have seen sharp increases in rents in both the public and private rental market. Prior to the pandemic, rents had stayed broadly stable, even a bit soft. However, COVID-19 caused unprecedented disruption in the construction industry, global supply chains and border controls, and the ensuing construction delays contributed to significant tightness in our rental market.

In addition to the supply-side constraints, the delays resulted in strong rental demand from Singaporeans who were seeking interim housing while awaiting the completion of their new residential units. Subsequently, with the easing of border restrictions in 2022, non-resident rental demand also quickly recovered.

To address these supply and demand imbalances, we have undertaken a broad suite of measures to support households that intend to rent. This includes significantly ramping up our public and private housing supply and increasing the supply of flats available under the Parenthood Provisional Housing Scheme (PPHS) for those awaiting completion of their new Housing and Development Board (HDB) flats. Close to 100,000 public and private residential units will be completed from 2023 to 2025. We have also more than doubled PPHS supply to about 2,000 since 2021 and will further double it to about 4,000 units by 2025.

Public and private housing rents have showed recent signs of stabilising, with the quarterly increase in public and private housing rents moderating to 1.9% and 0.8% respectively in the third quarter of 2023, from 3% and 2.8% respectively in the previous quarter.

That said, we expect rental demand to remain robust over the near term.

That is why we announced the temporary relaxation of the occupancy cap for 4-room and larger HDB flats, and private residential properties of at least 90 square metres. From 22 January 2024, these accommodations will be allowed to house up to eight unrelated persons, up from the current cap of six unrelated persons.

Allowing larger units to be rented out to more tenants will increase rental supply, even as we recognise that not all landlords and tenants will tap on the relaxed occupancy cap.

By increasing supply, we aim to ease the pressure in the rental market and help to moderate rents overall. This will benefit all households seeking to rent, such as Singaporean families who are in-between homes, including those waiting for the completion of their new flats, as well as Work Pass holders who play a critical role in our domestic economy and essential services, such as healthcare workers.

As of November 2023, there are approximately 58,000 HDB whole flats that are rented out. This is about 5% of the approximately one million sold HDB flats islandwide. Of these, 16% are rented out to six unrelated occupants. About 90% of these occupants are non-residents, with most in their 20s or 40s.

Some Members have raised concerns about infringements of the occupancy cap and potential disamenities that may arise from this temporary relaxation. We understand these concerns. We have put in place measures to mitigate these infringements and disamenities.

First, HDB regulates who is allowed to rent a HDB flat or a bedroom to minimise disamenities and maintain the Singaporean character of our HDB estates. We have put in place the non-citizen quota of 8% for HDB neighbourhoods and 11% for HDB blocks, which limits the number of flats that can be rented to foreigners in each neighbourhood and block. Non-Malaysian Work Permit holders from the construction, marine and process sectors are also not permitted to rent HDB flats or bedrooms. These rules will continue to apply.

A Member asked if we intend to limit the number of flats in an HDB block that may tap on the temporarily relaxed occupancy cap, to prevent overloading of existing infrastructure. While we do not currently have plans to impose such a cap, the existing non-citizen quota will help to limit the increase in occupants in each block, given that most of those renting at the occupancy cap are non-citizens.

Second, HDB flat owners are required to seek HDB’s approval prior to renting out their flats or bedrooms. HDB also undertakes routine inspections to ensure that owners and tenants comply with the terms and conditions of approval and do not cause serious disamenities to the public.

Over the past five years, instances of feedback relating to nuisance caused by tenants renting HDB flats or bedrooms constituted 1.5% of the total feedback on nuisance from neighbours. Where friction arises between neighbours, including tenants, HDB adopts a mediative approach and advises flat owners and tenants to be mindful of causing disturbances to others. Should the parties require additional mediative assistance, we will encourage them to tap on Government initiatives, such as the inter-agency Community Dispute Management Framework and the Community Mediation Centre, which provide facilitated mediation sessions that can help parties reach mutually acceptable solutions. Finally, in instances where tenants cause serious disamenities, HDB will take firm action by revoking the approval for the rental of the flat or bedrooms.

Over the past five years, HDB has taken action against an average of 115 cases of unauthorised renting a year, including cases where flat owners had breached the occupancy cap.

As we temporarily relax the occupancy cap, we will continue to take firm action against those who breach the rules. Depending on the severity of the infringement, HDB will issue written warnings, impose financial penalties or compulsorily acquire the flat for the most severe cases.

Similarly, owners of private residential properties must first register with the Urban Redevelopment Authority (URA) to authorise their properties to accommodate more than six persons. In the event of serious disamenities, the authorisation will cease, requiring the property to revert to its original occupancy cap of six.

