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Similar to other leasehold properties, premises which had been sold by HDB on 30-year leases will return to HDB upon expiry of the leases.
To ensure a smooth transition to tenancy and keep services running for residents, with the exception of premises affected by redevelopment plans, HDB will offer all current owners at least a one-year interim tenancy period after their 30-year lease expires.
Before the end of the interim tenancy period, HDB will tender out the premises via Price-Quality Method (PQM) to better curate the trade mix and rejuvenate the shop clusters. Former premise owners and existing tenants are also free to participate in the PQM tenders.
You may refer to the Frequently Asked Questions below for more details.
Q1. What happens when the lease expires?
Similar to other leasehold properties, the premises will return to HDB upon lease expiry.
To ensure a smooth transition to tenancy and keep services running for residents, all current premise owners will be offered at least a one-year interim tenancy period after their 30-year lease expires. This is subject to agencies' re-development plans. During this interim period, HDB will engage them on plans for after the interim tenancy ends.
Before the end of the interim tenancy period, HDB will tender out the premises via Price-and-Quality Method (PQM) tenders on a shorter tenancy term (e.g. three years). Former premise owners and existing tenants are also free to participate in the tender.
Q2. How many years is the interim tenancy that HDB will offer to premise owners before calling PQM tender for the premises? When will I be notified on the length of the interim tenancy? How does HDB decide this?
We expect that the majority of premises will be offered a three-year tenancy. The rest will be offered either a one-year tenancy or two-year tenancy. So, every premise owner will get at least a one-year tenancy term, subject to there being no change of operators or sub-tenants during the interim tenancy. The shorter one-year and two-year tenancies are for premises identified for more urgent kick-starting of the rejuvenation and trade mix curation, while the premises with a longer three-year tenancy are likely to be those that are serving the local residents’ needs very well, or premises with a strong local character or appeal.
This phased approach to calling PQM tenders and varying lengths of rental tenancies is to minimise any disruption to service provision and ensure that residents’ daily needs continue to be met, even while curating shops for more vibrancy and inclusiveness, over a three-year period. Such a phased approach will also give premise owners and operators more certainty and facilitate a smoother transition after expiry of the premises’ 30-year leases.
HDB will be engaging premise owners at least one year before lease expiry on the length of the interim rental tenancies, when HDB has done up detailed local rejuvenation and trade mix plans for the surrounding shop cluster.
Q3. What is this PQM tender that would be called after the interim tenancy? Will I receive priority if I have already been operating a business in my premises for many years?
PQM ensures that the tender evaluation will not just be based on tender price but also the quality of the proposal. We will evaluate quality by looking at factors such as affordability of goods and local track record. By accounting for quality when awarding tenders, we hope that residents will be able to enjoy a wider variety of affordable goods and services in their neighbourhoods.
Interested tenderers must submit a proposal to HDB for evaluation. Incumbent operators will have points awarded in recognition of their local track records.
More details on the PQM tender process will be made available one year before lease expiry.
Q4. When exactly will this PQM tender be called?
There may be cases where the PQM tenders are called during the interim tenancy, so as to stagger potential changes in tenants. In these cases, tenants will still be allowed to serve out the interim tenancy, with new tenants (i.e. if winner of PQM tender is different from incumbent tenant) to be brought in only thereafter.
Q5. What is the rent payable for the interim tenancy with HDB?
HDB will inform the premise owner of the assessed market rent (assessed by professional valuers) three months before entering into the tenancy.
Q6. For sold premises where owners have rented out part or all of the premises, how will HDB determine which operators should be retained under the interim tenancy?
Before lease expiry, HDB will do an on-site inspection to determine which are the existing operators who must be retained by the premise owner upon transition to interim tenancy.
Q7. What happens if there are multiple operators in one premises?
For premises with multiple operators, we would allow all operators (including the owner-operator if he/she is operating part of the space) to carry on with their trades into the interim tenancy. In this case, the owner will enter the interim tenancy with HDB and become a master tenant, and must retain all existing operators throughout the entire interim tenancy.
Q8. Can sold premise owners change trades or change tenant-operators prior to lease expiry? Can sold premise owners raise the rent to their tenant-operators, close to lease expiry?
Sold premise owners have full property rights up till lease expiry. Hence, during the period up till lease expiry, sold premise owners can change trades, change tenants or raise their rents for their tenants, based on free market negotiations.
However, premise owners and tenant-operators are cautioned against any kind of speculation as there is no guarantee of a future tenancy with HDB beyond the initial interim tenancy to be offered to on-site operators. In addition, as part of the interim tenancy conditions, premise owners who have rented out part or all of the premises to sub-tenants will become a master tenant, and must retain the existing sub-tenants throughout the entire interim tenancy. After the interim tenancy, HDB will be generally taking the approach of calling for PQM tenders to achieve better trade curation to better serve the community.
Q1. I live in the living quarters of my shophouse, can I continue to do so after transiting to the interim tenancy?
Yes, tenants may choose to continue living in their living quarters after signing the tenancy agreement with us.
Q2. I am living in the living quarters of my shophouse but I do not wish to continue with my business after the lease expires. If I take up the interim tenancy with HDB, can I choose to continue living in the living quarters while renting out the entire trading area? If I don’t take up tenancy with HDB, what alternative housing options are there?
Tenants of rental shophouses are required to operate a business within the same premises. To facilitate transition, we can allow you to take up the interim tenancy with HDB and live in the living quarters while renting out the entire trading area. If you do not intend to continue your existing trade in the premises after the interim tenancy, you may consider alternative housing such as BTO flat, HDB resale flat, HDB rental flat, private housing, etc.
If you meet the prevailing eligibility conditions to buy a BTO flat, you can apply for a flat in HDB’s public sales exercises.
If you meet the prevailing eligibility conditions to rent a flat from HDB, you can submit your application to us one year before the lease for your premises expires.
For cases in extenuating circumstances, HDB will work with you on case-by-case basis on support.
Q1. What happens to the stallholders in eating houses and markets upon lease expiry and transition to interim tenancy? How will the rent be determined?
As part of the tenancy condition for master tenancies, eating house and market operators are required to retain the existing stallholders and maintain/reduce the rents. This will give some form of assurance to existing stallholders and minimise disruption to their livelihoods. This will also ensure that the stallholders do not pass on the cost to the consumers by raising their food prices correspondingly. If there are extenuating circumstances to justify the increase, you will have to seek HDB’s approval and it will be assessed on a case-by-case basis.