Being the superior landlord of all HDB flats in Singapore, HDB retains the ultimate right to confiscate the flats of lessees for mortgage arrears and illegal subletting.
From January 2012 to December 2014, HDB seized 202 flats in compulsory acquisitions against lessees who have committed major infringements, such as unauthorised subletting of their flats or refuse to deal with their mortgage arrears. (Source: Straits Times)
In 2014, two HDB flats were confiscated from their owners, who rented them out to tourists on Airbnb.
Source: Christian Chen, unsplash.com
What happens when HDB confiscates a flat? Does it mean the lessee’s flat is compulsorily seized without any form of compensation?
The good news is: HDB does give some form of monetary compensation so that the lessee does not end up destitute in the streets. The bad news is: the compensation is usually below market rate.
The errant lessee will be offered only the amount you originally paid for the flat, minus a penalty for the infringement which is much lower than its actual valuation in the resale market.
For example, a real estate agent whose flat in Bukit Batok was seized due to illegal subletting was paid only $125,000. He had bought the flat for $150,000 and would be able to sell for as much as $320,000 in the resale market at that time.
As for those whose HDB flats are confiscated because they are unable to repay their home loans, HDB will usually help to find an alternative accommodation such as allocating a smaller flat or rental flat.
Before you buy a HDB flat, make sure you read its rules and regulations for lessees thoroughly and adhere strictly to them for being the landlord, HDB has every right to seize your flat for infringements.