ACQUIRED PREMISES (Abatement in compensation award)

Mr J.B. Jeyaretnam asked the Minister for National Development whether he will explain why an abatement is made in the compensation award paid to owners of acquired premises living in the premises if they are offered Housing and Development Board apartments for purchase upon moving out of their premises and delivering vacant possession.

Mr Teh Cheang Wan: Mr Speaker, Sir, the compensation award for premises acquired by the Government depends on whether the premises is delivered by the owner with encumbrances or on a vacant possession basis. A lower compensation is paid for encumbered premises to reflect the cost which will be incurred by the Government in subsequent clearance.

Owners who live in acquired premises can opt for priority allocation of HDB flats if they are unable to find alternative accommodation on their own. In which case, they are delivering the acquired premises on an encumbered basis. An abatement therefore has to be made on the compensation award if the award was earlier valued on a vacant possession basis.

Mr Jeyaretnam: Mr Speaker, Sir, does the Minister realize that if the owner who is in occupation of the premises gives up the flat or premises, then he is giving vacant possession. He is not giving up the flat on an encumbered basis. What is the reason behind the abatement of the award made to him under the Land Acquisition Act, where he says he wishes to purchase a Housing Board flat and has got the money to purchase it and will move out as soon as the flat is made available to him? Is he not giving vacant possession? Are there any tenants left behind for whom compensation will have to be made by the Resettlement Department? I thought that was the encumbered basis.

Mr Teh Cheang Wan: Mr Speaker, Sir, I think we must not mix acquisition of property with application for public housing. These two are separate matters. When a property is acquired, compensation is paid on the basis whether the property is encumbered or not encumbered. If the property is not encumbered, which means that nobody is staying on the property and that the HDB or the Resettlement Authority does not have to move any person out, then the compensation is made on vacant possession basis. But if the owner is staying there, then the property is no longer unencumbered, irrespective of whether the owner has applied for an HDB flat or not. If the owner has applied for an HDB flat and has obtained an HDB flat and moves out on his own, then he is able to deliver the property to HDB on a vacant possession basis. He will then be paid on a vacant possession basis.

Mr Jeyaretnam: Is the Minister aware of a tenant in Tras Street who has been awarded a sum of $30,000 or so under the Land Acquisition Act and he is being told that an abatement of $12,000 will be made if he applies to purchase an HDB flat?

Mr Teh Cheang Wan: Mr Speaker, Sir, I am not aware of the case mentioned by the Member for Anson. But, as I have stated, anybody who is cleared as a clearance case, in other words, he is living on a property that is acquired by Government, then that person living on that property is eligible to priority allocation of an HDB flat. That means he jumps the queue and is ahead of many others. He is able to choose the locality and the type of flat he wants to move into. This is the special consideration that a resettlement case gets. Such people will have this priority of choosing the flat in the locality he wants. Therefore, quite often, the owner says, "I am quite happy to get less compensation and be treated as an encumbered case." Therefore, an abatement has to be made and the owner who stays in his property will be accorded priority of choosing the HDB flat in the locality he wants by jumping the queue and getting the flat earlier than others. But if the owner wants vacant possession value, in other words, he wants a higher compensation, then this is simple. He just moves out of the premises and then the Government will pay him higher compensation.

Mr Jeyaretnam: Does the Minister then realize that what his Ministry is doing is to deduct $12,000 in the case of this man, simply to give him priority in the allocation of an HDB flat? Is that why you are actually deducting $12,000?

Mr Teh Cheang Wan: Mr Speaker, Sir, as I have stated earlier, do not confuse the award with the application for an HDB flat. These are two separate matters. If a property is acquired on an encumbered basis, then he is paid lower compensation.

Mr Jeyaretnam: He is giving vacant possession.