Tuesday, 26 September 2023

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DPM Wong rejects suggestion to implement pricing allocation framework for place of worship onto HDB flats

Deputy Prime Minister and Minister for Finance, Lawrence Wong, dismissed the idea of implementing a pricing allocation framework similar to Places of Worship (PW) sites for Housing and Development Board (HDB) flats.

In response to a parliamentary question filed by Associate Professor Jamus Lim, DPM Wong highlighted the distinctive nature of these two property types.

Asst Prof Lim had sought answers from DPM Wong regarding the impact of the revised land allocation and pricing framework for PW sites on past reserves and the potential long-term consequences.

He also further questioned whether the Government will consider implementing a similar pricing allocation framework for the land component of HDB flats; and, if not, whether the Government would account for the difference in treatment of the two types of property.

In response, DPM Wong emphasised that PW sites serve a vital role in meeting the spiritual needs of Singaporeans and maintaining religious harmony.

He noted that religious organisations have raised concerns about the rise in prices of PW land over the years.

“The Government has studied the issue, and decided to change the framework for allocation of PW land from a competitive tender process to a fixed price ballot.”

PW allocated through ballot system instead of tender

The change was recently announced by the Ministry of National Development (MND) this year on 28 May.

With the exception of mosques, future PW land will be allocated through a ballot system rather than through a competitive tender.

There will be upfront price certainty as religious organisations will pay a pre-determined price, reflecting the fair market value of the site, as determined by the Chief Valuer.

The price of PW land under this new framework is expected to be lower than the prevailing prices, thereby leveling the playing field for all religious organisations.

The PW land must continue to be predominantly for religious uses and worship. Religious organisations will continue to have to meet the existing pre-qualification criteria.

DPM Wong said this change reflects a fundamental change in the land allocation approach for PW land, which impacts how the market for PW land is defined and valued.

Without competitive tender prices, the Government will have to work out the appropriate fair market value (FMV) for PW land.

The Government has discussed this with the Chief Valuer (CV), and the CV intends to use as a reference the price of directly alienated PW land that had not been influenced by tender prices before.

“Of course, the actual FMV of any PW land will ultimately depend on its individual characteristics, and will be determined independently by the CV, based on established and accepted valuation principles.”

No draw on past reserves

DPM Wong emphasised that there will not be any draw on past reserves, so long as the land is disposed of at the fair market value.

In the case of public housing, the land is directly alienated by HDB, and the value of the land is also determined by CV based on his professional judgement and established valuation principles.

“But there is a key difference between PW sites and HDB flats,” DPM Wong noted.

“PW sites allocated to a religious organisation cannot be freely sold to other parties. HDB resale flats, on the other hand, are purchased and sold all the time in the open market.”

These resale transactions provide the CV with up-to-date market data to make his independent determination of the FMV of any public housing land.

“It would therefore not be appropriate for the CV to use a different basis for valuation, unless there is a fundamental change in housing policy.”


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