DEVELOPMENT CHARGE

Mr Ng Kah Ting asked the Minister for National Development whether he is aware of complaints that the development charge is too high and whether he will take steps to reduce it.

Mr Lee Yock Suan (for the Minister for National Development): Mr Speaker, Sir, I am aware of the complaints made by developers that the development charge is too high. However, I believe that this is because they are not very clear on how development charge is arrived at or how their interests are protected in the system of levying development charge.

Development charge is intended to cream off part of the windfall gains from increases in land values arising from approvals to develop land not in conformity with the Master Plan. It is based on 70% of the increase in land value as determined on a case-by-case basis by the Chief Valuer. This system is fair to all, since land value varies widely from locality to locality and at different points in time. Development charges are as high or as low as property prices at the time of approval of the development project. In the event that developers dispute the quantum of development charge, there is an avenue of appeal to the Minister.

The present procedure for the determination of development charge ensures that development is not discouraged. Development charge is determined at the date of the grant of in-principle approval and remains valid for a period of 12 months or until written permission is issued, whichever is earlier. This protects the developer in both a rising as well as a failing property market. In a rising market, with development charge determined on the date of in-principle approval, the developer is protected for up to one year from having to pay higher development charges from rising land values. In a property downturn, the developer can get a new determination of development charge after the expiry of 12 months to benefit from failing land values. Alternatively, he can abort his original planning application before the 12-month period and resubmit for a new in-principle approval upon which development charge will be determined.

There are no plans to review the present system of development charges since this is a fair system and reflects the current values of the property market.

Mr J.B. Jeyaretnam (Anson): Mr Speaker, Sir, may I ask the Minister of State about an appeal to the Minister? Who is the Minister advised by when he sits on this appeal? Does he take an opinion from outside valuers, or is he advised by the Government Valuer who made the valuation in the first instance?

Mr Lee Yock Suan: The appeal is considered by three parties. The developer himself is present at the appeal. Then there is he Government Valuer and there is the Valuation Appeals Inspector appointed by the Minister. On the basis of the evidence provided by both the developer and the valuer, the independent Inspector will submit a report to the Minister for National Development who will decide on the case.