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During the clarifications of the ministerial statements for the renting of Ridout Road properties by ministers K Shanmugam and Vivian Balakrishnan, Workers' Party chief Pritam Singh questioned how Singapore Land Authority (SLA) calculated the guide rent for state properties.
The Leader of the Opposition felt it was a "policy loophole" to use gross floor area (GFA) and not the total land area to calculate the guide rent of black and white bungalows, including those in "the most expensive and prime housing estates".
Singh also asked why Shanmugam did not have confidence in SLA, a statutory board under his purview, to maintain the adjacent land next to 26 Ridout Road.
In his response, 2nd Minister for Law Edwin Tong rejected the idea there was a "loophole", and in fact the use of GFA was a market-driven consideration.
Why not calculate based on total land area: Pritam Singh
Singh questioned why the SLA chose to focus on gross floor area and not the total land area in its guide rent of black-and-white bungalows, including those in "the most expensive and prime housing estates", since land is a scarce commodity in Singapore.
"Does this not represent a policy loophole that effectively is a special dispensation at the taxpayers' expense for individuals who can afford to rent black and white bungalows?" he asked.
Comparing this to previous debates on land and the reserves, Singh said that the PAP government "routinely shuts down any proposal" that draws down or is perceived to draw down revenue from state land as a "raid on the reserves".
He said that SLA had increased the size of 26 Ridout Road by almost three times with "no real impact on the cost of renting the property", except for the usual maintenance.
Singh felt that the episode highlighted a need to"close this policy loophole" and put a value on vacant land.
Singh also asked how many of the 600 black and white bungalows in Singapore had a larger land area than 26 Ridout Road and how many had had their lessees negotiate with SLA to enlarge their compounds as much as 26 Ridout Road.
No loophole: Edwin Tong
Tong spoke on the matter, rejecting the notion that there was a loophole.
"It's not a loophole. When you say loophole, it suggests that it's a policy that has not been closed off. That for some reason, SLA chose to use GFA," he said.
Tong countered that using GFA over the total land area was a market-driven consideration, and that the government can't set the policy to tell valuers to "just use GFA, ignore everything else" and expect the market to adjust itself.
Tong noted that most black and white bungalows under SLA's care were actually managed by external professional Management Agents than SLA itself. These external MAs used their own independent in-house expert valuers, Tong said.
Tong then referred to Teo's report, where "the criteria using GFA as the determining factor for marketability and valuation of rental" is made out.
Tong also said that the rental per GFA for 26 Ridout Road was between the third and fourth highest for all Black and Whites in Singapore between 2018 and 2021 when the lease was renewed.
Using GFA is not a policy set by the government to assess the value of the properties, and Tong refuted the idea that there happens to be a loophole where these properties can be obtained on the cheap.
"So I think we have to move away from the suggestion that somehow the methodology that's chosen was chosen to try and advantage some tenants," Tong said.
There's a difference between renting and owning land: SM Teo
On the issue of land size as it relates to rent, Senior Minister Teo Chee Hean made further explanations by pointing out the differences between owning land and renting a property.
He explained that a landowner, whether the property was freehold or a 99-year lease, owned the land for the entire duration and could develop the property.
Renters, however, held the property for a short period and thus could not develop it, instead, having to maintain it.
He said this was something the SLA considered when assigning valuation.
Teo also pointed out that the valuer did not know the renter's identity and based their valuation on their professional judgement, which Teo said he was not one to "second guess".
"Better position" to maintain land, not lack of confidence: Shanmugam
On the issue of adjacent land, Teo gave the example of a separate property which had seen its land size reduced so that SLA could take over the management of some vegetated land in response to concerns about mosquitos.
This was done without also reducing the property's rent involved, but despite this, Teo said he did not think the tenant was unhappy based on the MA's account.
"I think the tenant was not unhappy about the smaller fenced-in area because he did not have to maintain the vegetated land.
There was no reduction in rental, as the MA's valuation was based mainly on the GFA (gross floor area) of the house.
And so this case illustrates the issues at hand. That added land is not always a net gain in value, and that some tenants may not be unhappy to reduce the land area, to reduce the responsibility and the costs of maintenance."
Shanmugam also clarified why he had offered to maintain the adjacent land at his own expense.
Rejecting the suggestion that he "lacked confidence" in SLA's ability to maintain the land, Shanmugam said that as the prospective tenant right next to it, he would be in a better position to maintain the area, as it would be his sole focus, and he would be the main beneficiary of any such maintenance.
Pritam Singh questions information that "appeared privileged"
Besides raising questions about SLA's handling of the rent, Singh also asked about Shanmugam's decision to ask the Ministry of Law's Deputy Secretary for a list of properties for "his occupation".
He said this was in contrast to the case of Vivian Balakrishnan, whose property had been marketed through the State Property Information Online (SPIO) portal.
However, the information given to Shanmugam via the Deputy Secretary would "have appeared privileged", Singh claimed. Shanmugam is also Minister for Law, as well as Home Affairs.
Singh said that "the man on the street would not have equal access to this information and would have had to secure it at some cost".
Singh invited Shanmugam to consider if it would have been more appropriate for the minister to "have engaged an agent to inquire about properties that are available for rental".
Asking how Shanmugam reconciled it, saying the Minister's Code of Conduct and the Prime Minister's rules of prudence required that all ministers "scrupulously keep their official and private affairs separate, he further questioned if Singaporeans should conclude:
"Such actions by ministers, such as instructing civil servants on personal matters, and using official information for personal use, is appropriate, above board, and has been going on for a long time in the public service?"
Any credible prospective tenant can access the same information: SM Teo
Teo pointed out that Shanmugam had explained why he approached the Deputy Secretary, and it was not privileged information.
Before Singh spoke, Shanmugam said that he approached the Deputy Secretary for "total transparency", as he would let the Permanent Secretary know. And both senior civil servants would be able to go "beyond" Shanmugam and report to the Head of Civil Service or the Prime Minister, if they felt anything needed to be brought up to that level.
"So I believed it was better to ask him, rather than ask SLA directly," Shanmugam said, and pointed out that SLA has given this lists to others, and they are not privileged or secret information.
"(If) they are secret, SLA cannot rent out its properties," Shanmugam said.
Teo responded to Singh's comment that "this has been going on" for a "long time", said he didn't understand what Singh meant by that, and if Singh did not recall making that comment, Teo invited him to withdraw it.
"I think Mr Pritam Singh should not make general comments like that unless he can back them up," Teo said.
Teo added that the information on rentals was what "any credible prospective tenant" would have access to or can directly obtain, and there were "many examples of that".
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