Archive for the ‘HDB Subletting’ Category

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‘Punish rogue agents and tenants too’

March 28, 2010

Source : Sunday Times

Moves to clamp down on illegal subletting of HDB flats should not penalise only the owner, property agents told The Sunday Times.

Tenants and rogue property agents who close these deals should also be held responsible, they suggested.

They were responding to a case that made the headlines two weeks ago in which the HDB repossessed three flats linked to a man, Mr Poh Boon Kay, who also owned five private properties.

It was the most serious case of illegal subletting in the last two years. Only three other flats have been compulsorily acquired by the HDB over that period.

Such owners are not left with nothing. The HDB pays them the difference between the value at which they bought the flat, and the financial penalty.

So in the case of Mr Poh, who the HDB said had bought his flat in 2007 at $150,000, the HDB is considering a fine of $25,000 and returning him $125,000. The flat would fetch about $320,000 in the current market, according to property analysts cited in media reports.

Owners like Mr Poh also have 28 days to appeal to the HDB from the time they are given notice of the repossession of their flats.

In another 52 cases over the past two years, errant flat owners were fined amounts ranging from $1,000 to $21,000.

Subletting HDB flats is seen as a good source of income, property agents noted. For instance, an owner who buys a three-room flat at $250,000 and sublets it at $1,600 a month will receive an annual return of $19,200, or close to 8 per cent of the price he paid for the flat.

This is double the 3 per cent to 4 per cent rental yield for private properties.

A tenant must get HDB’s approval before he sublets his flat. He does not need to do so if he sublets only spare rooms, but he must register with HDB within seven days of subletting the rooms.

An indication of the popularity of subletting is the steady increase in the number of approvals that HDB has granted, from 5,849 in 2003 to 15,344 in 2008, with a slight dip to 15,137 last year.

The HDB told The Sunday Times that while HDB flats are for owners to occupy, it has relaxed its policy over the years to make it easier for owners, including retirees, to sublet their flats to supplement their income.

Doing so also enlarges the rental market for HDB flats, and gives those who are not yet ready to buy a property more rental housing options.

Flat owners must fulfil some criteria, such as living in the flat for up to five years if they sublet the whole flat or continuing to stay in the flat if they sublet spare rooms. (see Subletting rules)

Property agents said some flat owners ignore the HDB’s requirement to obtain its approval because they do not want to become ineligible for government rebates in service and conservancy charges, and they want to avoid paying more in property tax.

The property tax rate is 10 per cent for owners who sublet their whole flat, much higher than the 4 per cent for those who live in their flats, in addition to enjoying property tax rebates.

Of greater concern is the unhappiness among people who believe they are being priced out of the HDB resale market by others with deep enough pockets to buy an HDB flat – not to live in it, but to sublet it and cash out later on.

‘I’ve heard a lot of complaints on the ground,’ said Ms Lee Bee Wah, an MP for Ang Mo Kio GRC. ‘These people are thinking it’s because those living in private estates are allowed to buy HDB flats and jack up prices.’

However, Minister for National Development Mah Bow Tan said this month that the majority of resale flat buyers are citizens who do not own any private property.

Violating HDB rules

The HDB said of the 23,200 owners who are subletting their entire flats with its approval, close to 29 per cent are elderly households.

About 22 per cent moved in with their children, and another 38 per cent moved in with their parents, siblings and other relatives.

Property agents interviewed said private property residents out to make rental income are not the only ones who sublet their HDB flats.

Among them are singles who bought a flat but live with their parents, and young couples who own a new flat but live with their parents because they need their help to look after their children. Others sublet their flats to make ends meet.

In its reply to The Sunday Times, the HDB warned that it has stepped up enforcement against flat owners who flout the subletting rules.

The chief executive officer of real estate agency Propnex, Mr Mohamed Ismail Gafoor, supports the idea that tenants be subject to penalties as well. He suggested that the HDB require owners to show proof of their eligibility to sublet their flats to tenants. ‘If the tenant goes into a contract without verifying the eligibility, the tenant becomes liable too,’ he said.

A spokesman for the Institute of Estate Agents (IEA) noted that many tenants are foreigners working here.

‘They could be warned that if they breach the rules, their work pass might be cancelled,’ said Ms Margaret Chan, IEA’s first assistant honorary secretary.