URA undertakes regular inspections to ensure compliance with the prevailing occupancy cap. Those who breach the cap can be fined and/or imprisoned. Over the past five years, URA has taken action against an average of 244 cases per year for breaches of the occupancy cap in private residential properties.

Sir, the relaxation of the occupancy cap is a temporary measure that will be in place for three years to better meet near-term rental demand and moderate rents for Singaporean households that need to rent. We will continue to monitor the demand and supply of open market rentals as well as residents’ feedback on disamenities. These will be taken these into consideration when reviewing whether the relaxed occupancy cap should be extended beyond 2026.

I thank the Senior Minister of State for the good work and the comprehensive reply to our Parliamentary Questions. I understand of course there is a need to meet the increasing accommodation needs nationally to address the increasing housing needs of both locals and foreign non-home owners in this very tight rental market. And, of course, looking at the number of questions, many Members of Parliament have had to handle disputes over the years primarily between the transient tenants and the neighbours who own their homes permanently.

I have two supplementary questions. First, where tenants are non-citizens, are there more specific, more blatant, explicit measures to ensure that they are familiar with local standards in terms of safety, in terms of noise or even the use of these units as Airbnb type of accommodation or practices like unlawful partitions. That is one. Are there blatant, explicit measures to ensure they understand?

Number two, to ensure that the units do not turn out to be unregulated hostels, causing a negative impact on both the occupants and the neighbours, what are some measures that can be done to proactively prevent this from happening?

Sir, I thank the Member for her two questions. I believe these are at the back of the minds of many Members when they raise the questions today about potential disamenities.

Let me set in context some of the key points that I highlighted in my earlier reply.

Firstly, there are rules that are in place, both in terms of eligibility. For example, in HDB estates, who can rent a flat and a bedroom; and there are also non-citizen quotas that we have put in place and these rules apply. I also, earlier, mentioned that only about 16% of the rental flats that have been rented out are reaching the six unrelated persons occupancy cap. We do not have a feel of how many of the full tenants and landlords will take advantage of this temporary relaxation.

At the same time, we are also putting in place measures to minimise potential disamenities. I mentioned earlier that those landlords who want to take advantage of this temporary relaxation have to apply to both HDB, prior to renting out, as well as to URA to increase to that eight unrelated persons occupancy cap.

We will take all feedback and complaints seriously and we will investigate and take firm action if needed.

Just to share with the Member, HDB investigates all feedback received and conducts routine planned inspections of almost 500 flats per month. URA, likewise, has been maintaining a high enforcement tempo over the last five years. On average, there were about 330 instances each year where enforcement actions were taken.

So, I assure Members that we will take all feedback and complaints seriously; and we take firm action if needed.

I thank the Senior Minister of State for his replies. I guess it is never easy whenever it comes to neighbourly disputes and we all know we have received such feedback. Trying to do that mediator role is probably one of the most challenging.

I have got three supplementary questions for the Senior Minister of State. The first one is, back in 2018, the Ministry made the decision to reduce the number from nine to six in terms of the occupancy cap. There are always questions: while this is a temporary measure, why is the number increased back to eight and not nine? That is the first supplementary question.

The second one is, given the very robust rental demand at present – and that is the reason for this temporary measure – would the Ministry have sufficient capacity to do the enforcement to make sure that the landlords stick within the number that has been put as a cap?

And lastly, given the disamenities that have been happening, there is still a lot – particularly, noise between neighbours – that we have still not resolved, even with the current limitations. What is HDB's plan on trying to manage the situation? Sometimes, it is not enough to just tell them to go for mediation through the Community Medication Centre. Would the Senior Minister of State elaborate on this?

Sir, I thank Miss Cheryl Chan for raising the three supplementary questions and I note that she also spoke about this matter in 2017, on the occupancy cap. At that point in time, we revised the occupancy cap from nine to six for HDB flats. In this instance, we are making a temporary relaxation to raise from six for 4-room and larger HDB flats, up to eight.

Her question was, why not nine; go back the original number? There is no magic number. Firstly, at that point in time, for private residential apartments, the cap was also at eight and we reduced it to six – for the same reason, to minimise disamenities. For us, we will continue monitoring whether this move will help to elevate the rental tightness that we currently face and also, some of the consequences in terms of potential disamenities.

So, I think we will continue reviewing the results of this move and we will continue to look and see whether this relaxation will continue.

The second question is about whether we have enough resources to enforce. This is something we take seriously, and we will take the adequate steps to make sure that we follow up on feedback, complaints and to continue the tempo of inspections and enforcements.

