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Ho Ching suggests SLA’s “guide rent” approach may not be the best way to manage black-and-white bungalows

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Proposing an alternative approach, Mdm Ho suggested that the SLA consider coupling rental bids with capital expenditure (capex) improvements for future rental bid consideration.

SINGAPORE: Prime Minister Lee Hsien Loong’s wife, Ho Ching, has offered her perspective on how the Singapore Land Authority (SLA) should manage the black-and-white colonial bungalows that are at the centre of controversy after it came to light that two Cabinet Ministers are renting two such state-owned properties along Ridout Road.

The former Temasek Holdings’ CEO published her views in a Facebook post last week that seemed to suggest she disagrees with the guide rent concept SLA uses to rent the bungalows out as she discussed the consequences of leaving these properties vacant.

Mdm Ho said she recognized the bureaucratic perspective behind the SLA’s adherence to guide rents as it helps to protect them against accusations of unfairness or corruption. However, she observed that this approach had unintended repercussions, as unoccupied properties would quickly deteriorate.

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The PM’s wife pointed out the impact of rejecting bids below the prevailing guide rent, such as bids of $5,000 or $12,000, resulting in conservation homes being left empty and deteriorating rapidly. She said, “So by rejecting bids of $5,000 or $12,000 below the prevailing ‘guide rent,’ these conservation homes were left to rot empty.”

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To ensure better upkeep and maintenance, Mdm Ho said that SLA should rent out these properties even below the guide rent and warned that leaving them vacant would result in substantial repair costs in the future, regardless of whether the rental offers were above the prevailing guide rent.

She cautioned, “Leaving such properties empty when the offers are below ‘guide rents’ would leave these properties in a very bad state. And that means a lot of make good repair costs later even if the rental offers are above the prevailing guide rent.”

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Referring to a report comparing the rental rates of these units with other black-and-white and private bungalows in the vicinity, Mdm Ho noted, “The report comparing the 2 units vs other B&W and other private bungalows in the vicinity shows that on a per sqft built up floor area, the rentals are comparable.”

She indicated that larger units even had lower rental rates, which she attributed to the affordability limits for larger and more costly properties.

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Pointing out the unique considerations associated with colonial bungalows, such as their age and the lack of basic amenities such as fans, air conditioning, kitchen cabinets, and appliances, Mdm Ho noted that prospective tenants are expected to bear the cost of outfitting these bungalows and complying with additional restrictions imposed by authorities such as the Urban Redevelopment Authority (URA) for the conservation of these properties.

Proposing an alternative approach, Mdm Ho suggested that the SLA consider coupling rental bids with capital expenditure (capex) improvements for future rental bid consideration.

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Suggesting that additions like bathrooms, car porches, and annexes should be considered as capex contributions to the enhancement of the property, Mdm Ho said that the amortization value of such improvements could be added to calculate an effective rent, benefiting both the SLA and tenants.

She added, “And SLA would benefit from higher rentals beyond the tenants’ rental period too.”

Netizens responding to Mdm Ho’s post agreed that a balance must be struck between preserving the historical significance of these properties and ensuring their proper utilization and maintenance.

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Some said that SLA could better manage these properties and called on the statutory board to safeguard conservation while minimizing the potential for deterioration with a new approach rather than relying on the guide rent concept.

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