Renting in Singapore

How much income should you spend on rent in Singapore?

March 23, 2017

If you are renting in Singapore, the question is never “Is my rent too high?” This is not the world’s most affordable city, and if you took rent prices in Singapore and applied it to another country, political science experts would point to it and warn the UN of an upcoming civil war. 99.co is here to help, by explaining basic guidelines on how much to spend on rent (to keep you from selling bone marrow when the rent is due).

Just how much should you spend on rent?

Just how much should you spend on rent?

Typical condo rent prices in Singapore for newbies

If you’re completely new to Singapore, here are some very rough, easy numbers to go by when calculating how much to spend on rent. You can check out the district system in our previous article.

Core Central Region (CCR) and Sentosa – Approx. $5,000 to $7,000 per month

Rest of Central Region (RCR) – Approx. $3,500 to $3,900 per month

Outside of Central Region (OCR) – Approx. $2,100 to $2,600 per month

Mind you, there are always exceptions. You’ll occasionally see a unit that’s twice the average rental amount. That may happen if it’s near a hub area (e.g. rental units near Toa Payoh Central), or has some kind of unique amenity; proximity to certain universities, being next to the MRT station, and so forth.

Renting HDB flats

If a flat is at least a three-room, the owner can let out individual rooms. These are the most affordable options, and prices can be in the range of $600 to $1,200 depending on location.

As for renting out the entire flat, HDB prices are (currently) almost on par with condo prices in the OCR. This is because Singapore’s rental market has softened considerably over the past three years. In the more central and mature districts, HDB flats can rent out for around $3,000 a month.

But again, note that this is due to unusually low rental rates for condos in the market right now; the price gap between condos and HDB flats is historically much greater.

So now that you have a baseline, here are the other considerations when you spend on rent:

  • Use the 40 percent expense ratio guideline  
  • Check the rates of neighbouring units
  • Get a lower price for a longer lease
  • Work out furnishing costs before picking a rental unit
  1. Use the 40 percent expense ratio guideline  

This is one of those financial rules of thumb, like saving 20 percent of your pay cheque. When you’re picking between units, you can pay less attention to the price difference when it still falls within the realm of affordability.

For example, say you have a monthly income of $7,500. You would then budget a maximum of $3,000 a month for you to spend on rent. Between a unit that costs $2,600 a month, and a unit that costs $3,000 a month, you’ll know you’re “safe” picking the more expensive unit. It still falls within the realm of affordability.

As to why 40 percent, that’s because it still allows you save and have decent discretionary income. In the case of $7,500, you could still save $1,500 a month for emergencies, and have $3,000 a month to spend on scented candles, string quartet concerts, and other things that only expatriates buy.

  1. Check the rates of neighbouring units

So you’ve found a unit you like, because the condo has a nice pool.  Before you sign, check for neighbouring units. It should go without saying, but plenty of over-eager first time renters miss this step.

Check if there are other available units in the same development, which could give a better deal. We don’t just mean look at their listings; we mean speak to the agent or landlord, and try to negotiate with them as well. In fact, let them know you’re talking to them because you’re interested in another unit in the same condo (some competition always helps to lower the price).

Besides potentially getting you a good deal, this ensures you’re not overpaying for your unit of choice. If all the surrounding units are being rented for $3,000 a month, you don’t want to be the sucker who ends up paying $3,300; at least not without a fantastic reason.

  1. Get a lower price for a longer lease

If you want a two or three-year lease, don’t let the cat out of the bag early. When asked, say you’ll be here for a while but may consider moving once you understand the island better.

And then ask if you can get a lower price, if you’ll take the leap and sign a longer lease instead. A one month vacancy can cost the landlord a good deal, so most are eager to minimise vacancies; you may be able to bargain the price down by 10 to 15 percent by taking a longer lease.

4. Work out furnishing costs before picking a rental unit

Before you even go shopping for a unit, note the floor space you want. Then drop by IKEA or these furniture stores, and work out the cost of furnishings you need.

This will help you decide between a furnished and unfurnished unit. If the added cost of buying your own stuff takes you beyond the 30 percent guideline (see point 1), then you may want to look for something else.

A common newbie mistake when you spend on rent to make off-the-cuff decisions about whether the unit must be furnished, and then rack up a massive credit card bill when the furniture costs more than they suspected. So remember: work out the estimated cost of furnishings first. That will help you gauge how much you should be paying for rental costs alone.

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