The third supplementary question, if I got it correctly as I was scribbling it down, is about noise disamenities and what are the steps that we can take. Well, Sir, firstly, let me set the context. The number of feedback relating to neighbourly disputes as a result of rental, is about 1.5% of the total feedback received about nuisance from neighbours. So, by and large, I would believe that most of the tenants and landlords are responsible in making sure they are aligned and consistent with the norms and culture in our HDB estates. That is the first point.

The second point is that issues around noise disamenities go way beyond just about rental units. It goes into many of the other aspects because tolerance levels and sensitivity to noise are actually a very complex and multi-faceted issue, and we have had many discussions about this issue in this House. Suffice to say that these are issues that we continue to take seriously and work together with community partners through the different mechanisms to minimise neighbourly disputes and to still take a mediative approach in the first instance. In most cases, that works. If need be, HDB will not hesitate to take firmer action against serious disamenities, including revoking the permission to rent out the flat or bedroom.

Thank you, Mr Speaker. Just two short supplementary questions for the Senior Minister of State.

The first is relating to the number of rental flats that are being rented out right now. I think it was 58,000. May I ask, what has been the increase in the last five years and, correspondingly, the expected increase in the number of HDB flat units that will be rented out? And the context is really that, given that there is an increased number of units completing, a lot of them will still be subject to the five-year minimum occupation period (MOP).

The second supplementary question is: beyond the so-called natural increase in the number of units that are put up for rent, are there other proactive measures that the Government is taking in order to increase the number of rental flats available for renting, from now until December 2026?

Sir, on the first supplementary question by Mr Louis Chua, I think he has also filed a Question for Written Answer in Parliament today. More details will be shared if there is a written answer. But suffice to say, in general, over the past five years, the proportion of flats rented out and the average number of occupants in each flat type has been fairly stable.

For the second supplementary question, can the Member repeat? I missed out that point.

Sir, Mr Louis Chua earlier, in his first supplementary question, also asked about the projected number of rental units that will be available because of this relaxation. If we look at the analysts' reports, actually there is a range of views and most of them also cannot find a strong position of whether this will increase the supply because it really depends on whether landlords and tenants take up this additional relaxation.

I have looked at some of the analysts' reports. Some said that, the supply might actually decline because, for example, if a company is renting out two flats for eight workers and they are renting in two flats now, they may combine, at least for the next few years, into one flat. At the same time, some of the landlords might take advantage of this temporary relaxation to increase the number of tenants in their flat. So, most analysts also cannot project the number of flat supply that may come onstream because of this.

Earlier in my reply, I also mentioned that this move should be seen in the context of the suite of measures that have been put in place: increasing the number of flats available in the market, increasing the number of Parenthood Provisional Housing Scheme (PPHS) flats available, the suite of measures that were put in place to moderate the imbalances between demand and supply.

Mr Speaker, I have two supplementary questions for the Senior Minister of State.

The first one relates to my question in the Parliamentary Question. It is about how the HDB infrastructure can cope, because going from six to eight, essentially, you are increasing. If everybody takes it up, it is a third, 33% more. So, in the light of the new occupancy guidelines, which may lead to increased usage of infrastructure, who will be responsible for covering the cost associated with a higher maintenance in the enhancement of facilities in affected HDB blocks? That is the first one. If it is intensified, who is going to bear cost, especially in the common areas?

Second, the Senior Minister of State mentioned that it is fine because to preserve the Singaporean character of the HDB estate, HDB has established a quota, 8% at the neighbourhood level and 11% at the block level, for the proportion of flats that can be rented to non-Singaporeans. Actually, I am very happy because I was the one who championed this. But then, if you are now allowing – at flat level – an intensification of 33% from six to eight, how is it that you can still keep the Singaporean character if everybody decides to increase to the maximum cap? So, if the Senior Minister of State can elaborate on that.

Sir, on the first question, I would like to just highlight some of the figures I mentioned earlier my reply.

I said that about 58,000 of HDB whole flats are rented out and this is only about 5% of the approximately one million sold flats islandwide. And of these 58,000 HDB whole flats that are rented out, only 16% are rented out to six unrelated occupants. So, by and large, our neighbourhood estates are still majority owner-occupied. Again, I also mentioned that we are not sure if all of the tenants and landlords will take full advantage of this relaxation. That is the first clarification.

We agree with the Member that it is important to maintain the Singaporean characteristics of an HDB estate and that is the reason why we have the non-citizen quota at 11% at block level and 8% at the neighbourhoods. And to share with the Member, as of December 2023, less than 2% of HDB neighbourhoods and about 1% of HDB blocks are affected by the non-citizen quota. So, by and large, owner-occupied. We do not expect the operation and maintenance costs of common areas and facilities, like lifts and playgrounds, to go up significantly. Like the Member said, most of the users are existing owner-occupiers.