However, some foreigners may be in a bind because of a lack of cheap rental housing, said Mr Chandran Pillay, senior vice-president at real estate agency Century 21.

‘People have called me saying that even if the flat is not approved for subletting, never mind. They are already here with their wife and children,’ said Mr Chandran, who has rejected such requests.

While low-skilled workers are housed in dormitories, other workers end up sharing a whole flat to split the cost.

The HDB allows up to six people to live in a rented three-room flat and up to nine in a bigger unit. So three couples renting a three-room flat in Ang Mo Kio for $1,800 a month may still pay $600 each in rent.

The HDB did not directly address the question of taking tenants to task when asked.

Property agents are another group that needs to be regulated, said IEA’s Ms Chan. She reckoned that there are still agents who would agree to help an owner sublet his flat even if he does not obtain HDB approval.

Others may advise owners to lock one bedroom and sublet the rest of the flat without the owners themselves living in it, said Prop-nex’s Mr Mohamed Ismail. The HDB said such a practice is disallowed.

Ms Chan noted that these agents have nothing to lose: They do not need an individual licence to operate, so there is no fear of losing one.

Real estate agencies have also said they have too many agents to be responsible for every one of them.

There are about 1,700 licensed real estate agencies, with an estimated 25,000 to 30,000 real estate agents.

The lack of accountability in the real estate industry will soon change, with a new regulatory framework being worked out by the Ministry of National Development.

It has said previously that the framework would require real estate agencies to take greater responsibility for the actions of their agents, with the possibility of agencies and agents facing disciplinary actions for flouting laws and accreditation requirements.

The ministry told The Sunday Times it would share its plans over the next few months.

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HDB takes action against 56 flat owners for illegal sub-letting

March 13, 2010

By Mustafa Shafawi
Source : Channel Newsasia

The Housing and Development Board (HDB) has taken action against 56 flat owners for illegal sub-letting between January 2008 and December last year.

Most were fined between S$1,000 and S$21,000.

One owner had his flat repossessed for blatantly flouting HDB’s sub-letting rules.

Giving details of the case, HDB said it first received feedback on the unauthorised sub-letting of a unit in Block 336 Bukit Batok Street 32 on November 11 last year.

The flat was bought by Poh Boon Kay, who is a registered real estate agent. His wife was listed as an occupier.

He purchased the four-room flat from the open market in June 2007 without any loan.

HDB said the couple are also owners of five private properties. Its investigations found that the flat was sublet without its prior approval to three couples.

Mr Poh and his family did not live in the flat.

He was informed on November 25 to take immediate steps to evict the unauthorised sub-tenants, failing which HDB would take compulsory acquisition action.

However, the subtenants continued to occupy the flat. A notice to compulsorily acquire the flat was then served on December 23.

Mr Poh informed HDB on the same day that the sub-tenants had signed an undertaking to vacate the flat by the end of December.

A day later, the couple appealed. He claimed that the sub-tenant needed time to work out his finances before buying over the flat from Mr Poh.

He had therefore decided to rent out the flat to the sub-tenants in the interim.

On January 5, when the couple was interviewed by HDB, they claimed they did not know that they needed to seek the board’s prior approval before subletting the flat.

They also claimed that they were not aware of the policy for flat owners to fulfil the Minimum Occupation Period (MOP) of three years before they were eligible to sublet the whole flat.

HDB’s further investigations have shown that Mr Poh is also related to two other cases of unauthorised subletting at Bukit Batok and Telok Blangah.

With these further instances of unauthorised subletting related to Mr Poh, his claims that he is “unaware” of HDB rules cannot be substantiated.

HDB said as he has blatantly flouted HDB’s rules, there are no grounds for leniency and legal action has been taken to compulsorily acquire the flat.

HDB will also be taking legal action to compulsorily acquire the other two flats.

HDB would like to emphasise the severity of unauthorised subletting. HDB flats are meant for owner occupation. Flat owners who wish to sublet their whole flat must obtain approval from HDB and fulfil the MOP.


