The private property market in tandem with global markets may be heading south, but not the HDB rental market, well, at least not yet. This market is so hot that a colleague of mine who is renting out half his flat has a queue of prospective tenants waiting to secure one of his rooms – all thanks to a huge number of foreigners studying and working in Singapore and their numbers are expected to increase even further when the Integrated Resorts open next year and in 2010.
Perhaps this pent-up demand has lead to some HDB flat owners to take advantage of the situation.
The MediaCorp hotline has been getting a number of calls from foreigners complaining that they have been cheated of their deposit and rent from HDB flat owners.
Typically, the sum involved is a few thousand dollars, usually a year’s rent. This is a huge sum because these foreigners aren’t exactly on expatriate American Club-type salaries. And no, they aren’t always factory workers or blue-collared workers, they are also students and professionals – IT engineers, accountants – average joes like you and me.
As I pointed out in my article, there are many types of rental scams, but the most creative award goes to the person who devised the “pay upfront and a get discount” scheme.
From the number of victimised tenants and property agents I spoke to, it seems that the scheme usually involves the flat owner, the property agent and a loan shark.
Here’s one story from Mr A, an aerospace engineer from Kuala Lumpur. Mr A found a flat that he liked in Sengkang which was near to his workplace. The agent told Mr A that if he paid a year’s rent upfront, he would get a discount of $300 per month. Mr A thought it was a good deal because the going rate of a 3-bedroom flat in Sengkang was $1,300 – $1,500. So he paid the agent $12,500.
Unlike most tenants, Mr A did his due diligence by checking with the PUB and the HDB whether flat did indeed belong to the owner. However, on the day he tried to move in, there was red paint splashed on the main door and the key to the gate didn’t work. His calls to the agent went unanswered and when Mr A finally managed to speak to him, the property agent told him to call a locksmith to break the door down.
Frustsrated, Mr A called the police. Meanwhile, the key to the main door worked, but when he pushed the door open, he was surprised to see a family staying inside.
The flat owner told Mr A that he owed a loanshark some money. So the loanshark approached his friend, a property agent, the same one who transacted the deal between Mr A and the flat owner. I’m sure you can figure out what’s going on.
Loan sharks and rogue property agents like these kind of deals because the recovery of the “loan” is quicker and there’s some money to be made as well. For instance, the flat owner owes $8,000 but the property agent rents the flat for $12,500 – the agent and, or the loan shark pockets the difference of $4,500. Neat, huh?
But who suffers? The tenant. Should we feel sorry for them? I know some people think it’s ok to take advantage of foreigners because they feel that these foreigners and foreign students are here to take away jobs from Singaporeans. So what if they had to sell their farm/apartment in China/India/ Philippines etc. If they are stupid enough to pay a year’s rent upfront, then they deserve to be ripped off.
I don’t think it’s a question of street smarts. I don’t know about you, but I get worried when people think it’s ok to rip off foreigners because they are not one of us or because they are new to the place and are unfamiliar with our rules and cultural norms.
Speaking of rules, all the tenants I spoke to were astounded to learn that under the law, such rental scams or, to use a less loaded word, “disputes”, are considered a breach of contract and therefore just a civil dispute, which means you can either hire a lawyer or seek redress through the Small Claims Tribunal.
If, however, a few people turn up at the flat, each claiming that the owner had collected rent and deposit from them, then it’s obvious that the owner cheated these people and criminal charges can be filed against the owner.
I think these ruses will continue because rogue flat owners and property agents know most people won’t bother hiring a lawyer because they have already lost so much money. And lawyers and property agents tell me that the Small Claim Tribunal may not be the most effective way of recovering your money.
A lot of these tenants tell me that they are very surprised that the authorities permit such dodgy deals in Singapore. Very often, the refrain is “This is Singapore, you’re so strict with the law, no spitting, no littering and yet rental scams are considered just a breach of contract?”
I don’t think the laws are at fault nor do the authorities permit fraudulent acts, but I think, very often, people go around the law or make use of some loophole in the law to their benefit. One way to address this problem is to regulate property agents.
Right now, any one can be a property agent. And judging from some of stories I’ve heard while researching my story, a few – and I stress a few – of these property agents, I suspect, are moonlighting as loansharks. Or vice versa – loansharks moonlighting as property agents.
Having stricter rules and higher professional benchmarks for property agents will weed out dubious characters in the profession. According to the Institute of Estate Agents, right now only real estate agencies are licenced, their property agents are not.
As such, when an agent does something wrong or is terminated by company “A”. There is no stopping him from joining another licensed agency “B”. Therefore, this is the area where accountability and responsibility is lacking. As a result there is a loop-hole that allows unscruplous or ethical agents to get away scott-free because no one takes him to tasks.
I think making property agents more accountable for their actions would certainly weed out unethical agents in the industry and hopefully we’ll hear less of these “rental disputes”. What say you?