SINGAPORE - Rents paid by ministers K. Shanmugam and Vivian Balakrishnan for the Ridout Road black-and-white state bungalows are comparable to those paid by other tenants in the area, according to reports released on Wednesday.
Rents paid by tenants in the other 14 black-and-white state bungalows in the Ridout Road estate, near Queensway, were detailed in one of the reports by Senior Minister Teo Chee Hean.
Rents for private bungalows in the vicinity such as those in Swettenham Road, Swettenham Green, Ridout Road and Peel Road were also disclosed, although the exact addresses were anonymised.
The rent per unit floor area per sq m per month for 26 Ridout Road, rented by Home Affairs and Law Minister Shanmugam in June 2018, came to around $30.94.
This translates to a monthly rent of $26,500 for the property with a total floor area of 856.5 sq m.
For 31 Ridout Road, rented by Foreign Minister Balakrishnan in October 2019, the rent per sq m per month came to $23.05, for a monthly rent of $19,000 for the 824.3 sq m property. This was revised to $20,000 a month upon renewal for three years in October 2022.
A bungalow of comparable size – listed in the report as Property E – in the same estate with a total floor area of around 800 sq m, was rented out in June 2018 for $32.50 per sq m per month. This translates to a monthly rent of $26,000.
In comparison, the average rent per sq m per month for private bungalows in the vicinity of Ridout Road estate was $38.83 in 2018, and $27 in 2019, the report showed.
The report stated that while the $23.05 per sq m per month rate for No. 31 was slightly lower than $25 to $33.33 per sq m per month for other Ridout estate properties in 2019, it was due to the condition of the property.
It noted that $23.05 was still comparable to other properties of average condition at the time.
It also established that the rental rates paid by both ministers were at fair market value and not below market valuation, with no evidence that the ministers were given favourable rental rates due to their positions.
“In summary, the rental of the two properties did not deviate from the prevailing SLA guidelines and approaches in renting out black-and-white bungalows for residential purposes,” said the report.
The review by SM Teo, ordered by Prime Minister Lee Hsien Loong and requested by Mr Shanmugam and Dr Balakrishnan, along with a Corrupt Practices Investigation Bureau probe, came after public discussions on how the two ministers came to be the tenants of two state properties.
In his report, Mr Teo noted that the Singapore Land Authority (SLA), which manages about 2,600 state properties, functions “just like any other landlord”, and seeks to maximise occupancy at the market rate.
This includes about 600 black-and-white bungalows, other landed and non-landed residential properties, former schools, former army camp sites, and shophouses.
A guide rent must be calculated for all state properties available for rent. The guide rent is assessed by professional valuers, and takes into account factors such as location, use, floor area, physical condition of the property, and prevailing market conditions.
The guide rent, the report said, is the key mechanism through which SLA ensures that state properties are rented out at a fair market rate. It is intended to be the minimum rental to be achieved and all offers – whether bids or direct offers – are measured against it.
In general, reference is made to rentals of comparable properties. Valuers adhere to established principles and methods for valuation.
The report stated that it is the norm to refer to recent rental transactions for other black-and-white bungalows in determining the guide rent.
If there are insufficient rental transactions for black-and-white bungalows, listings of comparable landed residential properties, including good class bungalows, will be used, but adjusted to take into account factors such as the age and condition of the property.