Just two questions for the Senior Minister of State.

I refer to the point the Senior Minister of State made about the non-citizen quota. I understand it only applies when the entire flat is rented out and does not apply when bedrooms are rented out. In view of the decision to increase the rental occupancy cap, does HDB actively track, or does it plan to actively track the nationality of tenants who are renting out bedrooms? And would the Senior Minister of State agree with me, notwithstanding his previous answer to the supplementary question by Member Foo Mee Har, there will also be additional manpower expectations on Town Councils arising from the new rental occupancy cap? For example, when you have eight tenants in an HDB flat, they may dry their clothes at the common corridor and there may be additional disamenities of this nature requiring HDB to come in to liaise with the owner and so forth. My Parliamentary Question covered manpower issues and is it the Senior Minister of State's position that there is sufficient manpower for HDB to deal with this problem?

The second question pertains to a possible increase in noise-related complaints with the revised rental occupancy cap. The Community Advisory Panel on Neighbourhood Noise that was set up in 2022, recommended a quantitative noise threshold in the form of decibels to help in the assessment of egregious cases of neighbourhood noise. In January last year, Minister Desmond Lee replied in Parliament that the Ministry of National Development (MND) was studying the recommendations and would provide a response when it was ready. Can I inquire whether a decision has been made on the specific proposal pertaining to a quantitative noise threshold and if more communication and education needs to be undertaken by HDB to prospective owners who intend to let out their flats or bedrooms to ensure that tenants adhere to the recommended quiet hours of between 10.00 pm and 8.00 am?

Sir, Mr Pritam Singh has two supplementary questions. Let me take them in turn.

The first one is a relatively factual one, whether the occupancy cap applies to flat or room rentals. It applies to all room rentals, tenant composition and so on. But a more important point he was asking was related to what Ms Denise Phua and Miss Cheryl Chan were asking as well, whether there is enough manpower for enforcement.

Sir, we take the feedback on disamenities and complaints seriously and we will proactively work with the community partners to deal with these matters. But again, let me just set in context that, as of now, the complaints received resulting from tenancy rental, feedback on nuisance between neighbours is about 1.5% of all the total number of feedback received from nuisances caused by neighbours. And that is why we have to also look at these numbers and have an appreciation of whether there will be a sudden explosion of disamenities. But we take all complaints seriously and will continue to work closely with community partners, including Town Councils.

On the Member's second query regarding the quantifiable measure for noise, I invite the Member to file a Parliamentary Question on this because separate data on this is not available to me at this point in time.

Much obliged, Speaker. Just a quick follow-up to the reply to the first supplementary question on the applicability of the non-citizen quota vis-à-vis the renting out of bedrooms. I have the relevant printout from the HDB website here. It states that the non-citizen quota does not apply to the renting out of bedrooms. So, I hope the Senior Minister of State can clarify this particular point. Is that applicable only in a certain situation or is that the broad policy that the quota does not apply to the renting out of bedrooms?

Sir, sorry. I thought the Member meant the occupancy cap, whether it applies to whole flat rentals or bedroom rentals. For the non-citizen quota, it applies for whole flat rentals.

Speaker, I would like to ask the Senior Minister of State for clarifications regarding not the prevention or mitigation of disamenities but what is the recourse available to victims of disamenities caused by – I am going to bring up something other than noise – air-conditioning condensation due to excessive and incessant use of air-conditioning by tenants that creates health hazards in the neighbouring units where residents have to deal with mold and a lot of these things and they have to spend money to repaint and to get rid of this mold.

Is there any recourse for these victims and what does MND intend to do about possibly enhancing some regulations and enforcement actions so that we can prevent such excessive air-conditioning usage by tenants which, anecdotally on the ground, seems to be predominantly an issue with tenanted units.

Sir, like all neighbourly disputes or issues around living in an HDB estate where we live in very close proximity to one another, these are matters that we have to work through, closely as a community. HDB takes a mediative approach. Where friction arises between neighbours – it could be noise, it could be air-conditioning condensation – we take a mediative approach and advise flat owners and tenants to be mindful of causing disturbances and there are many existing mechanisms, whether through mediation and other platforms, where some of these issues can be brought together, discussed and, hopefully, amicably resolved. And by and large, that approach has worked. It is about being considerate to one another. These are matters that we continue to look at and work closely with our partners on. I assure Members that, as a result of this relaxation, these are matters that we will still continue to look at.