What an empty month costs

Researched and written 2026-09-29 15:08 SGT · 9 sources listed at the end · draft 1 · figures verified against the named sources on the date shown; where a source has since moved, the element carries a marker.

Every agent who prices a rental for you will use the word "yield." Yield is an average. It is what the unit earns if it is occupied every month of the year, divided by what it cost you. It is the number on the brochure. It is not the number in your bank account, because your bank account does not experience an average — it experiences a specific month in which the unit is either let, or it is not. This page is about the month it is not.

The mechanics: what a void actually costs, month by month

A vacancy is not a gap in your income statement. It is a month in which every cost of owning the property keeps running and the one line that was supposed to pay for it — rent — is zero. The mortgage instalment is due whether or not a tenant lives there. Property tax is due, and it is due at the higher non-owner-occupier rate with no relief for the unit sitting empty. Management corporation strata title (MCST) conservancy charges, fire insurance, and any master-lease or agent retainer you carry all continue on the same clock. None of them pause because the flat is between tenants. The only thing that stops is the income.

A worked illustration on the shelf, arithmetic rather than a quote: a S$2,000-a-month unit earning S$24,000 a year gross, run through a 5% vacancy haircut to S$22,800, then reduced by property tax of S$2,400, maintenance of S$2,400, agent fees of S$2,400 and loan interest of S$10,420, nets down to a 2.03% yield. The vacancy line in that example is modest — one haircut applied up front, not a real month of zero income. A single actual empty month on that same unit removes S$2,000 of the S$22,800 the calculation assumed it would collect — more than the entire net return the arithmetic leaves at the end.

Scale that up. A S$1,000,000 condominium at Singapore's 2026 average non-landed gross yield of 3.36% earns about S$33,600 a year, S$2,800 a month. Financed with S$700,000 borrowed at 6% a year, the interest alone is S$42,000 a year — S$3,500 a month — before property tax or MCST fees are even counted. On the numbers in that illustration the unit is already running a monthly shortfall before a single empty month happens; every month it sits vacant adds a full S$2,800 of missing income on top of a financing bill that was already larger than the rent.

Rental-yield calculators converge on a standard vacancy allowance of roughly one to two months a year, commonly modelled as a 95% haircut to the headline rent — and the same guides are explicit that there is no tax relief and no concession for the vacant period; the property is taxed at the non-owner-occupier residential rate throughout the void, exactly as if it were earning rent. That allowance is a planning assumption. It is not a cap. A market where private residential vacancy sits at 6.4% of completed stock (2Q 2026, up from 6.2% the quarter before) and where a broader read of private-rental vacancy — including units not yet formally counted as completed stock — puts the figure closer to 7%, ranging from 4-5% in strong-demand areas to 8-10% in newer outer-region developments, is a market where "one month a year" is an average, and some landlords are living well above it.

There is one genuine offset, and it is worth knowing precisely because it is easy to miss. From Year of Assessment 2022, IRAS allows a landlord to deduct repair, insurance, maintenance and upkeep expenditure incurred while the property sits vacant during part of a basis period, and any property tax paid for that vacancy period, against rental income — provided the landlord made reasonable efforts to find a new tenant during the void. It reduces the tax bill on the income you did earn elsewhere in the year. It does not replace the rent you did not collect.

The behavioural cost is larger than the arithmetic cost, and it runs the wrong way. A landlord guide states the pattern plainly: every month of vacancy at an aspirational asking rent costs more than accepting a 5% to 8% reduction to a qualified tenant immediately. The instinct when a unit sits empty is to hold the asking price, because dropping it feels like leaving money on the table. The arithmetic says the opposite — an empty month at S$3,000 has already cost more than a full year of renting at S$2,850 instead of S$3,000. Holding out for the top of the market while the unit earns nothing is the single most common way a landlord turns a small discount into a real loss.

• Mortgage instalment — due regardless of occupancy
• Property tax at the non-owner-occupier rate — no relief for vacancy
• MCST conservancy and sinking fund charges — continue unchanged
• Fire and landlord insurance — many policies suspend or void cover once a unit sits empty beyond 30-60 days
• Any master-lease guarantee you have given an operator — the operator's own vacancy risk becomes your rent shortfall
• Rental income foregone — the only line that stops

That insurance point is not a footnote. Most landlord policies carry a vacancy clause: cover is suspended or voided once the property has sat unoccupied beyond a set period, commonly 30 to 60 days. A landlord who lets a unit sit empty for two months while chasing a higher asking rent may find that the same two months have quietly lapsed the fire cover that was supposed to protect the asset while nobody was in it.

