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10-02-17, 17:26
http://www.businesstimes.com.sg/real-estate/industry-cool-to-tweaking-short-term-rentals-of-private-homes
Industry cool to tweaking short-term rentals of private homes
They say the changes could affect the hotel sector and security in condos; property tax issues could also arise
Wednesday, February 8, 2017
by Lynette Khoo
[email protected]
@LynetteKhooBT
CONDOMINIUM representatives and industry watchers have panned the latest proposals by the government to reduce the minimum rental period for private housing and to create a new class of private homes for short-term rentals.
Minister for National Development Lawrence Wong had offered scant details on these proposals on Monday, when he told Parliament that the Urban Redevelopment Authority (URA) was studying the options before releasing more details.
Until then, however, a key amendment to the Planning Act read on Monday will make it illegal for private homes to be rented out for under six months, in line with an existing URA guideline.
One proposal is to have a new class of use for private homes to be approved by the URA for the specific purpose of renting out on a short-term basis.
It has also been suggested that new residential sites be sold with such an approved use, while existing residential buildings will need planning permission for a change of use, and would be subject to a set of guidelines that URA is looking into.
Property consultants mulling the impact of the proposals said that a major challenge lies in ensuring a fair playing field for hotels and serviced apartments.
Edmund Tie & Company chief executive Ong Choon Fah predicted that there would be some cannibalisation of demand from the proposed new class of private housing.
She said that when there are major surges in demand for accommodation arising from major events here, people will have more options on where to stay. "But we are all moving towards a shared economy and we can't get away from this global trend."
CBRE head of research for South-east Asia Desmond Sim said that legalising short-term lets could affect the average daily rates and occupancies of hotels and serviced-apartments in the long run.
Another tricky issue is coming up with a proper tax on owners of the new class of housing.
International Property Advisor's key executive officer Ku Swee Yong commented: "We have to be prepared to downgrade the valuation of hotels and serviced apartments."
Representatives of management corporations of condominiums who spoke to The Business Times were similarly unenthused by the proposals.
Robert Tan, council chairman of the management corporation strata title (MCST) of Avon Park, a development in Potong Pasir, said allowing rental periods of under six months would lead to many more "strangers" staying in condominium developments, making these properties feel like a hotel.
The decision on whether an existing building be converted into the proposed new class of use should be left to the MCST to decide, he said.
Augustine Cheah, council chairman of the MCST at The Sail, a condominium in Marina Bay, said he is in favour of having a new class of housing for short-term rentals for the purpose of making it clear at the outset that certain projects can be used for short-term lets.
"This allows investors who want to buy for maximum yields to go for it, while those staying there will be mindful that short-term lets are allowed."
Currently, it is already easy for owners to skirt the minimum rental period by including a clause in the tenancy agreement to allow for early termination without penalty, Mr Cheah told BT. Reducing the minimum rental period for private homes will make it even easier for such abuse to take place.
Online listings platform Airbnb notes that more than half the hosts in Singapore are sharing their primary residence - the home in which they live.
"For a lot of Singaporeans, the opportunity to list their home on Airbnb - for an average of S$5,000 per year - makes a real difference paying off the mortgage, electricity bills and other daily expenses," its spokesman said.
"We recognise that Singapore has unique needs and challenges, and we have repeatedly offered our support to relevant agencies to develop a framework that promotes responsible home sharing."
Short-term lets used to be rampant at The Sail, until the council of the MCST clamped down on the practice by introducing by-laws requiring the submission of rental contracts to the MCST and confronting the perpetrators, Mr Cheah said.
In some condominium projects, units are rented by tenants who sublet them as "serviced apartments" under a private business.
An MCST council member from another condominium in the Central Business District, who wanted to be known only as Alex, said: "Residents complain that they feel more like they are living in a hotel than a private residence; there is a sense of insecurity for families who are worried about their children taking the lift alone or using common facilities."
But enforcement is easier said than done. He told BT that his MCST has spent much time and money acting against short-term lets, when its energies could have instead been channelled into property maintenance, safety or energy-saving initiatives for the benefit of residents and owners.
He added: "At the end of the day, the MCST is not designed, structured and staffed to manage short-term tenants like hotels do. Private properties are not designed to handle large volumes of people moving in and out with suitcases, generating more strain on common areas and creating security issues."
