Owner loses 5-room HDB flat after illegally renting the flat
The CEA website highlights cases involving estate agents who have committed professional misconduct. They also serve to warn homeowners, as they provide important lessons which can protect your investment.
He had three bedrooms and could legally rent out two of them while continuing to live in his third bedroom. The minimum occupation rule required that he live in the flat at least for five years starting August 2018 when it was purchased.
The owner, however, approached an agent for a lease of his entire flat in May 2019. This was a violation of the rule over four years earlier. The agent marketed the apartment anyway and in August, a foreign couple showed up to view it.
In order for tenancy contracts to be considered valid, they must be paid a levy. It is important that both the landlord and tenant go through this process, as they could lose a lot of money if one side decides to back out.
HDB is able to easily detect illegal rental cases, especially when the owners have not yet completed their MOP.
Past cases have shown how swiftly and furiously enforcement can happen – even within weeks of an offence being committed.
A rogue agent tried to hide the act by submitting a false lease agreement.
The scam was revealed a month later, when the tenants moved into the apartment. The guilty parties were punished severely – the HDB took back the owner’s property and the rogue agent received a fine and suspension from the Council for Estate Agencies.
HDB officials visited the flat days after receiving the letter and discovered that the only people living in the apartment were the tenant and relatives. The owner of the flat did not reside there, and the tenant rented out the entire flat.
The couple agreed to lease the apartment after they were assured that their children and themselves could “use the entire unit”.
After signing the contract, the agent submitted it to the Inland Revenue Authority of Singapore for stamping and validation. The agent made a misleading statement by claiming that the flat had been partially leased, when in reality the tenants had all of the unit to themselves.
In September, shortly after the tenants had moved in, the HDB sent the owner a reminder that he was in breach of the terms if he didn’t live in the flat, or rented out the entire unit without written permission.
A property investor invented a “foolproof’ scheme: buy a public housing unit. Hire a dodgy agent, and then ignore HDB laws to rent the whole thing out. What could possibly go awry?
The couple worried about signing a tenancy contract for “room rentals” when they really wanted to rent an entire flat, not just two rooms. They were assured by the agent that they can use all rooms and ignore the wording in the agreement because it is just a formality.
It’s pretty much all of it, but it is a good example for the rest us of penny wise, pound foolish behavior.
You would be foolish to assume that no one would check the fine print of your agreements, or to use false and misleading language.
The authorities can detect any violation by putting into place a system of flagging suspicious cases.
The owner thought that he could get around the Housing Board’s Minimum Occupation Period (MOP), five years in most cases, by finding a real estate broker who would go the extra distance.
In the end, the tenant’s family and he had to vacate within the month. They were inconvenienced and had to spend money in order to find a new house and move quickly.
The HDB later acquired the flat compulsorily, and the agent was suspended from work for four month while being forced to pay $7000 in legal fees plus a fine.