Eligibility: who is allowed to carry this risk

Not every owner is free to let a vacant unit sit and try again next month. An HDB flat cannot be rented out in its entirety until the owner has completed the Minimum Occupation Period (MOP), and even after MOP, subletting the whole flat needs HDB's approval and is subject to a citizenship and quota framework of its own — a Singapore Citizen or Permanent Resident household, subject to the ethnic integration quota for the block, is the baseline eligible tenant class. A private condominium or landed home carries no MOP and no HDB approval step; an owner can let it out, or leave it empty, from the day the title transfers. That single difference changes the shape of this page's arithmetic: an HDB landlord who miscalculates before MOP is not looking at a vacant month, they are looking at a flat they are not yet allowed to let at all, sitting as pure cost with no legal route to income even if a tenant is waiting.

Eligibility to buy and eligibility to let are two different gates, and citizenship sits mostly on the first one, not the second. Once you own a property — as a Singapore Citizen, a Permanent Resident, or a foreigner who obtained the necessary approval to buy it — nothing in the letting rules discriminates by your citizenship. A foreign owner can market, let, and collect rent on a Singapore property exactly as a citizen can. The citizenship question that actually costs money on this page is upstream of the vacancy: what it cost you to buy the unit that is now sitting empty.

Citizenship status and the FTA carve-out

A Singapore Citizen pays no Additional Buyer's Stamp Duty (ABSD) on a first residential property, 20% on a second, and 30% on a third and subsequent. A Permanent Resident pays 5% on a first, 30% on a second, 35% on a third. A foreign buyer pays a flat 60% on any residential purchase. Nationals of the United States, Switzerland, Liechtenstein, Norway and Iceland are, by Singapore's free trade agreements with those countries, taxed as though they were Singapore Citizens for ABSD purposes — a US national buying a second Singapore condominium to let out pays 20% ABSD, not 60%. A US national who also holds Singapore Permanent Residence is charged at the Singapore Citizen rate too. A US green-card holder who is not a US national does not qualify; the treatment follows nationality, not residence. None of this changes month to month while the unit sits vacant — it is sunk into the purchase, long before the first empty month — but it sets how large a base the carrying cost of a void is being measured against, and a 60% duty on entry makes every subsequent month of lost rent proportionally smaller than the capital already committed, not larger.

The taxes that keep running while the unit is empty

Buyer's Stamp Duty (BSD) and ABSD are one-time costs at purchase and are irrelevant to a vacancy that happens years later. Seller's Stamp Duty (SSD) only bites if you sell within the four-year holding period introduced 4 July 2025 — 16% in year one, 12% in year two, 8% in year three, 4% in year four, nil after — and a vacancy does not trigger it. The tax that matters every single vacant month is property tax, and it is the one place the rules are least forgiving: a vacant residential property is taxed at the full non-owner-occupier rate, with no relief and no concession for the void. Non-owner-occupier residential property tax runs on a steep progressive schedule against Annual Value — 12% on the first S$30,000 of AV, 20% on the next S$15,000, 28% on the next S$15,000, 36% above S$60,000 — and it applies whether the flat is let, or standing empty waiting for a tenant.

The one place the tax code meets you halfway is on the rental income side, and it only helps once you have income to offset. From Year of Assessment 2022, agent's commission, advertising, legal fees and stamp duty spent to find a tenant — for the first tenant, not only renewals — are deductible against rental income, alongside the vacancy-period repair, insurance, maintenance and property-tax deduction already noted above. Both deductions assume a basis period in which the property earned some rent to deduct against; a unit that sat fully vacant for the entire tax year has no rental income line for these expenses to reduce.

Borrowing: the carry does not pause for a void

If you borrowed to buy the unit, Loan-to-Value (LTV), the Total Debt Servicing Ratio (TDSR) and, for an HDB flat or executive condominium within its minimum occupation period, the Mortgage Servicing Ratio (MSR) all governed how much you could borrow at the point of purchase — MAS caps the first housing loan at 75% LTV (55% for a long-tenure or older-borrower loan), TDSR at 55% of gross monthly income, MSR at 30%. None of that machinery reappears once the loan is running; the instalment is fixed by the schedule you signed, on a floating SORA-pegged rate or a fixed rate for an initial lock-in period, and it is due every month regardless of whether a tenant's rent is there to cover it. A floating-rate mortgage in 2026 commonly prices at 3-month compounded SORA — around 1.19% in September 2026 — plus a bank spread of roughly 0.8-1.2%, an all-in rate near 1.9-2.3%.

