RENTALS OF HOUSING BOARD KIOSKS AND SHOPHOUSES

Encik Abdul Aziz Karim asked the Minister for Law and Home Affairs, and National Development if he will ask the Housing and Development Board to review its current policy of computing rising rentals on the basis of public tenders when allocating kiosks and shophouses to resettlement cases and to rationalise rentals in respect of resettlement cases to a fair and reasonable level in comparison to rentals for such premises let out by tender.

Mr Barker: Mr Speaker, Sir, the Housing and Development Board fixes the rentals of kiosks and shophouses allocated to resettlement cases by basing the rents on the lowest of the several successful public tenders for the type of trade in the particular shopping centre. For ease of reference, I will hereafter refer to this lowest tender for rent as the public rental.

Prior to 1st July, 1971, a rising rental concession was also granted whereby shopkeepers were required to pay only 70 per cent of the public rental in the first year of tenancy, the payments of rent being increased at the rate of 10 per cent annually until the full public rental was reached in the fourth year. To further assist resettled shopkeepers, a new resettlement policy increased the concession rate after 1st July, 1971, whereby a rental subsidy of 50 per cent is granted in the first year, and the payments are increased at the rate of 10 per cent per year until the full public rental is reached in the sixth year. Apparently, even this further increase of rental subsidy has not worked out to be fair and reasonable in all cases.

To minimise hardship suffered by shopkeepers, the policy has recently been reviewed and a new formula worked out whereby the rental for resettlement cases for shops is fixed at a reduced rate of 90 per cent of the public rental. As from July this year, resettled shopkeepers will initially pay only 50 per cent of the reduced public rental in the first year and a rental increase of 10 per cent per year until the sixth year. The rental for the sixth and subsequent years is, in fact, equivalent to 90 per cent of the public rental so that resettled shopkeepers will continue to enjoy a rent rebate of 10 per cent of the public rental from the sixth year onwards.

As a further safeguard against the rents being set too high by erratic public tenders, the Shops Committee of the Housing and Development Board will fix an appropriate rent for resettled shopkeepers where the public rental is more than twice that of the minimum rental approved by the Board.

Encik Abdul Aziz Karim (Kallang): Mr Speaker, Sir, when a business partnership is formed, will such a partnership enjoy the rebates? Can the Minister please clarify?

Mr Barker: Sir, in the event of a partnership being introduced, resettled shopkeepers are now allowed concessional rentals but not at the same figures. The concessional rentals are at the rate of 75 per cent of the reduced public rental in the first year, rising gradually by five per cent annually to the sixth year, and payment of the full public rental in the seventh and subsequent years. Under the previous policy where permission was granted for the inclusion of a partner into the business, the rising rental concessions were withdrawn and the rental was immediately raised to the full public rental.