Although the measures are framed as a labour-market calibration to keep foreign manpower quality aligned with rising local wages, the scheduled work pass salary increases from January 1, 2027—lifting the Employment Pass minimum qualifying salary from S$5,600 to S$6,000 (and from S$6,200 to S$6,600 in financial services) and raising the S Pass threshold from S$3,300 to S$3,600 (and from S$3,800 to S$4,000 in financial services), with age-based benchmarks escalating to S$11,500 for Employment Pass applicants aged 45 and above (S$12,700 in financial services) and to S$5,100 for S Pass holders aged 45 and above (S$5,650 in financial services)—introduce a tighter eligibility and cost structure that could, by narrowing or reshaping inbound hiring, translate into softer leasing absorption in expatriate- and foreign-professional-led rental segments. These changes sit within the COMPASS framework, implemented from 1 Sep 2023.
In housing-market terms, any moderation in incremental foreign headcount, or a compositional shift toward higher-paid but potentially smaller cohorts, can reduce churn and slow take-up velocity in both HDB rooms and suburban private units typically rented by pass holders.
The implementation is also staged, with new Employment Pass and S Pass applications affected from January 1, 2027, while renewals are affected from January 1, 2028, providing an adjustment window but extending the period in which rental demand may be re-priced.
Landlords and leasing brokers commonly benchmark achievable rents to tenant affordability and corporate housing allowances, so higher qualifying salaries may support rents at the upper end, even as fewer eligible applicants can limit breadth of demand. Conversely, tighter S Pass thresholds may constrain demand in mass-market locations, where shared rentals and compact layouts dominate, and where the renter pool is more sensitive to eligibility constraints.
Parallel domestic-wage policies reinforce the same direction of travel. The local qualifying salary for full-time local employees rises from S$1,600 to S$1,800 on July 1, 2026, applying to firms hiring foreign workers across all sectors, alongside mandatory Progressive Wage Model compliance for covered roles and the local qualifying salary threshold for other locals in such firms.
These labour-cost increments can influence occupier expansions and, by extension, household formation among renters.
To cushion adjustment, the Progressive Wage Credit Scheme increases co-funding from 20 percent to 30 percent for qualifying year 2026, maintains 30 percent for 2027, and steps down to 20 percent for 2028, while the minimum qualifying wage increase rises from S$100 to S$200 for 2027 and 2028. The broader policy context includes proposed recalibrations such as the industry call to reduce ABSD for foreign buyers on ultra-luxury properties, though such adjustments remain distinct from the rental segment primarily affected by work pass holders.
From 2028, additional levy changes—higher basic-skilled work permit levies in marine shipyard and process sectors, and simplified levy tiers in manufacturing and services—add further cost considerations that may temper rental demand growth. In particular, services and manufacturing will move to two-tier levies based on dependency ratio utilisation, replacing the current three-tier structure.
