Dos and don’ts behind running a HDB home business

Earlier this year, The New Paper reported a story where a Chinese National was found to be conducting a cosmetic surgery business from her 3-room Sengkang HDB flat, at half the price what qualified surgeons would otherwise charge.

Aside from the fact that people were willing to undergo surgery, invasive or not, from someone’s living room, what was also surprising was that she isn’t the only one offering such services from their HDB flats. Indeed, the choice to make money from the comfort of one’s home is becoming a popular one, thanks to HDB’s home-based business schemes.

What are HDB home business schemes?

Perhaps it has to do with the government’s stance on promoting an active entrepreneurial spirit in the Heartlands. In 2003, HDB introduced two HDB home business schemes to allow homeowners to operate a small-scale formal business or conduct informal business services from their HDB unit.

Under the Home Office scheme, aspiring individuals can use their place of residence as the primary address for their business. Of course, the owner’s business must be registered under the Accounting and Corporate Regulatory Authority (ACRA) and get a permit from HDB before commencing operations. There is a caveat – businesses set up under this scheme can only be administrative in nature.

For those who wish to run an informal small-scale business from home, they may choose to apply for the Home Based Small Scale Business scheme instead. Under this scheme, homeowners can aim to earn supplementary income from providing services such as tuition, baking and hairdressing from their home. Moreover, those who apply need not seek prior approval from HDB, unlike the Home Office scheme.

Application is simple and easy – individuals will just have to fork out S$20 for a five-year approval.

What HDB home business owners can and cannot do

There are certainly benefits behind working from home. Besides not having to jostle with the commuter crowd during rush hour, there are cost savings that can be made. This is especially so in today’s market where office and retail space contributes to the bulk of a business’s operating costs. Take note though, there are several rules and regulations to be aware of before applying for either of the above-mentioned schemes:

1. HDB units are primarily intended for residential use

The government maintains a strict policy over public housing; HDB flats should first and foremost be used as a home. That also extends to the maintenance of the standard of living and surroundings within the estate. Business may be carried out so long as it does not cause a nuisance to the neighbours, or generate excessive noise, smoke, or litter to compromise the cleanliness/ambience in the block.

However, there have been instances where these rules are flouted, especially with regards to tuition provision. HDB home business schemes only allow homeowners to teach up to three students in one session. In reality though, it is not uncommon to see some flats with numerous pairs of shoes outside their units. While in most cases the neighbours may choose to turn a blind eye, just remember that owners may get into trouble with the authorities if there are complaints about the noise level or increase in human traffic that arises.

2. Take note of the number of employees

According to the guidelines, HDB home business owners are not allowed to employ more than two people. Furthermore, they cannot reside in the same flat as the owner. What this implies is that the scale of home-based businesses must be small. If expansion is in the cards, you’ll have to look at commercial properties to house your operations.

Those looking to run a food or pastry business should pay particular attention. The nature of these types of businesses tend to be labour intensive, so there is a possibility extra hands will be needed in the long run. Don’t end up like a certain Madam Robiah, who made headlines for hiring eight other workers to run her curry puff factory from her two-room flat.

3. The nature of your business matters

Even if you’ve already gotten an idea of what kind of home-based business to run, you’ll need to ensure that it is aligned with HDB’s guidelines on the type of businesses allowed. HDB has outlined a list of permissible and non-permissible businesses, easily referenced on their website.

These range from offering consultancy work, hairdressing, pedicure/manicure, baking and sewing services. However, there are other types of businesses that do not fall into these categories, such as online shop retailers. While HDB does not encourage turning your home into a physical brick and mortar retail shop or a transaction office for the exchange of goods, it is best to clarify with them on these limitations before you set up your business.

In addition, home-based business also cannot explicitly promote their services around the neighbourhood by putting up signs, flyers or advertisements, making word-of-mouth the best way to raise awareness of what you do.

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Do you run a home-based business? Let us know in the comments section below.

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