Beer stall co-owner explains 40% increase for hawker rental is “wholly impartial empirical data-driven approach”; NEA clarifies rental rates increase not more than S$300

Earlier on Friday (25 June), it was reported that Makansutra founder KF Seetoh has taken to Facebook to slam the National Environment Agency (NEA) for raising the rent of hawker stalls by 40 per cent amid the COVID-19 pandemic.

In the post, Mr Seetoh did not mention which hawker stalls are subjected to the rental hike, but include a letter by NEA informing a stall owner on the rental raise.

The rental hike has inevitably sparked outrage among netizens, with many of them described the 40 per cent rent increase as “absurd” and “unacceptable”.

Meanwhile, Daniel Goh, co-owner of beer stall Smith Street Taps, with 10 years of experience in the industry, took to his Facebook page to explain the rental process for hawker stalls under the NEA based on his own understanding.

In reference to Mr Seetoh’s post, Mr Goh said he is “almost certain” that the 40 per cent rent increase imposed on the hawker stalls was “a wholly impartial empirical data-driven approach” which possibly an “extreme one-off case”.

He noted that rental prices for hawker centres are based on bids on a supply and demand basis, in which hawker centres with more popularity would generally attract higher bids due to “footfall and convenience/connectivity”.

“The closed bidding process is actually quite transparent – at the end of the bidding you know who bidded and at exactly what price. Unless there are prevailing concerns, the highest bidder wins.

“NEA hawker stall lease agreements run for three years. In those three years the average rental price in the hawker centre it’s located in fluctuates based on transacted (completed) bids in those years,” said Mr Goh.

According to him, NEA hawker stall lease renewals are mainly based on the average rental price, which may increase over the years, especially for hawker centres that attract higher bids.

“So if you’re at the end of your current lease and you need to renew it, your new rent can be significantly higher than your previous rental amount. Which is what I suspect happened to the case Seetoh’s referring to,” he added.

Citing popular hawker centres – such as Maxwell, Old Airport Road, Newton, and Amoy – which would attract bids over S$4K per month, Mr Goh believes that the 40 per cent increase in the average rental price is indeed possible.

“And if they displace a retiring hawker that’s on the old subsidy scheme paying less than $150/month, you can see how the average rental price for that hawker centre would skyrocket. This scenario is not extremely common, but it can happen,” he noted.

While it could be “a wholly impartial empirical data-driven approach” that caused the 40 per cent rent increase in the case highlighted in Mr Seetoh’s post, Mr Goh opined that the increase is “absolutely devastating” for a hawker who was “already barely scraping by” even before the COVID-19.

“The bigger discussion here is whether NEA should retain a bidding system which has worked in the past but may not be as relevant in this day and age where we’re seeing our prized hawker culture die a slow and painful death.

“It remains absolutely perplexing to me that our EDB can throw millions at large MNCs for them to be based here in Singapore, while we seem so intent on squeezing the lifeblood out of our hawkers by expecting them to subsidise our cost of living,” he remarked.

NEA clarifies rental rates for hawker stalls have been “kept unchanged throughout three years”

NEA has issued a statement on its Facebook page on Saturday to clarify that the rental rates for hawker stalls have been “kept unchanged throughout three years”, and that increases in rental rates have not exceeded S$300.

“On the other hand, there have been rental revisions downwards of more than $300 upon tenancy renewals. It is misleading to look at percentage increases alone as a $300 increase from a low rental will appear as a large percentage increase,” it stated.

The agency noted that stallholders who have obtained their stalls through NEA’s monthly stall tender exercises could pay “as low as a few hundred dollars, or even S$1”.

It explained that the renewal of tenancy will be based on prevailing market rates assessed by independent professional valuers, which can be higher or lower than the previous rate.

“For example, if there was fierce competition for a particular stall at tender and the successful rental submitted is higher than the valuers’ market rates at renewal, the rental will fall to the market rate.

“In situations when rentals are adjusted higher however, NEA moderates the amount of increase instead of allowing a large jump to the prevailing market rate,” said the agency.

NEA further clarified that the current median monthly stall rental of non-subsidised cooked food stalls across all hawker centres is S$1,250.

“We believe this is competitive and significantly lower than stall rentals at commercially-operated coffeeshops and food courts. NEA remains fully committed to supporting and promoting our hawker trade and culture,” it said.

Furthermore, the agency pointed out that it had frozen rental increases from 1 April last year to 31 March this year due to the difficulties caused by the COVID-19 pandemic.

NEA noted that hawkers were provided with five months of rental waivers and three months of subsidies for table-cleaning and centralised dishwashing services, adding that eligible hawkers also benefitted from the Self-Employed Person Income Relief of nine months.

“In 2021, support has been provided to our hawkers in the form of two months of rental waivers and subsidies for table-cleaning and centralised dishwashing services.

“Hawkers are further eligible for one-off support under the COVID-19 Recovery Grant (Temporary) which was announced on 28 May 2021,” it stated.

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