Four ministers talk about bungalow rentals on Liout Road: 11 things to know about the story so far

5. Leasing in compliance with standard processes

SM Teo’s report concludes that there were no deviations from its general SLA guidelines and processes in the two transactions.

When the property was rented to Mr. Shanmugam in 2018 and Dr. Balakrishnan in 2019, there is no need to list all available black and white bungalows on SPIO, SLA and management agency decides whether to do so We were able to.

Both 26 and 31 Ridout Road were advertised through “For Rent” signs placed at the gates. Additionally, 31 Ridout Road was featured on his SPIO.

The bungalow at 26 Ridout Road had been vacant for over four years since December 2013, before being rented to Shanmugam in June 2018.

He asked the then undersecretary of justice in January 2017 for a list of properties available for rent to the public and later visited several of these properties, all of which were marked “for rent,” according to the report. A sign was posted conspicuously. In January 2018, he appointed a real estate agent to represent him in the transaction to rent out 26 Ridout Road.

Until then, there had been no bids for the property, and Mr. Shanmugam was the only bidder.

His bid of $26,500 per month was accepted in line with the guide’s rent, and in June 2018 my wife signed a 3-year lease with options for 3 years and then 3 year renewals.

In June 2021, the rent was unchanged and renewed for the second three years.

Similarly, 31 Ridout Road was vacant for over six years from October 2019 until it was leased to Dr. Balakrishnan.

Balakrishnan contacted the management agent in September 2018 after spotting a “for rent” sign on the property.

The agent asked for $19,000 in rent, which Balakrishnan made an offer for in November 2018.

This was the highest bid and exceeded the guide rent of $18,800, so the SLA accepted it.

Prior to that, two unsuccessful bids, $12,000 in July 2018 and $5,000 in August 2018, were below typical guide rents.

Mrs. Balakrishnan signed a three-year lease with the option to renew for two years and then for another two years.

At the end of the first three-year term in October 2022, it sought to renew it for a further three years plus two years instead of the original two years plus two years.

This was permitted by increasing the rental fee to $20,000 given prevailing market conditions.

Questions were raised about the length of the tenancy, but after a review it was found that the SLA was no longer than three years, the maximum permissible term that the SLA could be granted at any time, with the option to extend it for three years and an additional three years.

The report said authorities consider factors such as how much a tenant is likely to spend on property improvements when deciding whether to approve long-term tenancy agreements.

Any approved improvements made by the tenant will become the property of the government upon the return of the property, so longer contract terms will allow such costs to be spread over a longer period of time.

On 26 Redout Road, Mr. Shanmugam carried out improvements costing more than $400,000 and on 31 Redout Road, Dr. Balakrishnan carried out works totaling more than $200,000.

6. Lack of guide rent accuracy

In both cases, the guide rent was not disclosed to the minister and his wife, the report said.

This is the minimum rent that all bidders must meet and is based on the SLA or prevailing market rates assessed by management agency evaluators.

The CPIB said access to information on Guiderent is limited to SLA’s leasing division.

However, the agency found a “lack of accuracy” in SLA’s use of the term “guide rent” with respect to 26 Ridout Road. This was the only issue I found.

The SLA rated the property at a suggested rent of $24,500, which was not accurate.

This is because it has since determined the minimum rent to be paid is $26,500.

The agency spent $172,000 to clear and fence off a portion of the land, and an additional $2,000 per month was to recoup these construction costs during the rental period.

Considering this, the SLA should have valued the guide rent at $26,500, CPIB said.

CPIB noted that this would make Shanmugam’s offer equal to the guide rent and not above the guide rent as the SLA said in its May 12 statement.

The agency said this lack of accuracy was found when it “carried over to a second evaluation for lease renewal” of 26 Ridout Road and investigated the matter and notified SLA.

The CPIB added that the problem with the derivation of guide rents did not arise from malicious intent on the part of the SLA, and that there was no evidence of malicious abuse of position in relation to the evaluation.

All bids and direct offers for black and white bungalows are priced against the property’s guide rent to ensure that such properties are rented out at fair market rates.

To achieve this goal, the SLA said the indicative rent will take into account factors such as location, use, floor area, physical condition of the property and general market conditions.

Rents for similar properties were also mentioned, as well as recent rental deals for other black and white bungalows, he added.