HDB COMMERCIAL/INDUSTRIAL PREMISES (Transfer fee)

Mr J.B. Jeyaretnam asked the Minister for National Development if he will state the reason for the levy of $500.00 by the Housing and Development Board for the transfer of tenancy of its commercial/industrial premises from the tenant to a partner or next of kin.

Mr Lee Yock Suan (for the Minister for National Development): Mr Speaker, Sir, the HDB charges a transfer fee of $500 when the registered tenant of a commercial or industrial premises transfers his tenancy to a business partner or a next of kin who has been assisting him in his business.

The fee, in fact, is a token charge. Transfers of tenancy are generally not allowed as they enable new tenants to enjoy the subsidized rentals of original tenants which are far below rentals that can be fetched by tender on the open market. Transfers of tenancy also allow a new tenant to enjoy the reputation and goodwill of the original tenant.

The HDB has considered charging prevailing market rentals for transfer tenancies but decided against this as it would cause undue hardship to a partner or next of kin of the original tenant.

The transfer fee is therefore a concession given by the HDB. It is not imposed when the transfer of a tenancy to a next of kin is necessitated by the death of the registered tenant.

Mr Jeyaretnam: Mr Speaker, Sir, in the written reply that was given, the answer was that this was to defray administrative costs. If that is correct, that it was to defray administrative costs and not a levy or a fine that the man has to pay for transferring the tenancy, I want to know what are the administrative costs involved. That was the answer that was given when I asked that question - it was to defray administrative costs. What are these costs?

Mr Lee Yock Suan: The Member for Anson is referring to a written reply which we gave to him when he wanted to know a whole long list of fees and charges imposed by the HDB. Therefore, in the summary table it was only possible for us to give the various reasons in point form. One of the reasons for this fee is obviously for the administrative effort involved. But the reason is, as I have given just now in more detail, that it is basically a token charge. The normal policy is that we do not allow a transfer of tenancy. But we have made a concession in these cases to allow it, and in so doing we charge a token fee.

Mr Ho See Beng (Khe Bong): Mr Speaker, Sir, I would like to ask the Minister of State whether he is aware or whether he has any idea how much transfer fee is involved for a transfer of tenancy of a private property.

Mr Lee Yock Suan: Sir, I think the question should best be directed to the Member for Anson who is a lawyer. But, as is well known, the fees could be very substantial in terms of stamp fees and so on. Very often there is consideration involved because you are transferring something of value from one person to another. In this case our policy is that this tenancy really belongs to the HDB. It is not a property to be transferred from one tenant to another. We have actually made a concession in this case, by allowing a transfer in special cases and with a token charge.

Mr Jeyaretnam: Mr Speaker, Sir, with respect, I really cannot follow the Hon. Minister of State. As I understand the written answer to my question, a fee is charged when the transfer is from one partner to another partner. Now the Minister of State talks about a new tenant coming in. If a coffee shop is run by a firm, there are several partners. It is the firm that is continuing. And if it is considered expedient or, for some reason, necessary that the tenancy should be held by A instead of B in the same firm, what is the reason for levying a $500 charge? The Minister of State talks about it being a token. I do not know whether it is being regarded as a token.

Mr Lee Yock Suan: Mr Speaker, Sir, this is not the first time that the Member for Anson has not been able to follow logical argument. I think the Members are hardly surprised and, in fact, I despair at having to explain to him. But the fact is that if the original tenancy was given to this partnership, the partners Mr A and Mr B, in the proportion of maybe 50-50, then when A transfers or gives up his share to B, B gets a 100% share. So there is a change in the original conditions. B is now getting a bigger share, and often this means that he is enjoying a bigger rental subsidy, and so on. Normally we would not allow a transfer. If, for example, A wants to transfer his share to someone completely new, we will say, "No. You bring this back to us. You tender again." This is because the market rental is different, and these are month-to-month tenancies. If A wants to take in a new partner, we will allow it, but then we will revise the rent to the market rental. So the Member must understand the basic premise. I can see a lot of confusion on his face, but as I have said, it is hardly surprising.