By WONG PEI TING Published 07 DECEMBER, 2017
SINGAPORE — From time to time, property agent William, 46, would get calls from homeowners asking him to list and manage their units or vacant rooms on home-sharing site Airbnb.
These include property owners based overseas or those in Singapore with spare rooms who are looking to “skip the hassle of managing (the short-term rental of their units) themselves” while cashing in on the gig economy. “Or else, they will get a lot of calls and messages (to enquire about the listings),” said Mr William, who declined to give his full name.
Each time, Mr William would decline the offers as they could cost him his agent licence. Nevertheless, he admitted being tempted by the lure of additional income especially when the property market was lacklustre.
Apart from getting requests from homeowners, some property agents would also tap on their database of clients, and rent units from them, only to illegally sublet them on Airbnb on short-term leases of less than three months. TODAY understands that this was what two former Savills Residential property agents Yao Songliang, 34, and Terence Tan En Wei, 35, allegedly did.
Yao and Tan were charged on Tuesday (Dec 5) with illegally leasing housing units for short stays - the first cases hauled to court since laws were passed to address short-term rentals via popular websites such as Airbnb. They each faced four charges under the Planning Act, which forbids the rental of apartments and rooms for a short term. Some time around May 15, the duo allegedly worked together to lease four different apartments - at the D’Leedon condominium in Farrer Road - for a period under six months through Airbnb.
Private residential properties were previously subjected to a minimum stay duration of six consecutive months. This was reduced to three months in June.
Industry players said that while what Yao and Tan allegedly did is relatively rare, it is fairly common for owners to try and beat the law by renting out their apartments for short-term stays via Airbnb. And property agents could be tempted into breaking the law when faced with regular requests from clients, they added.
OrangeTee & Tie property agent Timothy Chew, 54, said that in a year, he receives about 10 calls from people looking for short-term accommodation. They are mostly foreigners holding short-term visit passes who are in Singapore for medical reasons, or Singapore residents who need a place to stay while their houses are being renovated.
Mr Chew said he would refer them to serviced apartments, which can be rented for a minimum of seven days. However, he noted that some agents would refer such clients to properties listed on Airbnb given that rentals for serviced apartments are much higher.
Mr William said that for example, rental for a mid-tier serviced apartment here would cost about S$5,000 a month. Property agents usually do not get any commission for referrals to service apartments, he said.
In general, the practice of subletting units is uncommon among property agents because the margins are low. While they can get more money - albeit illegally - by subletting the units on Airbnb, the returns are not high, said Mr Aaron Lin, 30, a Propnex Realty agent.
For example, nightly rentals on Airbnb could be priced at S$150 for a unit which could fetch S$2,500 a month on the legitimate rental market.
On paper, a person who sublets a unit via Airbnb would need to lease out the unit every other night in order to break even. In comparison, property agents typically earn a one-time commission of about S$880 to S$1,120 for a unit being rented at S$2,500 a month for a year.
Agents who strike a deal with clients illegally, and help them list and manage their properties on Airbnb could also earn a higher commission, since they cut out their agencies from the transactions.
Mr Lin said he gets a request once every two months, either from a landlord or a tenant asking him to manage short-term rentals. But he pointed out: “Is it worth it to take such risks? You still have to clean up the place every two to three days.” Errant agents run the risk of getting sacked by their agencies if they were found out, or worse, being brought to court.
Property agents TODAY spoke with agreed there is constant demand for short-term accommodation for less than three months, despite it being outlawed for now unless permission is granted by the Urban Redevelopment Authority (URA).
A regulatory framework is being developed that would allow such rentals while addressing the concerns of residents and relevant stakeholders, URA said in response to TODAY’s queries.
A public consultation will be conducted on the draft framework when it is ready. “While the review is ongoing, the public is reminded that the prevailing minimum stay duration of three consecutive months must be observed for private residential properties,” URA said.
The authority has investigated 750 cases of unauthorised short-term accommodation in private residential units from January to November this year, with a majority of them taking place in condominiums. In comparison. URA dealt with 985 such cases in 2015 and last year combined.
“In dealing with such infringements, URA will assess the circumstances and severity of each case and calibrate our enforcement action accordingly,” URA said. In most cases, the offenders complied with enforcement notices to cease the unauthorised use within a month. “Nonetheless, we will not hesitate to prosecute recalcitrant offenders and those who blatantly disregard the regulations,” URA added.
Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants, warned that property agents “should know better” than to risk their livelihoods for a quick buck. “These people are doing it quite blatantly... it forces the authorities to come down hard on them,” he added.