Wednesday, 8 February 2017

Short-term rentals of private property illegal under new law; No more than 6 unrelated tenants in private properties from 15 May 2017

New private home category for short-term rentals under study
By Toh Yong Chuan, Manpower Correspondent, The Straits Times, 7 Feb 2017

The Ministry of National Development is studying the option of creating a new category of private apartment owners who would be allowed to rent out their place for a short period.

National Development Minister Lawrence Wong announced this yesterday as Parliament passed legislation that forbids these owners from renting out their whole flat or rooms for a short period on websites such as Airbnb.

The prospective category would encompass existing properties as well as new residential sites that may be designated specifically for the building of short-term rental properties.

Until then, the Planning (Amendment) Bill states that it is illegal to do such rentals for less than six months, unless the owners have obtained permission from the Urban Redevelopment Authority (URA).

It also limits the number of unrelated tenants in private apartments to six, down from the current eight.

Those with more than six will be treated as dormitories and will require URA's approval.

"Private residential properties should not be used for other purposes without planning approval, as there is a need to safeguard the living environment of residents in the neighbourhood," Mr Wong said during the debate on the Bill.



The changes to the law arose from growing complaints last year about short-term rentals.

The URA received 608 complaints, 61 per cent more than the 377 in 2015. There were 375 complaints in 2014.

The new law will allow the URA to "make sure the issue does not worsen further", Mr Wong said.

It also gives URA powers to impose conditions on developers to make new buildings more liveable and friendlier to pedestrians through the provision of public spaces and covered walkways.

These features account for only a small component of development costs and will not reduce the development potential of sites because they are excluded from the overall floor area, Mr Wong added.

URA officers will also be given more powers to investigate breaches of planning regulations, including summoning witnesses for interviews and entering premises for inspections.

Those who set up unauthorised dormitories will also face stiffer penalties, including a jail term. And the maximum fine for those who tear down conserved buildings, both partially or fully, will go up from $200,000 to $500,000.

In addition, property owners will be held responsible for unauthorised works by their tenants or contractors, unless they can show they have taken precautions to prevent them.

During the debate, four MPs spoke up strongly on the problems caused by short-term rentals, as they called for rules to govern them.

"I have many residents complaining to me about tourists on their floor, moving luggage in and out at all hours of the day, disturbing their rest," said Ms Lee Bee Wah (Nee Soon GRC).

Said Mr Saktiandi Supaat (Bishan-Toa Payoh GRC): "A Singaporean can, if there are no rules in place, wake up one day and find himself being stared at by someone from another country staying next door and a new one every other week or month or so."

An Airbnb spokesman in Singapore said the new law lacks details. He noted that it has been nearly two years since the URA started public consultations on short-term home rentals. "It is disappointing that the discussion has not moved forward," he said.

Mr Wong said in Parliament that the URA is still consulting stakeholders, and will provide more details soon. "We do see a role for home-sharing platforms to continue operating in Singapore so long as they are properly regulated and so long as there is a level playing field between them and similar entities that provide short-term rentals like hotels and service apartments," he added.





















What next for short-term home rentals?
New Bill makes clear penalties, new option for home-sharing under consideration
By Ng Jun Sen, The Sunday Times, 12 Feb 2017

There is the stick - it is illegal to rent out private homes on a short-term basis, Parliament heard on Monday.

And then there is the carrot - the authorities are also considering a new class of private homes that allows short-term rentals and is looking into shortening the minimum rental period from six months. No specifics were mentioned.

In an interview with The Sunday Times, Airbnb's Asia-Pacific director of public policy, Mr Mike Orgill, said clarity is needed with the amendment to the Planning Act that passed last week.

"While the Government has come up with a new Bill that codifies existing guidelines, they also say that there may be some way or form for hosts to engage in home- sharing. But it lacks essential details and it is this lack of clarity that needs addressing. While the penalties have been made clear, a way forward for our host community has not," said Mr Orgill.

