MUIS defends policy of charging market-rate rent for wakaf properties

SINGAPORE - By charging tenants rent at market rates, wakaf properties can keep generating income for the causes they support, the Islamic Religious Council of Singapore (MUIS) said on Feb 11.

It was responding to public concern over its management of such properties in Kampong Gelam, where heritage businesses have reported being priced out of the area by rising rents.

A wakaf is an Islamic religious endowment comprising land or assets bequeathed by Muslims for religious or charitable purposes. In Singapore, these assets – including shophouses, residential units and commercial buildings – are managed by MUIS. The income goes to mosques, madrasahs, the needy and other charitable causes.

In Kampong Gelam, 26 shophouses are on wakaf land. There are more than 600 shophouses in the precinct.

In its Feb 11 statement, MUIS said that trustees of wakaf properties, called mutawallis, ensure that these properties are regularly maintained and rented out “at rates you’d expect to pay in the regular property market”.

This is so that properties can keep generating income for the beneficiaries specified in each wakaf deed.

MUIS added that such trustees have a legal and ethical responsibility to act in the beneficiaries’ best interests. If the rental rates are set substantially below market norms, these trustees “could be accused of failing to perform their fiduciary role and short-changing the beneficiaries of the charitable income intended for them by the wakaf deed”, it said.

The issue of rental rates in Kampong Gelam was raised in Parliament on Feb 3, with MP for Jalan Besar Denise Phua seeking more data on rental hikes in heritage areas.

Senior Parliamentary Secretary for National Development Syed Harun Alhabsyi said that a small proportion of tenants in the Kampong Gelam area faced rental hikes of 25 per cent or higher when they signed their leases between 2023 and 2025.

He said that some of these leases were previously signed at below-market rates, and tenants may have experienced a larger increase from their low base when the rates normalised towards the prevailing market rate.

Workers’ Party MP Fadli Fawzi also asked how many shophouses in the area are on wakaf land, and how MUIS intends to preserve their cultural identity and historical value.

Acting Minister-in-charge of Muslim Affairs Faishal Ibrahim said in a written response that MUIS and its subsidiary, Warees Investments, work with government agencies to preserve and enhance heritage value and legacy.

In its Feb 11 statement, MUIS said that in heritage districts like Kampong Gelam, it ensures that tenants of wakaf properties, where relevant, are in line with the district’s identity.

It added: “We recognise that businesses today face significant challenges including manpower shortages, rising costs, marketing difficulties, evolving consumer preferences, and intense competition.”

When tenants face difficulties meeting rent payments, it engages them through Warees to understand their financial situation, and may explore repayment plans, it said.

“Despite these flexible arrangements and support measures, we acknowledge that some businesses may still be unable to continue operations due to broader market conditions and business viability challenges beyond rental considerations alone,” MUIS added.

Mutually agreed termination of leases or legal proceedings are pursued only as a last resort, in accordance with tenancy agreement terms, it noted.

“This approach balances MUIS’ responsibility to ensure wakaf properties generate sustainable income for beneficiaries with compassionate tenant management.”

Islamic and haj-related goods store VSS Varusai Mohamed & Sons operated from a unit in Kampong Gelam for close to 90 years, since it was established in 1924, before moving to another space nearby in 2021 because of issues like rising rental costs. Ms Fauzia Rani, who helps run the family business, told ST that she feels there should be more consideration for heritage businesses in the area.

It is sad that the merchants who first started everything in Kampong Gelam may not be considered to be part of the community that benefits from the wakaf, she said.

“When you increase the rent, the people who have been doing business here cannot survive and they have to move out. We have lost so many of our heritage businesses already,” she said.

Dollars and cents are important, but we also need compassion, she added.