Buying two homes without paying ABSD is unheard of. Yet, that's what dual-key units offer. Two separate spaces within the same property. Perfect for multi-gen living and rental income. Sounds like a good deal right? But like most things in life, there's always a catch. Getting a dual-key unit is actually not as simple as a two-for-one sale at your favourite store. Let's break it all down.

A dual-key unit is essentially a single property with two separate living spaces. They share a foyer and entrance but function independently. Typically, one unit is the larger main residence, while the other is a smaller studio or one-bedroom apartment. It's not uncommon for both spaces to have their own bathroom and kitchen.

This type of unit was first introduced to the private housing market when Caspian by Fraser Centrepoint was launched in 2009. This concept was actually a strategy so that developers could sell more of their larger units, and it worked! Dual-key units quickly gained traction and more developers began incorporating this layout into their projects. Today, you can find these units in condos and even some executive condominiums (ECs).

Dual-key units come in many layouts. The smallest one is the 1-bedroom + studio. So, the unit is divided into a 1-bedroom apartment and a self-contained studio.

Source: Sophia Hills

Another common layout is the 2-bedroom + studio. The main unit comprises two bedrooms, while the adjoining sub-unit is a self-contained studio.

Source: Lentor Hills Residences

Next in line is the 3-bedroom + 1-bedroom or studio. The main unit includes three bedrooms, and the sub-unit is a complete one-bedroom apartment or a self-contained studio.

Source: Lentor Hills Residences

Of course, layout options vary by project. While the above examples are the standard configurations, some developments offer larger units or even duplex and triplex designs like this unit at Park Suites.

Source: Park Suites

Although it's not very common, HDB flats can be transformed into dual-key units. However, not all of them can accommodate the change. The larger flats like the Executive Apartments or Jumbo units, which are larger in size and flexible in layout, are more suitable. You also need to secure the necessary approvals and permits, especially if you want to make structural changes. Renovation works must also comply with HDB's regulations.

Source: Strait Times

It's a great setup for multi-gen families, whether it's parents with young adult kids or adults caring for elderly parents. Not everyone can just buy a big house and enjoy life together as one happy family. And not everyone can afford to get two properties (double the costs + the headache of finding units next to or near each other). So instead of moving out and renting, a dual-key layout lets them be near loved ones without sacrificing their privacy and independence. And as I've mentioned, even though you get two homes out of it, you don't have to pay ABSD since it technically counts as a single property.

Then, there's the rental potential. Owners can live in one unit and rent out the other while still maintaining privacy between landlord and tenant. Or, they can rent both units out. Regardless, getting a dual-key is a smart way to generate passive income, which can be used to pay off the mortgage. It's almost like you're living there for free! And as long as you are living there, you pay an owner-occupier rate for your property tax, even though you're also receiving rental income. Plus, since dual-key units allow you to accommodate multiple tenants at once, you can actually get more rental income. Let me illustrate.

Last year, the average rental price of a standard 3-bedroom condo in the Rest of Central Region (RCR) was $4.56 psf. That means a 3-bedroom unit that's around 900 to 1,000 sq ft can command around $4,104 to $4,560. Meanwhile, the average rental of 2-bedroom and 1-bedroom condos in the same region were $5.35 psf and $6.5 psf respectively. This means a 2-bedroom (600-650 sq ft) + 1-bedroom (300-350 sq ft) dual-key unit can command around $5,160 to $5,752.5 in total. This demonstrates how dual-key configurations can be advantageous for investors seeking to maximise rental returns.

Aside from that, dual-key arrangements are very versatile. It lets you shape the space to suit your needs. Maybe an office, a storage space, or even a spot to kickstart your small business. You can get real creative and the possibilities are endless.

One of the main drawbacks of dual-key units is that they are actually more expensive. That's because they require more plumbing, tiling, and fixtures due to the multiple bathrooms and kitchens. When the demand surpasses the supply, dual-key units can command premiums of 16-25%.

But despite the higher price tag, dual-key units are smaller. Not literally, but it might feel that way. That's because some of the space is spent on the partition as well as the additional bathroom and kitchen to make both units functional. On that note, some people also find the limited kitchen facilities in the smaller unit as a drawback.

And if you're considering repurposing part of your dual-key unit as an office or place of business, there are regulatory constraints to be aware of. The Urban Redevelopment Authority (URA) allows home-based businesses under the Home Office Scheme, but with specific conditions. These include limitations on the number of non-resident employees and restrictions on external signage. So you can't just start any type of business from your dual-key unit. There are certain limits.

But the worst part is that dual-key units might be harder to sell. Even though they are getting more popular, dual-keys are still pretty niche. Not all buyers necessarily want the dual-living arrangement, which can narrow the pool of potential purchasers. This may affect the unit's resale value and the time it takes to find a buyer. Plus, if you're renting a room out, your tenant will have direct access to you, the landlord. This means if they have (m)any complaints, you're going to have to deal with that.

Like any other property investment, dual-key transactions can go both ways. Location, timing, property condition- all these factors affect its appreciation. Under favourable conditions, dual key units can yield long-term gains, especially those in central or developing areas. Bonus if you purchased it during market lows. One example is the Duo Residences in Bugis. It was purchased in 2013 for $2.5 million and sold in 2018 for $3.2 million. So, that's 28% in appreciation. There's also The Trilinq in Clementi, which was bought in 2014 for $1.8 million and sold in 2020 for $2.1 million, giving it around 17% appreciation. Of course there have been losses too, but they are often tied to external factors rather than being inherently linked to the dual-key concept itself.

• Singles or Couples
  Singles or young couples looking for a home that doubles as an investment might find dual-key units appealing. The rental income can help with mortgage repayments, easing the financial burden.

• Investors
  Many investors take advantage of dual-key units for their dual-income streams because they can rent out two separate spaces within a single property.

• Families
  Whether it's for ageing parents, grown children, or live-in help, dual-key units are a practical solution for families who want to stay close without sacrificing privacy.

It seems that many people show strong interest and optimism in investing in dual-key units, so there's definitely a future here. Though not everyone wants this type of unit, for those who see the value in them, the benefits can outweigh the costs. In the end, it's up to you to decide if dual-key is the right call for you.

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