The current MOP for the subletting of flats is as follows:


Flats bought directly from HDB – 5 years


Resale flats purchased with CPF Housing Grant – 5 years


Resale flats purchased without CPF Housing Grant – 3 years

– CNA/ms

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Illegal subletting: HDB to repossess man’s flats

March 13, 2010

Source : Straits Times

HDB started checks after getting tip-off

IT ALL started with a tip-off to the Housing Board (HDB): A four-room flat in Bukit Batok was being rented out illegally.

Further checks confirmed that the flat – bought by Mr Poh Boon Kay and his wife Khoo Kim Cheng in June 2007 – had been sublet without the HDB’s prior approval to three Myanmar couples at a monthly rent of $1,900.

Mr Poh, a housing agent, and his family did not live in the flat.

They were told to evict the sub-tenants immediately on Nov 25 last year, failing which the board would take possession of the flat.

But the sub-tenants did not go.

On Dec 23, the HDB sent Mr Poh a notice to say it would take back his flat.

But Mr Poh, 61, claimed his tenants had agreed in writing to vacate the flat by the end of December.

The next day, he and his wife appealed against the HDB’s move. They said they intended to sell the flat to one of the tenants, who needed to sort out his finances.

The HDB then interviewed the couple on Jan 5 this year, during which they claimed they did not know that they needed prior approval to sublet the flat.

They also claimed that they were not aware of the minimum occupation period (MOP) of three years before they were allowed to sublet the flat.

But further HDB investigations showed that Mr Poh was connected with two other cases of unauthorised subletting of flats belonging to his relatives in Bukit Batok and Telok Blangah.

The flat in Bukit Batok belonged to his aunt, aged 91, and had been sublet to Myanmar monks since July last year for a monthly rent of $1,400.

The monks used it as a meditation centre, and the rent was paid to Mr Poh, who acted as his aunt’s housing agent.

The Telok Blangah flat, meanwhile, was owned by his daughter.

It had been rented out for $900 monthly since May.

Checks with neighbours confirmed that Mr Poh’s daughter was not living there.

Both flats were also sublet without obtaining the HDB’s prior consent, and the board said that it would be taking steps to acquire them compulsorily.

In a statement yesterday, the HDB said that the additional cases of illegal subletting by Mr Poh showed that his claims of being unaware of the HDB’s rules cannot be substantiated.

‘These regulations are publicly available from many sources,’ it said, adding that ‘there is clear evidence that Mr Poh, a housing agent by profession, has been intentionally abusing HDB flats for monetary gains’.

It concluded: ‘As he has blatantly flouted HDB’s rules, there are no grounds for leniency.’

Mr Poh Boon Kay shows the compulsory acquisition notice for his Bukit Batok flat, which had been rented out illegally. — ST PHOTOS: AZIZ HUSSIN
View more photos
IN A clear warning to those who sublet their flats illegally, the Housing Board (HDB) has moved to take back three apartments linked to a real estate agent who owns five private properties.

One flat to be repossessed belongs to the real estate agent, Mr Poh Boon Kay, 61, and his wife, Madam Khoo Kim Cheng, 52, who had illegally sublet their four-room flat in Bukit Batok.

The other two flats in Telok Blangah and Bukit Batok are owned by the couple’s daughter and Madam Khoo’s 91-year-old aunt respectively. Both flats were also illegally rented out.

He acted as agent for the elderly woman and collected rent on her behalf.

The HDB said it is taking legal action to take back the units.

It is the most serious case of illegal subletting in the last two years. Only three other flats have been compulsorily acquired in that time.

In November last year, the HDB checked and found that Mr Poh had sublet his flat to three Myanmar couples without HDB approval.

The Pohs, who were not living there at that time, had also breached the Minimum Occupation Period (MOP) of three years. This rule states that buyers who purchase resale flats without a housing grant from the Central Provident Fund Board have to live in the flat for three years before they can rent out the whole unit.

The HDB then told Mr Poh this was unauthorised, and that they were intending to repossess his flat. On Dec 23, the HDB pasted a notice of intention to compulsorily acquire his flat.

The HDB told The Straits Times yesterday that Mr Poh will continue to hold the title deeds until investigations are complete. It will then decide whether to take back the title deeds officially and compensate him to the amount of $125,000.

Mr Poh, who claims he paid $155,000 for the house, can lodge an appeal against the notice. When asked, he said he was intending to appeal.

