SINGAPORE — The soaring rental prices of housing in Singapore have prompted many to explore alternative solutions, with short-term leasing contracts and highly flexible shared living spaces emerging as popular choices.
One co-living operator saw a business opportunity and signed a three-year contract to rent an apartment unit in Geylang, which they renovated and turned into a co-living space for rent.
However, after only one year, the landlord unexpectedly terminated the contract and asked some tenants to move out after just a week.
Shin Min Daily News reported on a dispute between a female director of a co-living company and their landlord.
According to the director, they had rented an apartment unit in Geylang for S$2,900 per month in September 2021, with the contract stipulating that the unit would be used as a co-living space.
However, on 12 December last year, the landlord accused the co-living company of illegally installing partitions in the unit, which might violate the Urban Redevelopment Authority (URA)’s regulations, and asked them to vacate the apartment by 15 January 2023.
“We dismantled the partitions and sought legal advice. The landlord was asked to provide evidence of the non-compliant partitions, but could not produce any,” the director told a Shin Min Daily News reporter.
The female director also accused the landlord of entering the unit without permission on 13 and 17 January and again on Monday, 20 February, to post notices requesting all tenants to leave and allegedly opened the tenants’ doors.
One male tenant who recently moved in with his wife reported that his wife was frightened by the landlord’s intrusion while she was showering.
Another male tenant, who had lived there for a year, expressed his discomfort with the landlord’s unauthorized entry into the unit. The co-living company reported the incident to the police and spent nearly S$300 on new locks for the tenants.
The landlord’s notice stated that they were taking back the unit due to illegal partition construction and demanded that tenants vacate the unit.
The landlord, Mr Chong (28 years old), told the press that he had notified the female director of the company of his intention to terminate the contract at the end of last year, but she continued to pay rent for the first two months of this year, indicating that she did not want to move out.
He also stated that he had to notify the tenants in person because there was no contact information for them.
Furthermore, he discovered that there were individuals in the unit who were not listed as tenants.
Director suspects landlord changed his mind due to soaring rents
The co-living company director suspected that the landlord had changed his mind because of the soaring rents and was looking for an excuse to take back the property.
However, the landlord argued that while he had been informed that partitions would be constructed, he had also reminded them that they must comply with the law before agreeing. Later, he discovered that the partitions were illegal after researching online.
“A partition in one of the rooms has no windows, which does not comply with regulations, and there are also concerns about emergency escape,” Mr. Chong added. According to the lease agreement, the co-living company was required to provide relevant information about tenants within two weeks of changing tenants, but they did not do so.
“I have no idea if these tenants have legal permits to stay in the country.”
“She accused me of terminating the contract just to increase the rent, which is unreasonable. We only had a year and a half left on the lease, and even if we rented it out after terminating the contract, we would only make a few hundred dollars more. It’s not worth it for me to go through all this trouble just to earn a few extra thousand dollars,” said Mr Chong.
The company director claimed that she spent nearly S$30,000 on renovations, air conditioning, painting, and partition construction, provided a three-month deposit, and also had to find accommodation for displaced tenants.
After the incident, she claimed to have tried to contact the owner’s son several times to negotiate compensation, but was unable to reach him.
“I didn’t avoid her. I asked to meet with her several times, but she sent me lawyer’s letters instead and threatened to call the police,” Mr Chong added.
The female director had made an unreasonable compensation claim of over S$50,000 from him, including the income loss for the remaining year and a half after termination.
“Since she was the one who broke the rules first, I cannot compensate her, but I am willing to refund the deposit and give the tenant half a month to a month’s time to find a new place to rent.”
Internal re-partitioning for private property still requires approval
The co-living company did not disclose how many tenants were staying in the apartment before the landlord requested them to leave.
According to URA, all types of private residential property are subjected to an occupancy cap of six unrelated persons per property.
The occupancy cap also applies to tenants who sublet the property.
If someone wants to create new sub-units within a residential dwelling unit (e.g. partitioning a large room into smaller rooms), this is considered an internal re-partitioning and it requires planning permission from URA.
In other words, simply creating new sub-units within a residential unit is not automatically allowed and requires approval from URA before it can be done legally.
Meanwhile, the subletting of HDB flats is strictly prohibited in Singapore.
High demand in co-living market
In its Q4 2022 poll, the National University of Singapore Real Estate (NUS+RE) consulted developers and other stakeholders in Singapore’s real estate sector on the future of the co-living market.
Half of the respondents believed that co-living is a permanent trend, while around one in five considered it a passing phase. Over 60 per cent of respondents thought that young workers with lower incomes would be more likely to opt for co-living, given rising rental prices and mounting cost pressures in the public and private housing markets. Some respondents believed that co-living would emerge as an alternative to renting.
The co-living market performed well in 2022, with operators reporting high occupancy rates, some exceeding 95 per cent.
URA revealed in its Q4 report 2022 real estate statistics that rentals of private residential properties increased by 7.4 per cent in Q4 2022, compared with the 8.6 per cent increase in the previous quarter. For the whole of 2022, rentals of private residential properties increased by 29.7 per cent compared with the 9.9 per cent increase in 2021.
The rental price hike and new property curbs have restricted homebuyers’ purchasing power, further driving demand for co-living spaces.