The number of Employment Pass (EP) holders dropped from 193,700 in December 2019 to 189,700 in June 2020, according to the latest figures from the Ministry of Manpower. Meanwhile, during the same period, S Pass holders decreased from 200,000 to 188,000.

The data was part of a study published on 24 September by the National Population and Talent Division, which revealed a 0.3 percent decrease in the population of Singapore in the past year. This is the first negative population increase since 2003, when, in the aftermath of the dot-com bubble, the population dropped by 1.3 percent year on year.

Overall, from 1.68 million in June 2020 to 1.64 million as of June 2020, the number of non-residents in Singapore decreased by 2.1 percent. The report claimed that this was “mainly due to a decline in global jobs in services.”

Specifically, Singapore’s number of permanent residents (PRs) dropped by 4,000, from 525,000 to 521,000. There was also a decrease of around 1,600 in the number of international students. S Pass holders dropped by 12,000 from December 2019 to June 2020, making up around 6 percent of the party. EP holders dropped by 4,000, about 2 percent of the party, in contrast.

It is not shocking that the holders of S Pass dropped by a larger magnitude, as many of them operate in service sectors such as hospitality and F&B, most adversely affected by the economic downturn of Covid-19.

The S Pass is given to eligible mid-level workers who receive at least $2,400 a month and have the necessary skills and job experience. In the other hand, job passes are targeted at overseas graduates, executives and employees who earn at least $4,500 a month.

EP and S Pass holders have a non-extendable 30-day grace period after losing their jobs to find another job (which is impossible considering the conditions) or complete any formalities before returning to their home country.

Most likely to be influenced by rental demand for CCR condos

The bulk of S Pass holders live in HDB flats at their income level, either owned by themselves or by their employers. These S Pass holders usually rent individual rooms in a HDB unit, pay less on leases and rent less square footage per user than EP holders.

So, although the decline in S Pass holders across the board is very substantial and is a development that is likely to continue, it is likely to buffer the effect on HDB landlords. For example, if a tenancy for a room in a HDB flat is terminated by one of three S Pass tenants, the HDB landlord will still maintain a respectable rental income stream.

For condo tenants, who usually rent whole condominium units to EP holders, it’s a different matter. For these landlords, the withdrawal of EP holders usually results in wholesale vacancies and a 100 percent decline in rental income.

Housing often usually represents a greater portion of the overall monthly spending of an EP holder, because condo landlords are more ‘exposed’ to any wage cuts that EP holders may make, either in the form of their lower rent applicants or needing to transfer to cheaper accommodation.

Thus, while the initial effects of a decline in EP holders would be distributed through condos in Singapore, it is conceivable that condos might end up being most impacted in the Core Central Area (CCR).

There is a strong explanation for this: Aside from EP holders who leave Singapore for strong, a large number in the Rest of Central Region (RCR) and the Outside Central Region (OCR) might also pursue a move to more accessible condos. The fact that working-from-home is likely to become a semi-permanent matter may speed up the CCR’s emptying out of rental condo units.

Before the economy recovers, we’ll probably see condo rentals fall the most in the CCR. Conversely, close public transit hubs, RCR and OCR condos would definitely see rental demand hold up well. In order to pay higher rents in the CCR, EP holder renters should still give landlords a rate they are comfortable with, at or not far from the pre-pandemic rate.

HDB tenants who rent out individual rooms shouldn’t think too much about losing a tenant, as mentioned. They can consider moving out of the master bedroom and placing it up for rent for stay-in owners who are vulnerable to any decrease of rental income, as master bedrooms may pay up to 50 percent higher rentals than common bedrooms.

HDB tenants who previously leased the whole flat to a single master tenant and now find their flat empty should also consider renting different rooms to ensure a sort of rental income.

If condo-dwelling tenants who rent out their HDB flats find themselves with an empty flat in a tight financial position, they might even propose listing both properties for rent and be open to the temporary possibility of moving out of their condo and shifting to the originally purchased HDB flat.

The landlords may consider selling one of the two properties as a last resort. When selling the HDB flat, additional care must be taken as it is considered a critical fall-back for Singaporeans (particularly if the flat is completely paid up).

If you need help, get professional advice from a real estate agent about what the next move should be, and find out what prospects lie ahead.