Mr Poh, an ordinary member of the Institute of Estate Agents (IEA), pleaded ignorance of the three-year MOP; he said he had been told by the HDB’s counter staff that he could sublet the flat after a year. He could not name the HDB employee.

But the HDB said that because of Mr Poh’s links to the other illegal subletting cases, his claims of ignorance could not be substantiated.

‘There is clear evidence that Mr Poh, a housing agent by profession, has been intentionally abusing HDB flats for monetary gains,’ said the HDB spokesman.

Mr Poh said he had not seen the acquisition coming. He added: ‘I can’t believe a notice can be served within a month of the HDB giving a warning letter.’

He said it was more usual for the HDB to send a second warning, or even fine an errant owner first.

The Housing and Development Act says, however, that the HDB can compulsorily acquire a flat once it ascertains that the owner is illegally subletting it.

‘HDB takes a stern view of unauthorised subletting, and will not hesitate to take strong action against those who flout the rules,’ it said.

The Board added that it will bring Mr Poh’s case to the attention of the IEA.

Mr Poh, who claims his daughter is stuck in the United States with marital problems, declined to discuss the cases involving her and his wife’s aunt.

He said he did not know for sure when they bought their flats.

The HDB has taken action against 56 such owners in the last two years, dishing out punishments ranging from fines of $1,000 to $21,000, to repossessing the flats involved.

HDB added that there was no discernible upward trend.

Flat owners who wish to rent out their flats must obtain approval from the Board and fulfil the MOP. The current MOP for subletting flats is five years for flats bought directly from the HDB or resale flats purchased with a CPF Housing Grant, and three years for resale flats bought without the CPF grant.

About 682,000 flats are eligible for subletting, but only 3per cent of these flats are sublet.

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Unauthorised subletting of HDB flats

March 12, 2010

Source: straits Times

HDB steps up enforcement

Reminding flat owners who want to sublet their whole flat, HDB said in a statement: HDB would like to emphasise the severity of unauthorised subletting. HDB flats are meant for owner occupation.

THE Housing Board on Friday served notice that it is stepping up enforcement action against unauthorised subletting of HDB flats.

It also disclosed that it has acted against 56 errant owners between January 2008 and last December, and fined them between $1,000 and $21,000. The board also repossessed a flat from an owner who had blatently flouted the subletting rules.

Reminding flat owners who want to sublet their whole flat, HDB said in a statement: ‘HDB would like to emphasise the severity of unauthorised subletting. HDB flats are meant for owner occupation.

‘Flat owners who wish to sublet their whole flat must obtain approval from HDB and fulfill the Minimum Occupation Period.’

It added that subletting of whole flats without HDB’s approval is an infringement of the lease, which could lead to compulsory acquisition of the owner’s flat.

‘HDB takes a stern view of unauthorised subletting, and will not hesitate to take strong action against those who flout the rules,’ it warned.

To help prevent such abuse of public housing, residents are encouraged to call the HDB hotline at 1800-5556370 (Monday to Friday – 8am to 5pm) to report any suspected cases.

Any information given will be treated with the strictest confidence, assured the HDB.

HDB’s terms and conditions for subletting of flats:

Flat Type and maximum number of subtenants allowed:

1-Room and 2-Room : 4 persons

3-Room : 6 persons

4-Room and bigger flat type : 9 persons

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Agent targeted foreigners in rental scam

March 11, 2010

Source : Straits Times

A PART-TIME property agent duped eight foreigners in a rental scam and collected nearly $22,000 for herself and her accomplices.

Razieya Mohamed Ali was jailed for 11 months by a district court yesterday.

From November 2008 to February last year, the 34-year-old divorcee would post flats-for-rent advertisements on the Internet and invite foreigners working here to view the premises.

To entice them to sign the tenancy agreement after they had seen the flats, she would offer very low rents. She knew that the flats were occupied and by the time her victims found out, she and her accomplices would be long gone.

However, the police tracked her down.

She initially denied the charges and on the first day of the trial on Nov 30, her friend turned up instead. She claimed that Razieya had been raped by her former husband and was in no condition to attend court proceedings.

No police report or medical certificate was offered.

Assistant Public Prosecutor Santhra Aiyyasamy said yesterday that Razieya did not attend any police interview to substantiate the accusation.

Yesterday, the prosecutor asked for a deterrent sentence as Razieya had targeted foreigners, who were vulnerable to such scams.

