Thursday, July 29, 2010

HDB seizes flats of four home owners

Six other flat owners fined, in clampdown on illegal subletting

FOUR Housing Board home owners lost their flats in the first five months of this year, after the HDB launched an unprecedented crackdown on those who let out their flats illegally.

Six others have been fined amounts that ranged from $4,200 to $14,400.

Making good its earlier pledge to clamp down on illegal subletting, HDB inspectors checked 2,600 homes from January to May, four times more than in the preceding five months last year.

Some 2,300 flat owners are in the clear, but of the 300 still being investigated, 59 cases have been classified as suspicious.

The crackdown comes after measures announced in March to ensure that heavily subsidised HDB flats are used as homes, and not as money-making tools.

For example, the minimum occupation period for resale flat buyers before they can sell the flat was lengthened to three years, up from as short as one year, to cool speculative demand for HDB flats.

The Government had said that illegal subletting was not rampant, but it also gave the assurance that it would step up enforcement against owners who flouted the rules to milk rental income.

The HDB confirmed that this is the biggest number of flats checked and compulsorily acquired over a five-month time frame.

In the preceding two years, the HDB repossessed four flats out of 56 illegal subletting cases. The other 52 were fined amounts ranging from $1,000 to $21,000.

'HDB flats are primarily meant for owner occupation. Subletting of HDB flats without HDB's approval is an infringement of the lease conditions,' its spokesman said yesterday.

As of the end of last month, 30,500 HDB flat owners, or 3.6 per cent, out of a total of 841,000 flat owners have obtained approval to sublet their flats.

In the latest blitz, the spokesman said that in all 10 cases, the flat owners were not living in their homes and had sublet the whole flat without HDB approval.

She said a fine would generally be imposed on first-time offenders, unless their actions were particularly blatant, such as repeatedly ignoring HDB reminders to evict tenants.

Then, under the HDB Act, it would resort to compulsory acquisition, returning the owner only the value at which he had bought the flat.

A penalty would also be deducted from that amount.

The HDB cited one case in which a woman bought a flat with her then-husband but stayed overseas all the while.

When the marriage broke up, the ex-husband confirmed that they had no intention of living in the flat, which had been sublet before the expiry of the minimum occupation period.

One owner even allowed his moneylender to let out his flat to collect rent that constituted his debt repayment.

The HDB also found cases where flat owners skirted subletting rules by locking up one room and renting out the rest of the flat.

The rules mandate that owners can sublet their whole flats only after they fulfil the minimum occupation periods of five years for subsidised flats and three years for non-subsidised flats.

Approval must be obtained from the HDB, with caps on the number of sub-tenants allowed, based on flat size.

Former chairman of the Government Parliamentary Committee for National Development Charles Chong said the crackdown will 'send out a very strong message that the flats are not for people to make money, but for accommodation'.

There had been public concern that illegal subletting was indirectly linked to rising resale prices.

However, property analysts interviewed said that stricter enforcement is unlikely to have a significant impact on the market.

Said group managing director Danny Yeo of Knight Frank real estate consultancy: 'There are many illegal subletters, but compared to the total number of flats available, the numbers are small.'

Mr Gerard Thomas, marketing director of SHL Realty, said: 'There are also external factors to consider, for example, what the economy is like, whether there are any disasters.'

Mr Thomas added that the stricter enforcement would reduce the incentive for people to sublet illegally because the 'price is too high to pay'.

About three in every 10 cases in the crackdown came from public tip-offs.

While flat owners who rent out rooms do not need HDB approval, they must register the subletting details within a week, on pain of a fine of up to $3,000.

This move helps track tenants who use the flat addresses to borrow from loan sharks.

A six-month grace period for those who had sublet their flats before the start of February expires at the end of this month.

Those who want to report on illegal subletting can call the HDB on 1800-555-6370.

Source: Straits Times, 29 Jul 2010

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