This is where a vacant month stops being an accounting entry and becomes a cash-flow problem. Banks underwriting a commercial rental purchase on Debt Service Coverage Ratio already build a vacancy allowance into the loan itself — one worked example on the shelf assumes a 10% vacancy and 10% maintenance haircut off gross rent before testing the loan against a 1.2x minimum coverage ratio. That is an acknowledgement, baked into the underwriting, that vacancy is not a tail risk — it is an expected feature of holding rental property, sized into the loan from day one. A residential landlord's own mortgage carries no such built-in cushion; the instalment is fixed at the full amount whether the unit is occupied 100% of the year or 90%, so a landlord who has not personally kept a reserve equivalent to that same 10% is running the loan without the buffer a commercial lender would have insisted on.

Refinancing does not solve a vacancy, but it changes how badly one hurts. A landlord carrying a higher-rate loan from an earlier lock-in period, or one who never checked whether a bank rate had fallen below their HDB concessionary rate, is paying more every month a tenant is in place — and more still on every month a tenant is not. From July 2005 to May 2026, a bank loan at SORA + 0.5% was cheaper than the HDB concessionary rate in 191 of 251 months, about three-quarters of the time; checking that comparison costs nothing and directly shrinks the size of the hole a void digs.

• LTV, TDSR and MSR set what you could borrow at purchase — irrelevant once the loan is running
• The mortgage instalment is fixed by the loan schedule, not by whether rent is coming in
• A floating SORA-pegged loan moves with the market whether or not the unit is occupied
• Commercial underwriting bakes in a vacancy allowance; most residential mortgages do not
• A cheaper refinance shrinks every future vacant month's cost, not just the occupied ones

Reno and turnaround speed: the one lever you actually control

Almost everything on this page is a cost that arrives whether or not you act. Turnaround speed is the exception — it is the one variable a landlord genuinely controls once a tenant has given notice or a purchase has completed. A unit that needs three weeks of repainting, appliance repair and cleaning before it can be photographed and shown is three weeks of vacancy stacked on top of however long it then takes to find a tenant. A unit kept market-ready — routine maintenance done between tenancies rather than deferred until a lease ends — can go from vacant to viewing in days rather than weeks. This is not a renovation-for-value argument the way it would be on a page about selling; it is a renovation-for-speed argument, and speed is the only lever here that shortens the void itself rather than just discounting what you charge during it.

Conveyancing: the paperwork that actually ends a vacancy

A vacancy does not end with a handshake. It ends when a tenancy agreement is signed and stamped. The tenancy agreement itself attracts stamp duty computed on the average annual rent over the lease term, payable regardless of whether the tenant is an individual or a company. If you engage an agent, CEA requires a Prescribed Estate Agency Agreement signed before the agent starts marketing the unit, and a separate Prescribed Estate Agency Agreement template (Form 4) governs the tenant's own side if the tenant is also represented. None of this needs a conveyancing lawyer the way a sale does — there is no completion date, no caveat, no legal handover of title — but the paperwork discipline is the same in miniature: get the commission rate and the GST treatment agreed and documented before the agent starts work, not after a tenant is found and the terms are being argued over.

Estate: the vacancy nobody chose

Some of the worst vacancies are not a landlord's decision at all. A property held in joint tenancy passes automatically and in full to the surviving owner on death, outside the will and the estate — that unit can usually be re-let quickly once a Notice of Death is lodged with the Singapore Land Authority. A property held solely, or as tenants-in-common, is different: it sits inside the estate, and an executor generally cannot let it, sell it, or make major decisions about it without a Grant of Probate — obtainable only where the deceased left a valid will naming that executor — or, where there is no valid will, a Grant of Letters of Administration under the Intestate Succession Act. That process is not fast. One worked illustration on the shelf puts the gap between death and a completed HDB estate sale at around five months: two to three months to obtain the grant, run one after the other with HDB's own resale process of eight to ten weeks minimum, because the flat cannot be sold before the grant is in hand. A rental letting moves faster than a sale, but the same structural fact holds — the property sits earning nothing, taxed at the full non-owner-occupier rate throughout, while the executor works through a legal process that has its own clock, not the landlord's. [⚠ estate.probate.eligibility_2026_06_15: sources differ; awaiting a ruling]

If that is your situation, the fuller mechanics of holding an inherited property — what an executor can and cannot do with it before the grant, and the decision of whether to let it, sell it, or move in — sit on a dedicated page.

