Market Insights: Revision in occupancy rental cap

Temporary relaxation of occupancy cap for rental of HDB flats and private residential properties

The Housing & Development Board (HDB) and the Urban Redevelopment Authority (URA) jointly announced on 20 December 2023 that they will be relaxing the occupancy cap for larger HDB flats and private residential properties from 22 January 2024 to 31 December 2026.

During this period, larger accommodations, defined as units that are 90 square meter and above for private residential properties or 4-room or larger HDB flats and equivalent HDB commercial properties, will be allowed to house up to eight unrelated persons (i.e. not from the same family unit), up from the current cap of six unrelated persons. The higher allowance in occupancy cap aims to better meet rental demand and support households that intend to rent. The application submitted to request for additional tenants will be subject to HDB or URA approval before the tenancy commencement date.

Surge in new home completion will stabilise the rental market in 2024

On top of this change, the residential market is seeing more new home completion in the recent and
upcoming months, that will result in more rental inventory in the near term. Landlords could see competition for tenants to intensify progressively over in coming months. Tenants are likely to enjoy greater negotiating power enabling them to secure more favourable lease terms.

This change of ruling is only a temporary measure (till December 2026) to alleviate the high demand
and low supply. Prior to this new ruling, rental demand is already expected to moderate in the near
term with the upcoming completion of new homes. In 2024, the rental price of private residential properties can ease by as much as 5%.

Opportunities and drawbacks of the change for various stakeholders

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