One common investment practice in Singapore is to purchase an HDB flat from sites like Property Guru and rent it out to local and foreign workers. Due to the country’s relatively small size, thriving economy, and the sheer amount of demand, it is not surprising that many people look towards real estate as the ideal investment platform. However, before you rent out your flat to anyone that inquires, there are a few essential steps that you should keep in mind.
Always Verify the Paperwork of your Prospective Tenant
One of the first steps that a flat owner should do is check the paperwork of your potential tenant. Yes, it is very tempting to rent out your place to the first person that inquires about it, but how sure are you that they are here in the country legally? All landlords are legally obligated to perform proper due diligence when it comes to all rental contracts. Failure to do so can result in either of the two scenarios:
- Scenario 1: If found to be wholly negligent, which entails you forgetting to perform any form of due diligence, you can face jail time of up to six months to two years and a fine of six thousand dollars
- Scenario 2: If found to be partially negligent, wherein you only partially investigated the paperwork of the tenant, you could potentially face jail time of up to a year and possibly a fine of six thousand dollars.
No one wants to go to jail, and that is why the Ministry of Manpower in Singapore highly recommends the use of its WP Online verification tool so that landlords can verify the work passes of their tenants. Remember, proper due diligence will only take you a few minutes on the internet, take the time to do so to prevent any legal issues from troubling you.
Ask About the Job of the Tenant
You, as a landlord, need to protect your interests, and one of the best ways of doing so would be to determine if the job of your potential tenant allows them to pay the rent of your apartment on time. For example, is the person inquiring a salesperson for a company that has a commission-only job? Is the person a student at a local university that is working part-time to pay the rent? Are they here under a short-term employment contract? It is questions like these that help to prevent you from winding up with a tenant that is late with payments or makes multiple excuses as to why they are not able to pay this month. Yes, it is not pleasant to discriminate, but you also have expenses and responsibilities. By taking a strict stance on the type of tenant for your apartment, you will be able to have some peace of mind knowing that you will get your payments on schedule.
Another practice that you should always focus on is to get your tenant to agree to a certain “code of conduct” when staying in the flat. For instance, it’s fine if your tenant has guests come to the apartment but the length of time they can be there should only be for a few days, not several months. When it comes to setting rules for lodging, one example of something you might not initially consider is cooking. For example, you might want to consider setting some rules as to what can be cooked within the flat. Often, low-income workers in Singapore try to increase their incomes by making food at home and selling it to their co-workers. The problem with this practice is that it can put a significant amount of wear and tear on the kitchen’s appliances. In some cases, it can even generate odors that can permeate into other units within the building. The smell could cause people from the other flats to complain, and bring about a whole set of other problems. Before you finalize any contract with a potential tenant, be sure to outline what they can and cannot do to avoid any issues from arising.
Take Photos of the Unit
Before your tenant moves into the flat, be sure to take pictures of the countertops, flooring, light fixtures, drapes, or any fixture. The reason you’re doing this is to prevent your tenant from falsely claiming that damage was there before they moved in, resulting in you having to pay the repair bill. Photos can act as evidence to show that all items were undamaged and that any subsequent issues that arose were due to the actions of the tenant.
Renting out your flat in Singapore is not that problematic as long as you take the right precautions. While you are unlikely to encounter any truly significant issues, it’s always best to be safe rather than sorry.