Ridout

Allegations were raised by the public against Minister K Shanmugam and Minister Vivian Balakrishnan regarding their rental of State Properties at Ridout Road. In response, on 17 May 2023, Prime Minister Lee Hsien Loong directed the Corrupt Practices Investigation Bureau (CPIB) to investigate the matter.

PM Lee also instructed Senior Minister Teo Chee Hean to conduct a separate review in order to address wider potential process or policy issues that were beyond the scope of CPIB’s investigation. The final report concluded that both Ministers and the public officers, as well as private sector intermediaries involved conducted themselves properly in the two rental transactions. There was no abuse of power or conflict of interest that resulted in the Ministers gaining any form of unfair advantage or privileges. The process of renting out the two Ridout Road properties did not deviate from Singapore Land Authority (SLA) guidelines, and any approaches in renting out Black and White bungalows for residential purposes.

What is the rental process for state properties and black and white bungalows?

The debate prompted new requirements to be made prior to future transactions that concern ministers and People’s Action Party MPs. This comes in the form of a new standard declaration requirement that will be introduced for selected groups of public officers who have access to privilege information, or are involved in leasing and valuation matters of various commercial and residential state properties. Said officers - who can influence the outcome of decisions related to such properties - will have to make this declaration before renting government properties managed by their agencies.

This declaration will cover black and white bungalows, factory or office spaces, business parks, shops in neighbourhood centres, as well as hawker and market stalls. The officer in question will also have to declare that he or she has taken adequate steps to prevent any conflict of interest from arising. This includes recusing himself from overseeing or processing the transaction.

The Prime Minister will also be involved in reviewing the declarations required for property transactions for ministers and Members of Parliament from the PAP.

Public housing rental cost versus state property rental cost

Based on the recent debate,the SLA valuer allegedly did not know that the prospective tenant was Mr Shanmugam and only found out when the matter was reported in the media. 26 Ridout Road is a 9,350sqm estate, established by SLA’s value as S$24,500. Mr Shanmugam initially offered a rental of S$25,000 per month, based on his property agent’s advice, however, instructed his agent that he should not be paying less than his neighbours. A neighbouring unit was tenanted at S$26,000. They finally settled on a counter-proposal of $26,500. The completed review established that the rental rates paid by both ministers were at fair market value. In contrast, the public housing rental market has come under fire lately as landlords increase their rent up to 75%. Ms Eva Teh experienced a 60% increase in her monthly rental. However, the fear of not having a roof over her and her partner’s head left her with no choice but to negotiate for a fair rental price for their one-bedroom home. Originally priced at S$1,950, the increase had them forking out almost S$3,000 a month. The intense demand in the market is the main cause for the surge in rental prices. This has trickled down from pandemic-related delays in construction projects. As the costs continue to climb, individuals and families are finding it harder to secure affordable housing options that can meet their needs. Having to prioritise their paychecks for the bulk of the rental has in turn impacted their ability to save and invest in other aspects of their lives. The future of rentals in Singapore

It is likely that public housing rental costs will continue on an increased trajectory. Singapore’s limited land availability, growing population, and strong demand for housing will contribute to this. In turn, this will affect Singaporeans who will have to resort to other means - moving to a more affordable location, downsizing, leaving the country, or becoming a homeowner. Despite the promise of approximately 40,000 public and private homes scheduled for completion, and 60,000 more by 2025, affordability and location preferences still pose a problem. Compared to rentals for state properties, the Singapore government has yet to introduce stringent regulations to maintain stability in the pricing of public rentals. Without rent control legislation, Singapore’s position as a competitive commercial centre might be affected.

Mr Inderjit Singh, former People’s Action Party Member of Parliament from 1996 to 2015 observed that “the approach taken by the government has favoured non-productive investment in properties of all types at the expense of the productive parts of our economy - the business owners.” On the contrary, SMEs or business owners end up paying escalating rents, making their own businesses less viable due to high-cost structures. The Control of Rent Act was repealed in 2001. It covers controls on rent increases, eviction controls, and a system of oversight and enforcement by an independent regulator or ombudsman. For example, capping rent at a 5% increase plus inflation, or setting overall maximum rent levels and limited rental increases for tenants under contract can ensure affordability. It also limits landlords from unfairly evicting or pressurising their tenants.