Two of her accomplices were dealt with last year. Axley Alexander Ryan Shah, 40, a serial offender, was sentenced to six years’ jail while Letchimi Kasinathan, 52, was sentenced to 2 1/2 years.

A third accomplice, Arul Rajoo Michael Rajoo, 39, remains at large.

The court heard that in January last year, he hatched a plan with Razieya and Ryan to offer his leased flat for rent to foreigners and to cheat them of the deposit and rental. Their victims included Chinese, Filipino, Indian and Myanmar nationals.

Razieya also conspired with Letchimi, whose son stayed in a rented flat in Lengkok Bahru, near Jalan Bukit Merah. Without his knowledge, they offered it to Mr Jun Ojima, 43, a Japanese working here as a golf coach, for $1,000 a month on Jan 1 last year.

He handed over a deposit of $1,000 but two days later, he complained that the rent was too high and the two women lowered it to $700 on the condition that he pay up six months in advance.

Payment was made but before he could move in, Razieya cancelled the agreement.

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Property agents call for curbs on subletting

March 7, 2010

Source : Sunday Times

The slew of new measures announced by the Government last Friday to curb speculative buying and selling of Housing Board flats does not address one issue – subletting – said property experts.

Under current rules, buyers of resale HDB flats can sublet the entire flat after three years if they did not take a government grant or HDB loan.

If they bought the flat with the grant and HDB loan, the minimum stay-in period is five years.

‘If you want to stop prices from rising and people from speculating, control the rental market too,’ said Mr Raymond Quah, president of Dennis Wee Properties.

The rental market indirectly influences the price of resale flats, said agents.

Home owners, realising that they can make money from rentals, are unlikely to sell their flats should they go on to buy private property.

This may lead to a dip in the supply of resale flats in the market, resulting in resale flat prices going up, said Mr Steven Tan, executive director of OrangeTee’s residential division.

There are also other factors that influence resale flat prices. One is the reselling of flats as soon as the minimum occupation period is up – one year for those who bought a resale flat without government subsidies or loans.

That is why the Government unveiled new rules last Friday to curb speculative buying and selling of public housing.

Among these new rules is one that states that the minimum occupation period for resale flats with and without subsidy is now three years.

The current rules on subletting were laid down in 2007 – after earlier rule changes in 2005 and 2003 – to allow more people to earn cash from leasing out their property.

Before 2003, owners were not allowed to rent out their flats unless they were working abroad, for example.

That year, HDB relaxed the rule to allow home owners to rent out their flats after 10 years if they had paid up the loan, and 15 years if they had not. In 2005, this was cut to five and 10 years respectively.

‘But the circumstances are different now – prices have spiked – and it is time to go back to the old rules,’ said Mr Quah.

There had been spikes in HDB resale prices in the three months following every rental rule change, suggesting there may be a connection between resale prices and subletting.

For instance, in the second quarter of 2003 following the February 2003 HDB rental rule change, resale prices went up by 2.13 per cent from first-quarter prices, according to HDB’s resale price index. This compared with only a 0.2 per cent increase in the same period a year ago.

More recently, after further easing of subletting rules in March 2007, the three months that followed saw resale prices jump 2.95 per cent. This compares with a 0.98 per cent increase during the same period in 2006.

Ms Jarina Shamsudeen, an agent with property firm PropNex, also felt the Government should revert to the old subletting rules to control property prices.

Based on anecdotal evidence, more Singaporeans approaching 35 years old are buying and subletting their flats for income. ‘Permanent residents are doing that too,’ she said.

Ms Jarina suggested that only Singaporeans posted overseas should be allowed to sublet their flats, and that private home owners should also be barred from subletting.

According to OrangeTee’s Mr Tan, tweaking subletting rules is necessary because ‘no matter how small the contributing factors are, they do add up’.

He was responding to a comment from National Development Minister Mah Bow Tan that only

3 per cent – or 20,460 flats – of eligible homes are sublet.

Mr Mah suggested that most flat owners are buying their flats for occupation and not rental.

‘If private property owners can buy HDB flats or keep their existing flat to earn money from rentals, the supply of resale HDB flats will dip,’ Mr Tan said. This will push up the prices of resale flats.

