Until
Kenneth Jeyaretnam started writing about it on his blog on 6 May 2023, few knew
that Cabinet Ministers K Shanmugam and Vivian Balakrishnan were living in
state-owned black-and-white houses at Ridout Road.
Built in
colonial times, black-and-white houses are architecturally unique and often sit
on large pieces of land. In Singapore,
such heritage homes are highly coveted places of residence. About 500 black-and-white houses remain
today, the vast majority of them are state-owned and managed by the Singapore
Land Authority (SLA), a statutory board under the Ministry of Law. Such
state-owned properties are only available for rent by public tender.
The optics
of ministers living in state-owned colonial mansions surrounded by massive land
while most Singaporeans squeeze themselves into pint-size flats in land-scarce
Singapore, make an unpretty picture.
Not
surprisingly, the Ridout Road news drew many questions and much indignation
from the public.
In
response to rife public speculation and interest in the Ridout Road rentals by
the two ministers, SLA issued a media statement on 12 May 2023. The information provided by SLA raised more questions
than answers.
Here are 6
facts revealed by the SLA statement and the questions that struck me when I considered
each of those facts.
Fact 1: 26 and 31 Ridout Road had been vacant for more than 4 years and more
than 6 years respectively, before they were tenanted.
- Why were those properties vacant for years?
- Were they left vacant by decision or due to inability to find suitable tenants?
- If they were vacant by decision, why were they kept vacant?
- When did the policy to keep them vacant change to getting them tenanted?
- If they were vacant for those years due to inability to find a suitable tenant, what were the efforts made over the years to attract tenants?
As far as I know, landlords hate vacant periods. Having an untenanted
property is like keeping your cash savings in a non-interest-bearing current
account. Also, maintenance costs will
continue to run, even for vacant properties.
Other than wealthy landlords who can afford to be indifferent, most landlords
would assiduously avoid vacant periods and do whatever needs to be done to
ensure that their property is at all times tenanted and therefore
income-producing.
In land-hungry Singapore, a huge dollar figure can be put to
describe the rental income forgone by leaving a piece of real estate – more so
one in a prime location - vacant for a year, let alone 4 to 6 years. Idle state
land resources represent an opportunity cost not only in terms of lost Government
revenue, but also the loss of social benefits had the land been employed for
public use.
Here, we are talking about state-owned assets managed by SLA, an
organ of the state carrying the burden of optimising the use of state
properties, either for social benefit or to earn income for Government coffers.
An explanation should be given to the public as to why those two
extremely large pieces of state-owned properties located in a prime area were
vacant for years.
Fact 2: The 2018 public tender for 26 Ridout Road only garnered one bid.
- What were the actions taken by SLA to publicise, promote and market 26 Ridout Road to attract potential bidders for the 2018 tender?
- Was the 2018 tender the first and only time since December 2013 that 26 Ridout Road was put out for bidding?
- If not, how many unsuccessful tenders were conducted before 2018?
- Were the terms and conditions of the bidding or the tenancy applied for the 2018 tender similar or different to those in the tender for other black and white houses?
- If different, what were those differences from the usual terms and conditions?
The response to the tender for 26 Ridout Road in 2018 was poor,
attracting only one bid.
Black and white houses are supposed to be highly sought-after. One
would expect many to be interested to rent a black and white house, subject to
being able to afford the rent.
If the Guide Rent is unknown to bidders, what is to stop an
optimistic house-hunter from making a “try-luck” offer?
To make a bid, the bidder must fork out a bidding deposit which is
the amount of his bid rent per month. But
his bidding deposit will be returned to him if his bid is unsuccessful. The
bidder will not lose any money by making a try-luck offer. Yet, the 2018 tender for 26 Ridout Road did
not even attract any try-luck bids.
Was the poor response due to Insufficient publicity? To rule
out insufficient publicity effort as the cause for the poor response, SLA should
release details of the actions taken to publicise, promote and market 26 Ridout
Road to attract potential bidders back then.
Were potential bidders put off by onerous terms and conditions? To rule
out onerous terms and conditions as the cause for the poor response, SLA should
release the bidding terms and conditions and the specimen tenancy agreement applied
for the 2018 tender of 26 Ridout Road, for comparison with the bidding and
tenancy terms and conditions for other black and white houses.
Were potential bidders put off by the state and condition of the
house? If the property has a
Guide Rent, then it must be in a lettable condition. At the minimum, the roof and structure of the
house should be sound and in good condition, have water and electrical supply
and a sewage system.
I cannot believe that SLA would release 26 Ridout Road for rent if
the roof was about to fall and if was too dilapidated to be fit for habitation.
It would be unconscionable for anyone to palm off an unliveable place for rent.
Anyway, if spending some money to fix up the property will enable
you to get it tenanted, then he would be a very silly landlord to not spend the
money to fix up the property.
Of course, if it is going to cost a fortune to render a
monster-infested property fit for human habitation, then I say nuke the place
and turn it into a public park for joggers, strollers and lovers to haunt. But don’t leave it vacant and idle.
All said, the poor response to the 2018 tender
for 26 Ridout Road needs an explanation and I hope we get one.
Fact 3: The bid for 26 Ridout Road was won by the Law Minister as the sole bidder.
