SLA statement on Ridout Road rentals raises more questions than answers

SLA statement on Ridout Road rentals raises more questions than answers

by Jeannette Chong Aruldoss

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 six 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 four years and more than six 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 four to six 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 benefits 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 were about to fall and if it 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:

  • As to which or when certain vacant houses would be going up for public tender;

  • The Guide Rent for houses up for tender;

  • The rentals of tenanted houses (but SLA does publish the results of recent open tenders on their website for a period of time); and

  • The tenancy expiry date of tenanted houses.

On 2 August 2022, Mr Shanmugam speaking as the Law Minister, answered parliamentary questions on rental demand for SLA-managed black and white houses. SLA is under the Ministry of Law.

He informed:

“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.

  • What does making an offer through an agent mean?

  • 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 the 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.

Jeannette Chong Aruldoss is a practicing lawyer and a former politician in Singapore. This article is the first of a 2-part commentary. See her follow-up article,
Are the Ridout road rentals in breach of the Ministers’ Code of Conduct?

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