In the first quarter of this year, condo rents grew at their fastest pace since 2010 to a new record and are up by almost 12 per cent from last year. During the pandemic, demand changes have accelerated with many Singaporeans renting due to construction delays in housing projects, especially Build-To-Order flats.
More upgraders are also renting after selling their flats to avoid paying the additional buyer’s stamp duty when purchasing a new property. Many foreigners, expatriates, Singaporeans and permanent residents have also returned from abroad.
As it is now a landlord’s market, many are likely to raise rents at renewal.
While some tenants may tolerate the rental hikes by cutting back on other expenses, those who can afford may also need to adjust their expectations because it may take another year or so before more new homes enter the market.
Here are some ways to obtain lower rental rates or get better leasing terms.
Rent units with partial or no furnishing
Tenants can potentially save $200 to $300 a month for such homes in the suburbs and up to $2,000 a month for luxury condos. It could be cheaper for tenants to buy low-frills furniture for the short term. Tenants should not spend too much time negotiating over small items lest the unit is secured by someone else.
Cut down on the frills
Consider renting condo units with an apartment status or without “full” facilities. Tenants should assess if there is a need to pay a few hundred dollars extra per month for a tennis court, 50m lap pool, putting golf green and other facilities they may not use.
Rent smaller units and make use of self-storage warehouses
This option could be helpful for local renters who are waiting for the completion of their new homes. Families can consider leasing warehouse space to store their bulky furniture, children’s toys, books, extra appliances and other unused items. Such storage spaces can cost as low as $1.50 per sq ft and can be leased for short periods like two weeks or a few months.
Renew or extend leases
As rent increases are typically lower for existing leases than new contracts, tenants are likely to save more when extending or renewing them. Tenants can save on upfront costs like mover expenses and utility transfers which they may incur should they move to a new unit.
Sign longer leases for better rental rates or concessions
Many tenants are signing two-year leases to lock in lower rents or secure a choice unit early. Landlords are usually more open to negotiating when tenants offer to sign a longer lease and tenants who do so may consider including diplomatic clauses as a safety net so that they can terminate the lease earlier without suffering heavy penalties.
Consider low-rent housing estates or older properties
Rents are significantly cheaper for such properties, especially homes farther from an MRT station or in a less accessible block. With increased home-based work arrangements, individuals working remotely for more than 50 per cent of the time can move to lower-rent areas.
Do your search early and seek help
Ask property agents to look out for homes with upcoming expiring leases and lock in a contract early.
Some savvy agents can help to negotiate better deals, such as asking the landlord to add a few new furniture pieces for the same price, or spot problematic areas before tenants are embroiled in contentious situations. Agents are more in tune with the latest market trends and can advise if the rental increases are in line with the market rate.
Consider being an owner
Long-term renters, especially PRs, can consider buying their homes instead of incurring recurrent rental costs. After all, many properties yield positive capital appreciation over time, and such home owners can quickly exit the market when required.
Where are the lower rents?
Rental hikes vary across the island and this means that cheaper options are available.
Here are the popular two-bedroom condo units with the lowest median rents:
$2,500 and below: H2O Residences, Urban Vista, Riversails, NV Residences, High Park Residences, The Alps Residences, The Luxurie, The Palette and Waterview.
$2,600 to $2,800: Kingsford Waterbay, One Dusun Residences, Ripple Bay, Melville Park, Signature Park, City Gate, Maysprings, La Fiesta, A Treasure Trove, Bayshore Park, Stellar RV, Coco Palms, Eastpoint Green, Parc Rivieria, The Bayshore, Parc Vista, Botanique at Bartley, Bartley Ridge and Gem Residences.
$2,850 to $3,300: The Glades, Sims Urban Oasis, Lakeville, North Park Residences, The Lakeshore, Bartley Residences, Eight Riversuites, Astoria Park, Grandeur Park Residences, The Lakefront Residences, Caspian, Lake Grande, Dover Parkview, Sky Vue, The Minton, The Clement Canopy and The Scala.
Popular three-bedroom condo units with the lowest median rents:
$3,000 and below: Orchid Park Condominium, Springdale Condominium, Signature Park and The Sunny Spring.
$3,100 to $3,500: La Fiesta, Melville Park, A Treasure Trove, East Meadows, The Bayshore, Parc Oasis and Bayshore Park.
Strategies to improve rental negotiation
Savvy tenants should discuss with their landlords a few months before the lease expiry to avoid giving the impression that they are desperate to stay put. It pays to do some homework to compare rents of similar homes in the area to judge if the rental increase is reasonable. Tenants should do a calculation and present the cost savings to their landlord should they agree to renew the lease at a discounted rate.
Most landlords would avoid the expense and hassle of finding a replacement tenant. This is because landlords can save on turn-around costs like furniture upgrades, repainting and cleaning works when renewing leases. Renewals can also prevent downtimes when no rents are collected in between leases.
Highlight how you may be a better tenant than others. The general rule of thumb is to maintain a good relationship with the landlord by maintaining the unit well and paying bills on time.
The good news
While fewer housing units are available for rent now, more supply will be entering the market next year. As many as 20,000 private homes will be completed in 2023, up from the 10,401 units this year.
Although the increased housing supply may not immediately offset the high rents, it may still help slow down the rapid pace of rent increases, especially with more flats and affordable private housing to be released in the suburbs.
• The writer is senior vice-president, OrangeTee & Tie Research & Analytics
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