There are around 8,000 Singapore listings on Airbnb, the poster child of the sharing economy and one of 2016's biggest disruptors. Airbnb itself is not opposed to regulation, said Mr Orgill, and has come up with tools to assist policymakers in crafting laws regarding home-sharing.



When The Sunday Times asked if the growth of the sharing economy may be dented now that the law has been clearly spelt out, experts were split in their answers.

Singapore University of Technology and Design's (SUTD) Professor Costas Courcoubetis, said the move could have a chilling effect on the sharing economy here.

"The Government should avoid over-regulating as it continues to encourage innovation in the sharing economy," added Prof Courcoubetis, who leads SUTD's Initiative for Sharing Economy Research. He called for a self-regulated system with both the Government and businesses in the sharing economy making available data about public complaints, for instance.

The home-sharing model has faced challenges in cities such as New York, London and Paris, with strict regulations and heavy enforcement against short-term rentals.

New York, for instance, has been tangling with Airbnb over its business model, and imposed steep fines on anyone who lists their property on its website.

President of the Sharing Economy Association Singapore, Mr Jim Tan, said the sharing economy is important as enabling apps can provide smart ways to match demand with supply in cities where resources are limited.

Nanyang Business School's Associate Professor Boh Wai Fong said the law is inevitable, given the Government's previous stand that short-term leasing under six months would contravene the Urban Redevelopment Authority's guidelines.

Clear regulation also kicked in last week in the case of transport apps like Uber and Grab - private car-hire drivers now need to be licensed.

Prof Boh said while the transport economy is also regulated, car-sharing is generally in line with the Government's objective for a car-lite Singapore.

But not so with home-sharing apps.

"It is just that housing and property is a highly regulated and sensitive sector for Singapore and for the policymakers. Hence, the recent policy relating to leasing to tourists does not, in my view, reflect the official government stance towards innovation in the sharing economy," she added.

Entrepreneurs should seek to anticipate the likely responses of the stakeholders, said National University of Singapore Business School's Associate Professor Sarah Cheah.

"While most governments support innovation and entrepreneurship with the view to promote job creation and economic development, they still have to maintain social order and stability as a society undergoes transitions with technological disruptions and socio-cultural change," said Prof Cheah.

In response to The Sunday Times' queries, a Ministry of National Development spokesman said: "There is certainly a place for short-term rental platforms in Singapore. What we intend to do is carefully review and consider new policies to better respond to them.

"Such an approach best ensures that any problems caused by such 'disruptors' are effectively addressed, even as we attain the social and economic benefits from fostering innovation in the sharing economy."



















Relief for some building managers
By Ng Jun Sen, The Sunday Times, 12 Feb 2017

A new law passed last week, which clarifies that short-term home rentals are illegal, has brought relief to some building managers who have been finding their own ways to combat the problem.

At The Sail in Marina Boulevard, it took drastic measures from the building's management corporation strata title (MCST) to tackle the issue.

Given its downtown location, the 1,111-unit private condo had been plagued by "professional operators" running a hotel-like business for the past four years.

In August last year, council members voted to pass a by-law to clamp down on short-term home rentals, amid growing concern among residents over the security and reputation of the condominium.

The condominium's response involved bouncers who operated around the clock in two shifts.

MCST chairman Augustine Cheah said: "They could demand to see the tenancy agreement of anyone they suspected to be involved in short-term leasing.

"If they could not prove they were legal residents, they would be given the boot. Most of the time, they are renting from the original owner, who does not know about the subletting.

"At its peak, I would say that 10 per cent of units in The Sail were involved in short-term letting."

While harsh, the measure worked, as the MCST no longer receives reports about strangers entering the premises, he said.

But in some estates, consensus on short-term leasing is not as clear-cut. At the condominiums and landed homes of the Chestnut and Cashew estates in Bukit Panjang, there are residents on both sides of the fence.

The chairman of the Chestnut neighbourhood committee, who declined to be named, said: "Those with extra space in their homes would like the ability to lease out and share their homes with vacationers, as they benefit from these economic activities.