Illegal subletting may have indirectly contributed to rising HDB prices, said Knight Frank consultant Peter Ow.

It is known that some people lock up a room in the flat but lease out the entire unit, exploiting a loophole in the law.

‘This is not an issue of policy but policing,’ Mr Ow said.

Unless rules are enforced rigorously, having them will not deter people from doing things behind the backs of the authorities.

‘Even if there are rules to control subletting, people will still break them. So the rules – tighter or not – would not have much of an impact,’ said an ERA agent who did not want to be named.

But not all home owners who rent out their flats are speculators.

Retiree Christine Chan, 65, rents out two rooms in her five-room flat in Choa Chu Kang as this is her only source of income.

‘I cannot find employment anymore due to my age, so I rely on the $1,000 I make from renting out two rooms for retirement,’ she said.

‘I am not looking to make a quick buck. I feel that if the Government were to tighten the rules, it should make some exceptions.’

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HDB flats: Facts & Myths

March 7, 2010

Source : Straits Times

NATIONAL Development Minister Mah Bow Tan spent some time in Parliament yesterday addressing popular misconceptions about Singapore’s public housing market.

MYTH: There are not enough HDB flats to meet demand.

HIS RESPONSE:

The HDB released 13,500 new flats last year and will release another 12,000 or more this year. This is more than the total number of flats in Clementi or Jurong East (about 23,000 flats each).

The massive oversubscription rates for new flats are misleading. That is because half the number of flat applicants choose not to book a flat when invited to do so. Many say this is because they could not get a flat of their choice, yet in recent selection exercises, one-third rejected flats on the first day of selection, when all the flats were available.

Some first-time buyers have complained that they have tried repeatedly to get a flat to no avail. But when the HDB reviewed 477 such cases in the last six months, it found only 29 appeals (6 per cent) were genuine.

CASE STUDY: Mr C complained about his lack of success in getting a flat. The HDB’s checks found that he had submitted four applications, three of which were in highly popular mature estates. In six months, he consecutively rejected three offers of flats: one offer of 121 flats in Punggol/Sengkang because he had been ‘targeting a unit in Buangkok’; another offer of 143 flats in Punggol because ‘the units left are facing the mosque’; and a third offer of 14 flats in Serangoon, Yishun, Ang Mo Kio, Tampines and Woodlands because these were not his ‘choice’ flats.

MYTH: HDB flats are unaffordable.

HIS RESPONSE:

On top of the CPF Housing Grant of $30,000 or $40,000, there is an Additional Housing Grant (AHG) for lower-income families of up to $40,000. As of Jan 31, the Government disbursed more than $330 million in AHG to more than 20,000 families.

The median house price is 5.8 times the median household income in Singapore. In comparison, the ratio is 7.1 in London and 19.8 in Hong Kong.

The average mortgage payment for new flats in non-mature estates sold in 2009 was 22 per cent of monthly household income. This is well below the affordability benchmark of 30 per cent to 35 per cent.

Four out of five Singaporean new flat buyers service their housing loans from CPF savings, without any cash payment.

CASE STUDY: Mr and Mrs S, with a $4,500 monthly income, bought a four-room flat in Punggol for $297,900. They received $10,000 in grants and took a concessionary loan of $268,100 (90 per cent of the price) from the HDB. The couple’s monthly instalment is $1,073, or 24 per cent of their income. They can use $1,035 from the CPF to service the mortgage and end up paying only $38 monthly in cash.

MYTH: PRs push up prices.

HIS RESPONSE:

The median cash-over-valuation (COV) paid by permanent residents have been the same as the median COV nationwide for the last two quarters.

Cases of PRs paying high COV are the exception. Of 37,205 resale transactions in 2009, 58 cases had COV exceeding $70,000. Of this, only eight (14 per cent) involved PRs.

MYTH: Private property owners push up prices.

HIS RESPONSE:

Their number is not large enough to push up prices. Of the 58 resale transactions last year with COV exceeding $70,000, only 11 cases (19 per cent) involved private property owners.

MYTH: Subletting of HDB flats is rampant.

HIS RESPONSE:

Of the 682,000 flats that have fulfilled current Minimum Occupation Period requirements, only 3 per cent are sublet. This suggests most flat owners are buying their flats for occupation, and not rental.

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