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Minister for Law and Home Affairs K Shanmugam decided to rent a black-and-white (B&W) state property at 26 Ridout Road because he was putting his family home up for sale after reviewing his finances.

While the rental received from his family home "mostly" pays for the cost of renting the property, Shanmugam said he is still incurring a "net deficit" and has to top up the deficit.

Shanmugam was speaking in Parliament on Jul. 3, 2023, where he explained why he was renting instead of staying in his own home, and whether he was making money from doing so.

Apologised for delving into "personal" matters in Parliament

Shanmugam responded to questions raised regarding his renting of 26 Ridout Road, some of which he said was related to the choices he has made and are "very private".

Shanmugam is also of the view that many appreciate that the choice of a person’s home is "typically a personal and private matter".

However, he is mindful that the authority of an elected official is conferred to him by the trust of Singaporeans and noted that the lines between what is personal and public may not always be clear for an elected official.

Nevertheless, he apologised for taking up time in Parliament to address the issues which arose out of his "personal decision" of renting 26 Ridout Road.

Why is he selling his house?

Shanmugam said he decided to put his family home up for sale after reviewing his finances after approaching his 60s.

He did not specify where his family home was located, but mentioned that it was a Good Class Bungalow (GCB).

He said he bought the family home with the income that he had earned during his time in the private sector as a senior counsel, and with the assumption that his future stream of income will be similar to what he was earning then.

Shanmugam's income changed when he became a minister in 2008 and he found that "too much" of his savings were tied up to his family home.

This resulted in his decision to put his family home for sale.

However, Shanmugam stressed that the decision was not borne out of financial need, nor does he regret forgoing his previous earnings to enter politics.

"It is a privilege to be in public service. And if I am asked, I will make the same choice again."

Is he earning from renting instead of staying in his own home?

To prepare for the move and sale of his home, Shanmugam started looking at several rental properties, including 26 Ridout Road.

While he did not specify the rental properties he looked at, he said he "long liked" B&W houses, and eventually decided to make an offer for 26 Ridout Road in 2018.

Did not know guide rent

Echoing Senior Minister Teo Chee Hean and the Corrupt Practices Investigation Bureau's (CPIB) findings into the matter which was published in a 44-page paper on Jun. 28, 2023, Shanmugam said he did not know the guide rent.

His property agent advised him that S$25,000 a month is a fair offer, based on rentals for similar properties at that time, and taking into account the built-up area, and the condition of the property.

Shanmugam and his agent accepted the Singapore Land Authority's (SLA) counter-offer of S$$26,500 a month.

He moved into 26 Ridout Road from June 2018 and leased out his family home as he was still deciding on the sale.

"It took me a while to decide to sell. And then Covid-19 intervened. My family home was put on the market in November 2021."

Has to top up for net deficit

Shanmugam said he is not making any money from the difference in rentals by staying at 26 Ridout Road and renting out his own home.

Instead, he is incurring a net deficit after taking into account property tax, because the family home is now non-owner occupied, and income tax on the rental proceeds.

Would not have rented 26 Ridout Road

He explained how he is topping up for the difference, saying "I am, in essence, using my previous lawyer’s income to pay for the rental for 26 Ridout Road."

"Based on my current income, I would not have offered to rent 26 Ridout Road. That is based on my personal approach to finances."

Why is 26 Ridout Road so big?

Shanmugam revealed that the dimensions of the adjacent empty land, which was cleared and included into 26 Ridout Road's property boundary and tenancy agreement, spans 150,000 square feet, or roughly 13,900 sqm.

He stressed that while he offered to pay for the land's maintenance out of his own pocket, he did not want it nor did he need it.

"My reason was that if you own a landed property, you want a large land area, because you benefit from the capital appreciation. But if you are a tenant – any land under your lease becomes your own responsibility.

And thus, an additional land area of 150,000 sqft means additional legal responsibility."

However, he agreed with SLA, who is of the view that the land had to be a part of Shanmugam's 26 Ridout Road lease if he was maintaining it, and did not want to negotiate.

"Even now, if SLA agrees to take back the extra land – more than 60 per cent of the total – I would be very happy to give it up. And I would be happy to maintain it if SLA agrees", he said.

Spent over S$500,000

According to CPIB's findings published on Jun. 28, Shanmugam will be paying approximately S$25,000 per year to maintain the cleared land.

Shanmugam said on Jul. 3 that he spent over s$500,000 on improvements at 26 Ridout Road, including paying for the car porch and planting many trees.

"I did work on the house to the extent that was allowed. It is a conservation property, so there are limits on what you can do."

Was there a conflict of interest?

Shanmugam acknowledged that while SLA is a statutory board under the Ministry of Law (MinLaw), he had taken himself "completely" out of the personal matter and there was no conflict of interest.

He said, "I did not enter public service to maximise my earnings, or try and pay less than I should, to the State."

"Conflict of interest means that I make a decision, in a matter where I have an interest. I have an interest in the tenancy. But I made no decision for SLA on the matter.

He added that either MinLaw, SLA or himself have taken steps to "deal with any perceived or potential conflict of interest".

He rehashed CPIB's findings, saying he had informed the then Deputy Secretary of MinLaw and the Senior Minister of State for Law Indranee Rajah that he was looking at B&W houses.

He detailed that he had told the former that he was recusing himself from the matter and the latter to handle the matter, should any issues arise.

"Actual, potential, or perceived conflict can only arise where I have an interest, I make a decision on the matter, then that will be actual conflict.

If I have an interest, and I remain able to make a decision, even though I do not actually make any decision, there can be potential or perceived conflict of interest.

But once I recuse myself, I can’t make a decision, nor am I potentially able to make a decision."

Welcomes scrutiny

Shanmugam noted that there have been many questions asked about the Ridout tenancies, and said he will answer any question raised as it is important that the government does the right thing and holds itself up to "high standards of integrity".

"I welcome the scrutiny, the questions, because financial integrity, probity, are critical for Singapore – and for anyone standing up here. Without that, we will be finished as a country [...]

As a member of the Government, it is important that I am held accountable to Singaporeans, and to subject myself and this matter to scrutiny. This is how our system works and must continue to work. No one is above the law."

He said he is "fully committed" to working with Singaporeans to address issues that matter to them.

Top image from Google Maps and screenshot from Ministry of Communications and Information/YouTube