Besides
only attracting one bid, the sole bidder who placed a bid above the Guide Rent
(which
was not disclosed to him), was the Law Minister himself.
A person looking to rent a black-and-white house will access SLA’s
website to see what houses are up for public tender.
Other data
that house-hunters may want to know, but which SLA does not publish, include:
ü As to
which or when certain vacant houses would be going up for public tender;
ü The Guide
Rent for houses up for tender;
ü The
rentals of tenanted houses (but SLA does publish the results of recent open
tenders on their website for a period of time); and
ü The tenancy
expiry date of tenanted houses.
“SLA currently manages 262 residential State
black-and-white bungalows which exceed 20,000 sq ft in land area. As of 21 July
2022, 236 of these residential State black-and-white bungalows are tenanted,
with a median land size of about 38,000 sq ft and a median rental of about
$13,000 per month.”
The
information given by Mr Shanmugam gives the impression that he has access to
data relating to SLA’s inventory of tenanted and untenanted black-and-white
houses and the rentals which the tenanted houses were fetching.
- When SLA decided that 26 Ridout Road would be released for public tender, did Mr Shanmugam, being the Law Minister, have access to that SLA decision, ahead of it becoming public knowledge?
- Or did Mr Shanmugam, despite being the Law Minister, find out about the tender of 26 Ridout Road by checking the SLA website like anyone else, so that he knew about it no sooner than the public did?
- If Mr Shanmugam, being the Law Minister, did have access to information that SLA would be putting 26 Ridout Road up for public tender, ahead of it becoming public knowledge, does it matter?
Fact 4: Mr Shanmugam made his offer for 26 Ridout Road through an agent.
- Does making an offer through an agent mean that the agent signed the bidding form in his own personal name, without disclosing the name of Mr Shanmugam as the prospective tenant and without making it known to SLA that he was acting as an agent on behalf of Mr Shanmugam?
- Why didn’t or couldn’t Mr Shanmugam make the offer himself without going through an agent?
I picked up a “Bidding Form for State Property” at random from the
SLA website. The Bidding Form I saw requires the bidder to provide his personal
particulars, including his monthly income. He must also be the person signing the
tenancy agreement as “tenant” if his bid is successful.
Clause 1.4 of the Bidding Form states: “The State Property shall
be used solely for residential purpose by the successful bidder personally and
his family”.
Clause 5.4 of the Bidding Form states: “The successful bidder
shall not be entitled to transfer his right to rent.”
This means that agents cannot bid on behalf of undisclosed
persons.
We do not know if a different type of bidding form applied to the
tender that Mr Shanmugam went through in 2018.
SLA should release a copy of the bidding form used in that 2018
tender.
If the bidding form used in that 2018 tender was the same as the
Bidding Form I saw at SLA website, then Mr Shanmugam could not have made an
offer for the property anonymously. SLA
would have been fully aware during the bid evaluation, that Mr Shanmugam was
the prospective tenant.
Fact 5: Mr Shanmugam notified a senior Cabinet colleague that he was
making a bid for 26 Ridout Road.
- Why did Mr Shanmugam notify a senior Cabinet colleague that he was making a bid for the property?
- Did Mr Shanmugam do this for the sake of transparency?
- If transparency was Mr Shanmugam’s aim, then why didn’t he give formal notice to the Cabinet instead of telling one Cabinet colleague?
- Who was the senior Cabinet colleague Mr Shanmugam notified?
- Why did Mr Shanmugam choose that particular colleague instead of any other colleague?
- Did Mr Shanmugam inform the said senior Cabinet colleague verbally or in writing?
Since the
SLA media statement mentioned that Mr Shanmugam had notified a senior Cabinet
colleague that he was making a bid for 26 Ridout Road, it suggests that SLA has
seen a copy of the notice given by Mr Shanmugam. In which case, I hope SLA or Mr Shanmugam
would release the copy to the public. That would answer a lot of questions.
Fact 6: Dr Vivian’s tenancy of 31 Ridout Road commenced 11 months
after he had bid for it.
Dr Vivian made his bid in November 2018, but his tenancy only commenced
on October 2019, 11 months after he made the bid for it.
31 Ridout Road being released for public tender would mean that it
was ready to let. If so, the tenancy should commence immediately, to minimise
the void period.
According to the Clause 5.6 of the Bidding Form I saw on SLA
website:
"The tenancy shall be for a term of 2
years commencing within twenty-one (21) calendar days from the date of the
Letter of Acceptance.”
Hence, the tenancy should commence immediately after the bid is
awarded.
Yet, Dr Vivian’s tenancy did not commence immediately, but 11 months later.
- Why did Dr Vivian’s tenancy not commence immediately, but 11 months later?
- Was deferred commencement date imposed by SLA or requested by Dr Vivian?
- If it was imposed by SLA, what was the reason for imposing such an unusual condition for 31 Ridout Road?
- If it was Dr Vivian who requested for the deferred commencement date, why did SLA agreed to such an unusual condition for 31 Ridout Road, given that there were other bidders apart from Dr Vivian?
- If it was Dr Vivian who requested for the deferred commencement date which SLA agreed, then how was the loss of rental income during the additional void period accounted for?
SLA ended their media statement with a promise to release more
details in July 2023. I will wait till
then for the answers to my questions.
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