"But there are those who expect their homes to be liveable and do not accept short-term renting.

"This is especially true in the denser condominiums, where there are more chances of friction."





Government to seek views on home rentals for short term
Maximum duration of rental in a year, safety and privacy of other residents among possible issues
By Rachel Au-Yong, The Straits Times, 13 Feb 2017

The guidelines around a new category of private homes for short-term rentals will become clearer in the coming months, with the Government set to engage both industry stakeholders and the public in the second quarter of this year.

Among the issues that could surface are the maximum duration that homes can be rented out for in a year, whether the new category would apply to residences in a specific area, and how best to ensure the safety and privacy of other residents in the area.

The consultation comes amid some criticism of the measures that National Development Minister Lawrence Wong floated in Parliament last Monday.

Parliament passed laws that make Airbnb-style rentals illegal, in line with Urban Redevelopment Authority (URA) guidelines in place since 2009. But Mr Wong also said his ministry was considering two proposals: a new category of homes for short-term rentals; and lowering the minimum rental period of residences from the current six months.



On short-term rentals, which cater mainly to tourists, the authorities are seeking feedback to come up with "safeguards against negative externalities", the Ministry of National Development (MND) said in response to queries. It noted that residents have raised concerns about safety and privacy arising from the comings and goings of transient visitors.

The URA received 608 complaints last year, 61 per cent more than the 377 in 2015. There were 375 complaints in 2014.

The MND also sought to distinguish between the kind of guests both proposals would attract. Referring to the lowering of the minimum rental period, it said: "This review concerns conventional residential tenancies rather than short-term subletting, which is typically conducted on a daily or weekly basis."

It added: "The move is meant to allow homes to be rented to those who are in Singapore for extended periods but cannot commit to a lease period of at least six months."

The MND did not give details, but industry watchers said this group could comprise medical tourists, or those working on events and projects that require them to be temporarily based in Singapore.

Still, some industry watchers are sceptical about the suggestions.

Despite URA officers getting new enforcement powers to investigate breaches after amendments to the Planning Act were passed last week, International Property Advisor chief executive Ku Swee Yong predicts difficulty wielding them with regard to shortened leases. "If you reduce the lease to three months, people will complain that it's not short enough. But if it's something like one month, it'll be taxing for officers to make sure it's adhered to," he said.

He also panned the proposed new category, saying it would further complicate regulations for a market saturated with hotels, hostels and serviced apartments.

But Suntec Real Estate Consultants director of research and consultancy Colin Tan suggests that the new category could include owners of shoebox apartments or city-centre homes, where families are less likely to reside.

"The new category, depending on its form, would balance safety and space constraints... with being forward-thinking about the sharing economy," he said.





Provide clarity on short rentals
By Rachel Au-Yong, The Straits Times, 13 Feb 2017

In case there is any doubt - it is officially illegal to rent out your home for less than six months.

The Planning Act was amended in Parliament last week to make short-term rentals of private homes an offence, to bring the law in line with guidelines in place since 2009.

The authorities also have more teeth now. For example, Urban Redevelopment Authority officers can, if needed, even enter premises without permission to investigate those suspected of running afoul of the law.

But lest one thinks the authorities are declaring war on such rentals, that is not quite the case.

Within the same debate in Parliament, National Development Minister Lawrence Wong said his ministry is proposing the setting up of a new category for certain private residences to engage in short-term rentals.

He suggested that new residential sites could be sold with such an approved use, while existing residential buildings would require planning permission for a change of use, subject to a set of guidelines.

In a reply to The Straits Times, the Ministry of National Development said there is certainly a place for short-term rental platforms. "What we intend to do is carefully review and consider new policies to better respond to them," it said.

On the proposal for a new category of homes, the authorities said they will garner feedback in the second quarter of this year.

It should note that the industry is awaiting details, and fast, with many stakeholders pointing out that the Government launched a public consultation two years ago but there has yet to be any discernible change.

Some industry observers have suggested that these short leases could be restricted to shoebox flats, or those in the city centre, away from suburban areas where most families reside.