The twelve questions — what a vacancy actually is, in plain terms

Strip away the jargon and a rental property is one of four things, decided by two questions asked in plain language, not "are you investing or staying" — nobody buys believing the price will fall, so that question sorts nobody. The two that matter: are you borrowing to buy it, and once you hold it, are you lending it out to a tenant? Cash bought, kept for your own use, is pure appreciation with no carry at all. Cash bought and let out is yield — positive carry by construction, since there is no financing cost eating into the rent. Borrowed and kept for your own use is negative carry by construction — most owner-occupiers are quietly in this position and few say it out loud. Borrowed and let out is the spread play, and a vacancy is exactly where that spread play goes wrong: the gap between what the loan costs and what the rent would have paid is the whole game, and a void widens that gap to the full amount of the missing rent.

The play, the statements, and the carry

THE PLAY: a rental property bought with a mortgage is a cash-flow play first — its whole purpose is the monthly spread between rent and financing cost, not a balance-sheet bet on price alone. A vacancy attacks the play directly, at its only moving part.

BALANCE SHEET: what you own is the property, at whatever it is worth; what you owe is the outstanding loan. A vacancy does not change either number by itself — the asset does not shrink and the loan balance does not grow just because a month goes unrented. The balance sheet only moves if the missing cash forces you to draw down savings or borrow further to cover the gap.

CASH FLOW: this is where a vacancy actually lives. Cash flow is what moves in and out, and when — rent in, mortgage instalment and property tax out, every month, on their own separate clocks. A vacancy is a month where the "in" side goes to zero while every item on the "out" side keeps firing on schedule. The funding gap in that month is the full rent you did not collect, and it has to come from somewhere — savings, a credit line, or a delayed bill.

PROFIT AND LOSS: your P&L for the year averages the vacant month in with the occupied ones — twelve months of rent, minus twelve months of financing cost and tax, arrives at one annual profit or loss figure. This is precisely why the yield number on the brochure can look fine for the year while a specific month nearly broke your cash flow. Profit and loss is not the same thing as cash flow, and a landlord who only watches the annual P&L will not see a vacancy coming until the bank statement already has.

CARRY: income minus financing cost, month by month. A tenanted unit with rent above the mortgage instalment runs positive carry. The same unit vacant runs the most negative carry it will ever run — 100% of the financing cost, 0% of the offsetting income. Carry is the single number that turns from positive to sharply negative the instant a tenant leaves and nobody has replaced them, and it is the number this whole page is really about.

The trade, the risk, and the horizon

GIVE / GET: what you give is the mortgage instalment, the property tax, the MCST charges, and the work of finding and managing a tenant. What you get, when it is working, is the rent, minus those costs, plus whatever the property itself appreciates. A vacancy is the month you give everything and get nothing back on the cash-flow side.

EXPOSED TO: a vacancy exposes you to the local rental market's supply and demand, to your own asking-price discipline (the 5-8% discount that beats holding out, discussed above), to your insurance lapsing past a 30-60 day threshold, and to interest rates on a floating loan moving against you at the exact moment your rent has stopped.

FOR HOW LONG: the holding period on this page is not the lease term, it is the void itself — the stretch between one tenant leaving and the next signing. Market data puts the average expectation at roughly one to two months a year across a portfolio, and individual voids well outside that average in a softer submarket. Knowing how long you can personally fund a void, not just how long the market average says it should take, is the number that actually matters.

What goes wrong, how fast money comes back, and who is in control

FAILURE CASCADE: the order matters, and it runs the same way every time. Negative carry from a void hits cash flow first — the mortgage and tax bills fall due with no rent to meet them. If that persists it accumulates into the P&L as a real annual loss, not just a bad month. If the loss is large enough or long enough, it erodes the equity cushion you thought you had, moving you toward negative equity if prices have also softened. From there the property becomes harder to sell quickly at a fair price — illiquidity — and if you cannot cover the shortfall from savings or refinancing, the end of that chain is insolvency: forced sale, on someone else's timetable, at someone else's price.

LIQUIDITY: a vacant rental property does not become cash quickly. Selling it takes weeks to months even in a liquid market, and selling under the pressure of an unfunded vacancy is exactly the scenario that produces a haircut on price — a forced seller rarely gets the market rate. The tenant search itself, by contrast, is comparatively liquid: a well-priced, well-presented unit in a normal market lets in weeks, not months, which is precisely why the pricing discipline discussed above matters more than almost anything else on this page.

CONTROL: this is where reno and turnaround speed, discussed earlier, are this page's version of control — the lever that wears different clothes at different points in a property's life the way tax and financing structure do elsewhere. You cannot control the rental market's vacancy rate. You can control how fast your specific unit is ready to show, how quickly you cut the price when the data says the market has moved, and whether your insurance and refinancing are kept current so a void does not compound into a second, avoidable loss.

