Should Short Term Room Rentals Be Allowed?

By Mr. Propwise

A recent article in The Straits Times highlighted the growing trend of home owners and tenants renting out spare rooms to paying guests for short periods of times (such as a few days). Websites such as Airbnb, Wimdu, 9flats and Roomorama have sprouted out to facilitate these lettings by effectively creating a marketplace for renters and rentees.

Airbnb currently has over 230 listings for rooms for rent in Singapore, which can be stayed in for as low as $40 a day, or less than one fifth what a typical hotel room would cost. Some hosts even offer premium services such as breakfast and complimentary toiletries and EZ-link cards.

From the host’s perspective, it’s a great way to earn some extra dollars from a spare room, while from the guest’s perspective they can save a lot of money and get a different experience versus staying in a hotel.

The catch? It’s illegal

Sounds like a win-win idea… but it’s illegal. According to the Urban Redevelopment Authority (URA), private residential properties can only be rented out or sublet for periods of six months or more. A spokesman said they would investigate cases of breaches, and those caught will be issued enforcement notices. If they do not stop they can be fined up to $200,000 and/or jailed for up to a year. Neither the HDB nor JTC allow short-term subletting either, so those caught doing so can face penalties. HDB homeowners may even get their flats confiscated.

The URA’s rationale for banning this practice is that “transient occupiers” may disturb and inconvenience other residents. A Singapore Hotel Association (SHA) spokesperson voiced concerns about how unregulated guesthouses could compromise the safety and health of the guests, and that any complaints from tourists might create adverse publicity for Singapore.

Is the renting out of rooms really that bad?

Personally, I believe that short-term room renting should be allowed. As one of the hosts in The Straits Times article put it, doing so “democratizes the marketplace” and is a win-win for both the hosts and guests.

For the hosts, they can earn extra income from their asset while meeting new people from around the world. For the guests, they have a greater choice of accommodation at affordable prices, and can choose the experience they would like to have. In my travels, my favorite places to stay were often not the fancy hotels but small bed and breakfast places where you get to enjoy the local hospitality.

If this practice became widespread, the losers would be the hotels and hostels as they would face greater price competition and an increased supply of rooms, which is probably why they are against it. In my opinion, the risks stated by the URA and the SHA are probably overstated, given that this practice has been going on for over five years and we do not seem to have any major incidents arising from it.

Of course, if renting out rooms were allowed, the URA would still play a vital role in investigating any complaints lodged by neighbors and residents if a nuisance was being created, and could take action against offenders instead of banning it outright.

While negative incidents could indeed affect a tourist’s impression of Singapore, I believe on the whole that allowing the short-term renting of rooms would actually have the opposite effect – it would allow tourists to experience true Singaporean hospitality, and get an understanding of the local culture that they would never get by staying in a fancy hotel. It would also allow “asset rich and cash poor” homeowners to monetize their asset and increase their incomes, while exposing Singaporeans to people from all over the world, leading to increased cultural tolerance and understanding.

Hopefully the regulations can be reconsidered, and amended to benefit the homeowners and not just the hoteliers.

3 Replies to “Should Short Term Room Rentals Be Allowed?”

  1. yes .. i think the hdb/govt should learn to be more flexible … short term rentals shld be allowed …. owners themselves would also want to have more income and at the same time able to have privacy without the perm tenants around all the time.

  2. Allowing such short-term rental has its merits but it could very well increase the rental rate for longer-term tenants as well as the housing market in general.

    When more rooms are rented out on short-term basis, less will be available for longer-term tenants. The law of supply and demand will then dictate a rise in monthly rental rate for longer-term tenants. Some longer-tenant may decide that perhaps buying a home is more economical and thereby generate additional demand on ‘owned’ housing.

    How this flows out to affect the overall housing market is not that difficult to see. The upward price spiral cause will only in turn act to push rental rate higher. Overall it benefits no one but those who chose to flout the law for monetary gains. Not only is this practice a slight on those who obey the ruling, it also goes against the true spirit of public housing.

    All said, my opinion is that greed is ultimately the underlying factor behind those public-housing owners practising short-term rental.

    1. Hi Patrick, thanks for your comment! I see your point about how allowing rooms to be rented out on a short term basis could push up rentals overall, but conversely by allowing it a large supply of spare rooms that have been till now left empty could be unleashed onto the market, so the impact on long term tenants and housing prices may not be significant. I’d like to reiterate that I’m not encouraging anyone to break the law, I’m arguing that the authorities should reconsider the reasonableness of the law.

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