It is not easy to appease those on either side of the short-term rental debate. But the sooner some clarity is provided, the better for all involved.





* No more than 6 unrelated tenants in private properties from 15 May 2017, URA informs agents
From Monday, landlords can rent out to no more than six unrelated persons; no change to HDB cap
By Ng Jun Sen, The Straits Times, 13 May 2017

When she moved out of her family home last year, Ms Yvette Lim, 34, thought she could eventually sublet her old bedroom to help her family pay the rent.

With a floor area of 4,500 sq ft, her spacious Choa Chu Kang house, where six of her family members now live, could easily accommodate a few more tenants, she calculated.

But her plans have been dashed.

From Monday, landlords can rent out private homes to no more than six unrelated persons. If there are six related people living in the residence, no tenants are allowed.

The move reduces the occupancy cap from eight previously.

Existing tenancy agreements with seven or eight tenants will be allowed to run their course until May 15, 2019, but after that, the rules will kick in regardless of the contract's expiration date, said the Urban Redevelopment Authority (URA) in a letter on Thursday to registered property agents.

For HDB flats, the maximum sub-tenants allowed for a three-room unit and a four-room or bigger unit remain unchanged, at six and nine respectively.

Ms Lim, an administrative assistant, told The Straits Times: "Eight was just nice for us, but it's a pity now because the house will be quite empty. One of the five bedrooms will be unused."

Responding to queries from The Straits Times, a URA spokesman said the rule change ensures that residential premises are "consistent with the character of the local community and integrate better with the neighbourhood".

He added that it takes into account "the strong supply of alternative accommodation" that caters to non-familial groups of occupants, such as hostels for students and dormitories for company employees.

Some residents and property watchers The Straits Times spoke to welcomed the move, saying it will reduce disruption and noise caused by overcrowded units.



PropNex Realty chief executive officer Ismail Gafoor said: "Private properties are meant to be exclusive, with owners of the development having the quiet enjoyment of the facilities and lifestyle. In order to maintain this exclusivity, the cap of six tenants is reasonable."

However, landlords such as Mr Peter Chiado not agree. The retiree, who is in his 60s, relies on rental income from his four-bedroom unit in Pacific Mansion in the River Valley area. He lives there with five tenants and hopes to get two more.

Mr Chia will have to take down his advertisement if he is unable to rent out the empty bedroom in his 1,500 sq ft apartment by Monday. This is a loss of $900 to $1,200 in potential monthly rent, he said.

The new rule will also affect home-sharing such as Airbnb. The URA is studying the option of creating a new category of private homes that will allow short-term rentals.

An occupancy cap of six means that future home-sharing hosts will not be able to lease out an apartment to, say, two large families, said International Property Advisor CEO Ku Swee Yong.

Some analysts wondered if the occupancy cap could have better reflected the size of the home.

Said Cushman & Wakefield research director Christine Li: "A better implementation could have been to peg occupancy caps to the number of bedrooms, similar to that for HDB flats."

URA said this is not the case as there are various types of private property, from small apartments to bungalows. Said a spokesman: "We have simplified the control for greater clarity to the public by not adopting a stratified occupancy cap control based on unit sizes."

Thursday's announcement gave three days for real estate agents to react and could trigger a surge in rental contracts being renewed or signed over the weekend, said ERA Realty key executive officer Eugene Lim.

On social media, some agents have started asking landlords with a sizeable number of tenants to quickly renew their tenancy pacts.

Said Mr Lim: "We have not seen any surge of sign-ups yet, but we do not rule out that some landlords will try (to do so) over the next few days, before May 15 arrives."

Mr Lim believes HDB occupancy caps may soon follow suit.

"There is a possibility that HDB may align the caps accordingly since the spirit of this rule change is to prevent overcrowding within residential units," he said.




Related
The Planning (Amendment) Bill 2017 2nd Reading Speech by Minister Lawrence Wong
To Airbnb or not to Airbnb...
URA: Renting out private residential properties

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