Renting Out Your Whole HDB During MOP (Comes with a Price)
Is it possible to be renting out HDB before MOP (the end of the Minimum Occupation Period) ? In my previous article on the HDB MOP rules, it was mentioned that it is illegal to rent out your whole HDB flat. Do not lock one room, keep a key and try to rent it out. It is illegal. You can lose your HDB flat.
It is not technically complete. It IS POSSIBLE to rent out the whole HDB flat during the Minimum Occupation Period but that has to come with the approval of HDB.
What are the reasons that you can be renting out HDB before Minimum Occupation Period
Let’s recap. There are many things you cannot do during the MOP period and these are covered in the article I wrote on the do and don’t during the MOP previously. Many details also can be found in the HDB page on these MOP rules.
One reason that HDB might approve is the owner (and his co-owner) will be working overseas. Hence no one will be staying in the HDB flat and you can write it to HDB to apply for special permission to rent out the whole HDB unit during the period. Each approval period is 2 years maximum.
From HDB email reply to my question on renting out HDB before MOP:
For HDB to consider appeals for flat owners to rent out their flats during the 5-year Minimum Occupation Period, they must write in directly to HDB to review their appeal on a case-by-case basis. It would be best if the request is supported by a company letter detailing their work contract and when the overseas posting will end.
If approval is given, it will not be definite. It will only be for a fixed period of time (2 years per appeal) and they are expected to resume occupation immediately upon expiry.
Also the flat owners must apply for a Power Of Attorney to manage the flat on their behalf. I believe the basic theory behind this is that there is no one in Singapore to take care of the flat (you are overseas, right ?!).
For flat owners going overseas, they must apply for a Power of Attorney to manage their flat on their behalf. This document needs to be submitted at the point of tenant registration (after approval is issued).
A very serious implication of renting out HDB before MOP
When you are overseas and enjoying your cultural experience and renting out your whole HDB flat and receiving a good rental yield on it, you must be really happy, right ?
The most common thing that people would say is this. I am using my CPF to pay for my HDB flat and I am getting cash rental for it. People are paying for my mortgage loan. It is a great deal etc.
However, and there is always a however, there is a VERY IMPORTANT implication that you should be aware of when you are renting out HDB before MOP.
The period of time in which your flat is rented out is NOT included into the Minimum Occupation Period.
Let me rephrase it. The two years you are renting out your WHOLE HDB flat approved by HDB comes with a price. It is NOT part of your MOP.
Let's say you bought your flat in 2020.
You got an overseas job in 2022. By then you have fulfilled 2 years out of your 5 years of MOP. 3 more years to huat huat.
You decided to rent out the whole flat, thinking of the beautiful monthly rental of $2,500. You got approval from HDB. These 2 years of rental does not count into the HDB MOP period !
In other words, instead of MOP ending in 2025, it now ends in 2027. Seven years after you got your flat.
As confirmed by HDB:
To make it clear, here's the official answer:
The period of renting out of flat will not be counted toward the Minimum Occupation Period and the owners must make it up upon their return to Singapore.
For about $2,500 per month of renting out your whole 4 room or 5 room HDB flat, over a period of 2 years, that would net you $60,000. Which is a very good sum of money. However, you added two more years to your MOP period.
Is that a good deal then ?
At the end of the day, it depends on whether you are a keen player in the property cycle. In my view (and opinion), buying and waiting for a BTO flat to be built already set a young buyer back by 3 years (during this period, you are not allowed to buy any properties).
Then you add another 5 years of MOP and you are now 8 years out of the property cycle.
And finally now, extending 2 more years to the MOP (because you rented out with special approval from HDB), means that you are 10 years out of the property cycle.
10 years ! 10 years without a chance to dip into ups and downs of the property cycle. You can only watch the world goes by, up and down. Up and down. Of course, you might miss out on the bad times but you might also miss out on the good times.
At the end of the day, it is a personal choice whether to add that 2 years (or whatever number of years you are overseas and have special approval to rent out your whole HDB flat during MOP). Just remember that it does not count into your MOP and hence it will lengthen your MOP.
Good or bad. Your choice.
I can only say, “人的一生有多少个五年” 🙂
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