Case Studies
RES Fined and Suspended for Infringing HDB’s Rules for Renting Out Bedrooms
31 July 2024
An RES was fined and suspended for facilitating an HDB flat rental transaction which breached HDB’s MOP rules.
When facilitating HDB flat rental transactions, real estate salespersons (RESs) must advise their clients to comply with HDB's rules and regulations, including the Minimum Occupation Period (MOP) requirement.
In this case study, RES Ng Ni Ni from PropNex Realty Pte Ltd facilitated two tenancies despite knowing that:
Her client was not allowed to rent out the whole HDB flat, as it was within the MOP
Her client was not allowed to lock up one bedroom and rent out the rest of the rooms in the HDB flat, as the flat was within the MOP.
First tenancy
RES Ng helped her client advertise her HDB flat for rent. When contacted by a prospective tenant, RES Ng confirmed that the rental would be for the whole flat. During the property viewing, RES Ng told the tenant that the flat owner was overseas and would be locking up her belongings in one of the bedrooms
In December 2020, HDB officers inspected the flat and discovered that the flat owner was not physically living in the flat.
After HDB’s inspection, the tenant felt uncomfortable to continue living in the flat and terminated the tenancy prematurely.
Second tenancy
Just two days after HDB’s inspection, RES Ng quickly advertised the whole flat for rent again.
Later in December 2020, another prospective tenant contacted RES Ng. During the property viewing, RES Ng similarly informed the prospective tenant that the flat owner was living overseas and would not be staying in the flat. During the handover of the keys, RES Ng told the tenant that the flat owner would not be staying in the flat and had locked up one bedroom.
In late January 2021, the tenant had to abruptly move out of the flat after receiving a call from the flat owner to do so.
Conviction
RES Ng was convicted by a CEA Disciplinary Committee (DC) for, amongst others, facilitating an HDB flat rental transaction which breached HDB’s MOP rules. The DC imposed a financial penalty of $4,000 and a suspension of five months, effective from 10 April 2023.
Industry Perspective
By Thomas Tan Tzyy Howe
Assistant Secretary, Singapore Estate Agents Association
This case highlights the importance of adhering to the regulatory rules and our ethical responsibilities as real estate professionals.
The agent involved may have been acting under the direct instructions of the property owner, who insisted on leasing the HDB flat despite being fully informed of HDB’s restrictions. While it is understandable that agents strive to meet their clients’ demands and facilitate transactions, it is imperative to prioritise compliance with the law and our profession’s ethical standards.
The Housing and Development Act 1959 is designed to ensure the appropriate use of public housing resources and to maintain the integrity of the public housing system in Singapore. As professionals, registered agents have a duty to uphold these regulations and to provide accurate and honest advice to clients.
In a situation where a client insists on proceeding with an illegal transaction, the agent must exercise professional judgment and refuse to partake in any activity that contravenes the law.
It appears that the agent in this case chose to proceed with the transaction despite knowing that the HDB flat had not fulfilled the MOP requirements. This decision not only jeopardises the agent's professional standing, but also undermines the integrity of the real estate agency industry.
It serves as a stark reminder that agents must always be prepared to walk away from transactions that compromise their ethical obligations and legal responsibilities.
To prevent such situations, it is recommended that agents:
Thoroughly Educate Clients: Clearly explain the legal restrictions and potential consequences of violating the Housing and Development Act 1959.
Document The Advice Provided: Keep detailed records of all advice given to clients, including the legal implications of their intended actions.
Seek Legal Counsel: When in doubt, consult with legal experts to ensure compliance with all relevant laws and regulations.
Refuse Non-Compliant Transactions: Firmly refuse to engage in transactions that violate the law, regardless of pressure from the client.
By adhering to these guidelines, agents can maintain the highest standards of professionalism and ensure their actions align with legal compliance and ethical obligation. This not only protects their career and reputation, but also reinforces the trust and credibility of the real estate agency industry in Singapore.
In conclusion, it is essential for everyone to remember that compliance with the law is non-negotiable. The responsibility to uphold the law and act ethically always supersedes the client’s demands.
Agents must prioritise integrity and legality in all their transactions, so as to foster a transparent and trustworthy real estate agency industry.
Information accurate as at 31 July 2024