The exit

THE EXIT from a single vacant month is simple: sign a tenant, stamp the tenancy agreement, and the cash flow resumes. The exit from the property altogether, if a landlord decides a pattern of voids means the numbers no longer work, is slower and costs more — agent commission, any Seller's Stamp Duty still running inside the four-year holding period, and the market risk of selling into whatever conditions exist at the time you decide to leave. A vacancy that is allowed to become a pattern is the thing that turns "should I sell instead of renting" from an abstract question into an urgent one.

That decision — rent it out again or sell it — has its own page, built around exactly this trade-off.

The broker's mandate: what an agent is actually for here

An agent's job during a vacancy is narrow and specific: shorten it. That means pricing the unit against what is actually renting nearby this month, not what a similar unit fetched a year ago; getting it photographed and listed within days of notice being given, not weeks; and running the conversation about a 5-8% price cut before the second month of vacancy starts, not after the fifth. CEA requires a Prescribed Estate Agency Agreement before marketing begins and requires payment to go to the licensed agency, never to the individual salesperson directly. An agent cannot represent both landlord and tenant and collect commission from both sides of the same deal — that is a CEA offence, not a grey area.

If you are weighing whether to manage a letting yourself or hand it to an agent — and by extension, whether the speed an agent brings to filling a vacancy is worth their fee — that comparison is its own page, built around exactly this trade-off, and it is where a broader mandate conversation belongs: keep me in mind for the next unit that turns over, and I carry no fee for a referral that does not close.

What the realtor actually earns, and where the incentive points

CEA sets no fixed commission for a letting, the same as for a sale — the rate is negotiated and must be documented in the Prescribed Estate Agency Agreement before work starts. Nearly eight in ten consumers know the rate is negotiable, and of those who actually negotiated, 85% succeeded in lowering it. Market-reported agent income sits around S$72,000 a year at the median, with new agents typically earning S$10,000 to S$40,000 in their first year — figures that make clear most of an agent's income depends on transaction volume, not on any single deal.

Here is the incentive worth naming plainly, including where it points against the agent's own short-term interest: an agent paid on closing a letting is paid faster by closing at whatever rent the market will actually bear this month, not by holding out for the asking price you originally wanted. That usually aligns with your interest too — the arithmetic above shows a fast letting at a discount beats a slow one at full price — but it means an agent's advice to "drop the price and take this tenant" should be read as what it usually is: correct, and also convenient for the agent to say, because it closes the deal faster for both of you. The place to watch for actual misalignment is the opposite direction — an agent with no exclusive agreement, competing against other agents on the same unit, has less reason to spend real effort chasing a marginal S$100 or S$200 of extra rent for you once a workable tenant is in hand, because that effort is unpaid unless the deal closes at all. An exclusive mandate removes that particular pressure at the cost of locking you to one agent for up to three months, with liability for commission extending three months past the agreement even for tenants introduced during it.

Where this leaves you

A vacancy is not an unlucky month. It is the one month a rental property's entire economics are tested at once — the mortgage, the tax, the insurance clause, and your own pricing discipline, all firing at the same time with no rent to absorb any of it. The number that protects you is not a better yield figure on a brochure. It is knowing, before the tenant gives notice, exactly what one empty month costs you in cash, and having already decided how many of them you can fund before the pricing discussion above stops being optional.

Sources

• IRAS — Additional Buyer's Stamp Duty (ABSD) (2023-04-27) · https://www.iras.gov.sg/taxes/stamp-duty/for-property/buying-or-acquiring-property/additional-buyer's-stamp-duty-(absd)
• IRAS — Property Tax Rates — non-owner-occupier (effective 1 Jan 2024) (2024-01-01) · https://www.iras.gov.sg/taxes/property-tax/property-owners/property-tax-rates
• IRAS — Income from property rented out (2026-08-10) · https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individual-income-tax/what-is-taxable-what-is-not/income-from-property-rented-out
• MAS — Loan Tenure and Loan-to-Value Limits (2018-07-06) · https://www.mas.gov.sg
• MAS — Mortgage Servicing Ratio and Total Debt Servicing Ratio Rules (2021-12-16) · https://www.mas.gov.sg/regulation/explainers/new-housing-loans/msr-and-tdsr-rules
• MAS — Seller's Stamp Duty for residential property (2025-07-04) · https://www.mas.gov.sg
• CEA — Agent commission is negotiable (2026-05-13) · https://www.cea.gov.sg
• Family Justice Courts — Apply for probate (2026-06-15) · https://www.judiciary.gov.sg/family/apply-for-probate
• SLA — Notice of Death lodgment (2026-09-28) · https://www.sla.gov.sg