How to make money from your HDB the legal way

Rent out HDB room as storage space

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Some people want to make money off their spare rooms but are not ready to become landlords.

For this reason, it’s become increasingly popular to rent out a spare room for quality storage, instead of to a person.

Consider outfitting the spare room with proper storage racks or proper storage lockers. This caters to many people who have bulky goods that are not valuable, but still need lots of storage.

For example, a hobbyist painter may need more room to store canvases or someone may need to store extra clothes and appliances while waiting to move into a new home.

There are some legal considerations involved here. Always ensure that the renters understand they place items at their own risk, and that you are not liable for them.

You may want to get a contract drawn up for you (it will be a one-time cost).

Do not accept high-value items such as gold, jewellery, or luxury goods, as you do not want to be accused of anything if they go missing.

There is no “market rate” for this service, so charge whatever you’re comfortable with. We’ve seen everything from S$30 to S$120 per month.

Remember to keep good records of who has and hasn’t paid, to avoid disputes later.

Rent your HDB as a photoshoot venue

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If you’ve got a beautifully renovated HDB BTO with the trendiest furniture from Taobao, consider renting your spare room or living room out as a photoshoot or video shoot location.

There are websites such as Tag Venue that allow production companies, advertising agencies, television shows, and even independent KOLs and influencers to book out spaces to create content.

As a landlord, you will want to vet through the rental requests carefully to ensure that no illegal activities will be carried out in your flat, and that they won’t mess up or destroy your furniture.

Chances are, you might be dealing with youngsters who are not homeowners and may not understand how to respect someone else’s home. Ensure all rules and regulations are communicated clearly before you allow them to come to your place, for e.g. no smoking, no loud music, no eating and drinking, no extension of shoot time, no access into bedrooms and toilets (unless paid for).

Split HDB flat into more rooms

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If you’re lucky enough to have a whole unit to rent out, you might want to consider splitting the unit.

This can sometimes result in higher rental income, as you may find it easier to get separate tenants than a whole family to rent to.

Occupancy Cap

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Condo Private Property Occupancy Cap
For example, a 1,400 square foot condo unit, with three bedrooms, could be divided up between three separate tenants.

We’ve seen condo units with up to seven or eight people living in tiny, partitioned rooms in Singapore. However, you must know that’s illegal. Take note of URA’s private property rental limitations of up to six unrelated persons per private residential property.

Private Property Rental Cap: 6 pax
HDB Rental Occupancy Cap
For HDB flats, you need to get approval if you are hacking down walls to divide the flat. It’s better to simply put up partitions, to divide the area between tenants. Always ensure that your plans are acceptable by HDB before taking action.

HDB’s occupancy cap for 4-room and larger HDB flats is six persons (used to be nine pax prior to 2018). For 3-room, it’s 6 persons. Anything else smaller will be 4 persons.

5-Room and above: 6 pax
4-Room: 6 pax
3-Room: 6 pax
2-Room and below: 4 pax

Check if you meet the requirements, such as falling within the maximum number of tenants allowed. This is helped by modular kitchen units, which can be found in home furnishings shops like IKEA.

These devices can turn almost any room into a functional kitchen, with some prices as low as S$400.

Now. your tenants don’t even have to share the same kitchen (although that’s still possible if you insist).

One advantage to this is that you experience a lower risk of vacancies. Even if one room is vacant, the others could still be rented out.

Mortgage and repairs tax deductions from IRAS

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If you’re a landlord in Singapore, you should know you have a lot of possible tax deductions.

For example, you can claim tax deductions on the interest payment of your mortgage. More importantly, you can claim tax deductions for money spent on maintenance.

If repairs are needed on your property during the rental period, and you don’t make improvements* to the state of the house, you can save the receipt for a tax claim with IRAS.

*This means the repairs cannot be used to upgrade or improve the unit, only to restore it to its normal condition. For example, if you replace damaged vinyl flooring with the same material, it’s claimable. If you replace it with high-grade Italian marble, that’s an improvement that is no longer claimable.
Lease-Buyback Scheme to Supplement Your Retirement Income
If you are looking for more retirement income, consider HDB’s lease-buyback scheme.

According to HDB, the lease buyback scheme allows you to “sell part of your flat’s lease to HDB and choose to retain the length of lease based on the age of the youngest owner. The proceeds from selling part of your flat’s lease will be used to top up your CPF Retirement Account (RA).”

The money in your CPF RA account will then be be used for your monthly CPF LIFE payouts when you hit 65 years old.

This allows you to sell some of the unused portion of the lease on your flat, back to the government.

The lease-buyback scheme can supplement your CPF retirement funds by $10,000 to $20,000, with little immediate impact on your life.

However, do be sure to check that you actually need this. If your CPF funds are already substantial, it may not be necessary for you to surrender any of your remaining lease.

This article was contributed by Singsaver.com.sg, edited by Home and Decor. SingSaver is a personal finance comparison platform that allows users to easily compare credit cards, personal loans, and insurance for free while helping empower people to lead healthier financial lives through increased financial literacy.