LATEST DEVELOPMENT (as of 28 June 2023) - Ridout Road bungalows: CPIB finds no criminal wrongdoing in rentals by 2 ministers
SINGAPORE — The recent issue over the rental of state properties by Law and Home Affairs Minister K Shanmugam and Foreign Affairs Minister Vivian Balakrishnan has led to questions surrounding the procedures and conditions for renting state-owned properties.
In response to social media posts questioning how the ministers “could afford to pay the market rent for such a pricey property” that was published by opposition politician and Reform Party chief Kenneth Jeyaretnam, the Singapore Land Authority (SLA) confirmed in a statement that two state properties at 26 and 31 Ridout Road – both bungalows – had been tenanted to the two ministers.
It also said that the rentals of the two state properties were "performed in full compliance with the relevant SLA procedures."
Subsequently, Prime Minister Lee Hsien Loong requested for reports from the relevant agencies "setting out the facts". He also asked Senior Minister Teo Chee Hean to review the matter and to establish whether proper processes had been followed, if there was any wrongdoing, and to make the findings public in time for the upcoming Parliamentary sitting in July.
As members of the public anticipate the outcome of the review, Yahoo Finance Singapore looked into the procedures and requirements for renting state properties.
What is SLA?
State-owned properties and assets in Singapore are managed by SLA, a statutory body under the Ministry of Law. There are two key functions of the SLA, namely to develop and regulate land resources in the country.
As a regulatory body, SLA is the national land registration authority that oversees the registration of property transactions in Singapore. It is also responsible for the management and maintenance of the national land survey system.
SLA also optimises the use of state land by maintaining the national land information database and managing state land through land sales, leases, acquisitions and allocations. It is also responsible for developing, maintaining, managing and marketing state properties to optimise their use for the public.
Some examples of the types of state properties managed by SLA include residential units such as bungalows, semi-detached houses, terraces and apartments, as well as shops, offices, and former institutional buildings like schools and camps.
These properties can be rented out for a variety of use cases such as for residential, commercial, or institutional uses – subject to approval by SLA and any relevant government agencies.
Leasing state property
Based on information available on the SLA website, individuals or organisations looking to rent state property must go through an open tender process. The bidding entity can either be a local or foreign individual, or a local or foreign company.
Once bidding is closed, a tender schedule put up on the State Property Information Online (SPIO) site will display individuals or companies who have put bids in and their respective bid amounts.
For individuals, those awarded with the tender upon a successful bid are required to seek approval to incorporate a new company or use an existing company in Singapore with limited liability to execute the tenancy agreement.
If approval is granted, it is subject to additional requirements, including the need to hold a controlling interest of more than 50 per cent of the shares in the new or existing company throughout the term of the tenancy.
When tendering to lease state property, the highest bidder may not necessarily be the one awarded the property. In evaluating the bids submitted, SLA states that it "considers among other factors - the tendered price, concepts, proposed uses, track record and financial health of the bidders."
A decision on the award of the tenders will then be made after the bids have been evaluated and publicised in the award notice found on the SPIO site. The successful tenderer will be informed via a Letter of Acceptance, while unsuccessful tenderers will also be notified via letter and their tender deposits returned.
Are ministers allowed to rent state property?
According to SLA, 26 Ridout Road had been vacant for more than four years since December 2013, before it was tenanted to Shanmugam in June 2018, who was the only bidder for this property. The minister renewed the tenancy for the same property in June 2021 for another three years.
Less than one kilometre away is 36 Ridout Road, which SLA said had been vacant for more than six years since July 2013 before it was tenanted to Dr Balakrishnan. The minister had put in a bid in November 2018 and came out as the highest tenderer. The tenancy was granted to him in October 2019 and renewed by him in October 2022.
In both cases, SLA said that both ministers had made offers that were higher than the "guide rent", which was not disclosed to them. However, SLA offered no further explanation on how "guide rent" is determined.
SLA also did not indicate how much rent the two ministers were paying for the properties and added that "more details on this issue" would be provided during the next parliamentary session in July 2023.
While no information is available on the SLA website with regard to rules for public officials making bids, it did state that "all interested parties, including the existing tenant, are given equal opportunities to bid for the property", in addition to stating that individuals and organisations, both local and foreign, can put in bids to lease a state property.