Owner lost 5-room HDB flat after illegally renting it out
A clever property investor devised a “foolproof scheme” – purchase a brand new public housing unit and hire a shady estate agent to then rent out the entire thing, blatantly disregarding HDB regulations. What could go wrong?
As it turns out, pretty much everything. Even though it provides the rest of us a great example of penny-wise pound-foolish behaviour.
The owner of a five-room HDB apartment thought he would be able to circumvent the Housing Board’s minimum occupancy period (MOP), a five-year requirement for most flats. He did this because he had found a realty agent who was willing to go above and beyond.
The agent submitted a fake tenancy contract to cover the crime.
The ruse was discovered a mere month after tenants moved in. HDB seized the flat of the owner, while the rogue estate agent was fined by CEA and suspended.
On the CEA’s website, cases of professional misconduct are highlighted. These serve as warnings to homeowners and offer valuable lessons for protecting their investments.
It is a mistake to believe that you can fool the authorities with false and misleading contracts and assume no one will be checking every line.
The HDB can easily detect illegal rentals, particularly when they involve owners who are yet to complete their MOP.
It is now easier for authorities to detect infractions by simply setting up a system that flags suspicious cases.
In fact, previous cases have shown that enforcement actions can be swift and furious. They can occur within weeks after the offenses are committed.
The owner of this flat had three bedrooms, so he was able to rent two out legally and continue living in the third. This is why the minimum occupancy rule was created, requiring him to stay in the apartment for a minimum of five years after August 2018, when he purchased it.
It is mandatory to pay a fee for every tenancy agreement in order to make it valid. This is a process that neither the tenant nor landlord should try to avoid because both sides risk losing money if they decide to break their agreement.
In May of 2019, the owner approached an agent in order to rent out the entire apartment, which was a violation by more than four years. The agent still went ahead and marketed the flat, and a couple of foreigners showed up in August for the viewing.
After being assured that they and their children would be able to “use the whole flat”, the couple decided to rent an apartment.
The couple was worried that when signing the agreement they would be signing for “room rental”, but they actually wanted to rent out the entire apartment and not only two bedrooms. The agent told them they could use the entire flat, and that the contract was just “formality”.
The agent then applied to Singapore’s Inland Revenue Authority to stamp and validate the agreement. She made a false statement, stating that the apartment was only partially leased when in fact the tenants owned the entire unit.
The owner was sent a letter by the HDB in September shortly after tenants moved in. It reminded him of his breach of terms and conditions for not living in the apartment or letting the entire unit out without written consent.
HDB officers visited the flat a few days after the letter was received. They found only the tenant, his family and the landlord living there. Further inquiries confirmed that there was no owner and that only the tenant lived in the flat.
The tenant and his family were forced to leave the next month. The tenant and his family suffered from great inconvenience as well as financial loss due to the fact that they were forced to move and search for a home within a short time period.
The HDB acquired the flat later, while the agent received a suspension for four months as well as a $7000 penalty and legal costs.