Industry cool to tweaking short-term rentals of private homes
They say the changes could affect the hotel sector and security in condos; property tax issues could also arise
Wednesday, February 8, 2017
by Lynette Khoo
[email protected]
@LynetteKhooBT
CONDOMINIUM representatives and industry watchers have panned the latest proposals by the government to reduce the minimum rental period for private housing and to create a new class of private homes for short-term rentals.
Minister for National Development Lawrence Wong had offered scant details on these proposals on Monday, when he told Parliament that the Urban Redevelopment Authority (URA) was studying the options before releasing more details.
Until then, however, a key amendment to the Planning Act read on Monday will make it illegal for private homes to be rented out for under six months, in line with an existing URA guideline.
One proposal is to have a new class of use for private homes to be approved by the URA for the specific purpose of renting out on a short-term basis.
It has also been suggested that new residential sites be sold with such an approved use, while existing residential buildings will need planning permission for a change of use, and would be subject to a set of guidelines that URA is looking into.
Property consultants mulling the impact of the proposals said that a major challenge lies in ensuring a fair playing field for hotels and serviced apartments.
Edmund Tie & Company chief executive Ong Choon Fah predicted that there would be some cannibalisation of demand from the proposed new class of private housing.
She said that when there are major surges in demand for accommodation arising from major events here, people will have more options on where to stay. "But we are all moving towards a shared economy and we can't get away from this global trend."
CBRE head of research for South-east Asia Desmond Sim said that legalising short-term lets could affect the average daily rates and occupancies of hotels and serviced-apartments in the long run.
Another tricky issue is coming up with a proper tax on owners of the new class of housing.
International Property Advisor's key executive officer Ku Swee Yong commented: "We have to be prepared to downgrade the valuation of hotels and serviced apartments."
Representatives of management corporations of condominiums who spoke to The Business Times were similarly unenthused by the proposals.
Robert Tan, council chairman of the management corporation strata title (MCST) of Avon Park, a development in Potong Pasir, said allowing rental periods of under six months would lead to many more "strangers" staying in condominium developments, making these properties feel like a hotel.
The decision on whether an existing building be converted into the proposed new class of use should be left to the MCST to decide, he said.
Augustine Cheah, council chairman of the MCST at The Sail, a condominium in Marina Bay, said he is in favour of having a new class of housing for short-term rentals for the purpose of making it clear at the outset that certain projects can be used for short-term lets.
"This allows investors who want to buy for maximum yields to go for it, while those staying there will be mindful that short-term lets are allowed."
Currently, it is already easy for owners to skirt the minimum rental period by including a clause in the tenancy agreement to allow for early termination without penalty, Mr Cheah told BT. Reducing the minimum rental period for private homes will make it even easier for such abuse to take place.
Online listings platform Airbnb notes that more than half the hosts in Singapore are sharing their primary residence - the home in which they live.
"For a lot of Singaporeans, the opportunity to list their home on Airbnb - for an average of S$5,000 per year - makes a real difference paying off the mortgage, electricity bills and other daily expenses," its spokesman said.
"We recognise that Singapore has unique needs and challenges, and we have repeatedly offered our support to relevant agencies to develop a framework that promotes responsible home sharing."
Short-term lets used to be rampant at The Sail, until the council of the MCST clamped down on the practice by introducing by-laws requiring the submission of rental contracts to the MCST and confronting the perpetrators, Mr Cheah said.
In some condominium projects, units are rented by tenants who sublet them as "serviced apartments" under a private business.
An MCST council member from another condominium in the Central Business District, who wanted to be known only as Alex, said: "Residents complain that they feel more like they are living in a hotel than a private residence; there is a sense of insecurity for families who are worried about their children taking the lift alone or using common facilities."
But enforcement is easier said than done. He told BT that his MCST has spent much time and money acting against short-term lets, when its energies could have instead been channelled into property maintenance, safety or energy-saving initiatives for the benefit of residents and owners.
He added: "At the end of the day, the MCST is not designed, structured and staffed to manage short-term tenants like hotels do. Private properties are not designed to handle large volumes of people moving in and out with suitcases, generating more strain on common areas and creating security issues."