Ridout Road bungalows: How were Shanmugam's and Vivian's offers so close to SLA's guide rent?
After weeks of public speculation around the rental of black-and-white bungalows by two Cabinet ministers, the facts and figures were revealed in a report on Wednesday (June 28).
Investigations by the Corrupt Practices Investigation Bureau (CPIB) found that Law and Home Affairs Minister K Shanmugam's monthly rent of $26,500 for 26 Ridout Road is equal to the guide rent set by the Singapore Land Authority (SLA).
As for Minister for Foreign Affairs Vivian Balakrishnan, SLA accepted his wife's offer of $19,000 a month for 31 Ridout Road, since it was $200 higher than the guide rent.
While CPIB found no evidence of corruption, criminal wrongdoing or preferential treatment, some members of the public are questioning how the two ministers managed to make offers so close to the guide rents, given that the guide rents were not disclosed to the ministers and their spouses.
'They have done their homework': Property agent
It is possible for "serious tenants" to make offers that are close to the guide rent, Jasmin Ong from Realstar Premier Group told AsiaOne on Friday (June 30).
"I believe that [Shanmugam and Dr Balakrishnan] or their property agents have done their homework to come up with a figure," the real estate agent said.
"They probably walked the ground [to speak] with those living in the neighbourhood, and asked them [how much] rent they were paying," Ong added.
According to CPIB's findings, Shanmugam's property agent had studied the rental of comparable neighbouring properties, and independently determined and valued the rent.
"Minister Shanmugam instructed his property agent that he should not be paying less than his neighbours," said CPIB, adding that the rent of a neighbouring unit was $26,000
The minister's final negotiated rent amount was $26,500, which met the minimum rental to be achieved by SLA.
In the case of 31 Ridout Road, CPIB said the asking rent for the property was determined independently and valued by the managing agent to be $19,000, which is $200 higher than the guide rent of $18,800.
Is the 'guide rent mechanism' fair?
CPIB's report also found no evidence that the ministers were given favourable rental rates due to their positions.
"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," it said.
This comes after opposition politician and Reform Party chief Kenneth Jeyaretnam questioned last month if the ministers were "paying less than the fair market value" for the Ridout Road state properties.
Speaking about the findings, Ong shared that the guide rent "mechanism" set up by SLA works very well.
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.
Ong said: "I think we need to consider that the tenants have to incur extra costs to maintain [the black-and-white bungalows].
"And they cannot fully utilise the land since they do not have redevelopment rights to it… So I think [setting] the rental amount to the gross floor area is very fair."
ALSO READ: Refurbishment works also done for other black-and-white properties, not just Ridout Road bungalows: SLA
chingshijie@asiaone.com
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