Clamping down on illegal HDB subletting

For-RentI wish there were more information in this Straits Times report on the HDB backing down from a compulsory acquisition of a resale flat for illegal subletting, after the owner had initiated a legal challenge. It is an interesting case that throws up various points of note.

Firstly, as pointed out by this letter to Today, there is no proper definition for owner occupation. Reading purely from the ST report, we can’t tell if the owner’s claim that he occasionally stayed with his parents is true. Even if it’s true, does that violate this occupation requirement? We also do not know what additional information has surfaced to persuade HDB to grant him benefit of the doubt. It is hard to qualify or quantify if someone is living at a particular address, so much is left to the judgement of the authorities such as by examining the laundry and other signs of daily activities. This can’t be ideal when a hefty penalty of losing one’s flat (it’s not a complete loss — HDB will buy it back at 90% of valuation) is left at such hazy discretion.

In most cases, owners have not met the Minimum Occupation Period, or have official approval to sublet only individual bedrooms but proceeded to let out the whole flat with one room locked up. You will be surprised how many Singaporeans actually still think that this locking up of one room trick is perfectly legal. Just recently, two friends of mine revealed their cluelessness in separate conversations I had with them. One of them had even bought a flat not long ago with the intention of doing just that.

So now HDB has not only backed down from a legal fight, but they are paying for the owner’s legal costs as well. Will this embolden other owners in future cases of compulsory acquisition to mount similar challenges?

The report billed this as a potential landmark case on whether HDB’s decision can be subjected to judicial review. This is strange because there were 39 compulsory acquisitions for illegal subletting in 2010 and 18 cases in 2011 alone, not to mention those that took place before 2010. But, apparently, this was the first time an owner took on the HDB in court. What does that tell us? Are Singaporeans too meek to challenge the authorities and fight for their ownership right? Do they even know of such an option? Or was guilt beyond doubt in all those cases?

HDB is stepping up on enforcement in this area, but currently it still relies heavily on whistle blowers. If they are really serious in cracking down on illegal subletting, they should make it an offence not just for landlords, but for tenants as well to rent these flats. In fact, in many cases, the tenants may be complicit in agreeing to remain hush hush in exchange for favourable rates.

Currently, tenants are only advised to check that the owner has official approval before entering into the rental agreement. This laissez-faire attitude by the authorities encourages tenant to seek the best deals for themselves where they will not be held responsible. What HDB should do is make tenants legally liable to check and hold on to a copy of this approval from the owner, with financial penalties if the illicit arrangement is uncovered. Ignorance cannot be an excuse. Putting this onus on tenants would also make it harder for errant owners to find willing participants in this illegal activity.

And, of course, property agents who help with such arrangements must be made responsible too.