On Monday (3 July), Second Minister for Law Edwin Tong noted that as a landlord, the Singapore Land Authority (SLA) has a commercial interest in renting out state properties, such as black and white bungalows located in Ridout Road.
This came after Leader of the Opposition Pritam Singh asked about the land cost in relation to renting out 26 Ridout Road.
Mr Singh asked why land area did not factor more prominently in determining rental rates.
Source: MCI on YouTube
In response, Mr Tong said it does not let people rent black and white bungalows “on the cheap”.
Rather, when a tenant comes in, as one did, the SLA also has to consider its commercial interests.
S$26,500 was the top three in all rentals for black and white bungalows in Singapore at the material time, Mr Tong noted.
Additionally, 26 Ridout Road had been vacant for almost 5 years, as the previous tenant had pre-terminated their tenancy.
The previous tenant was paying S$22,000 a month. Mr Tong said.
“This tenant is offering you S$26,500. It’s offering to maintain the land that otherwise SLA has to maintain.”
The tenant prepared not for this to be fenced in, but they will pay for the maintenance because of health and safety issues, Mr Tong said.
SLA’s calculation is to consider all these factors, along with the fact that this tenant is prepared to put in enhancements to the tune of more than half a million dollars, which the landlord will retain, he added.
At the same time, it would help meet the conservation cost that the external consultant has consulted independently.
“When you weigh this up, in fact, if you can get the tenant, it would be great,” Mr Tong said.
“If you could additionally have the additional land fenced in… that would improve SLA’s position.”
He said it was just a burden to maintain the area, as it was vacant for almost five years, abuts 24 Ridout Road, and isn’t easily accessible.
“You can see why [the rental transaction] was something at arm’s length, negotiable, commercial, and sought to achieve the state’s interests as well.”
Earlier, Mr Teo had noted that the guide rent had been set by a valuer appointed by SLA.
Before the additional land area Mr Shanmugam agreed to include as part of his rent, he offered S$25,000 monthly rent.
However, the SLA valuer set the guide rent at S$26,500 after the area enlargement.
He was unaware of the prospective tenant and only found out about their identity in the media.
The Q&A continues in Parliament today. You can watch Parliament live here.
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Featured image adapted from MCI Singapore.
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