HDB RELOCATION OF RENTAL FLATS (Effects on neighbourhood shop-houses)

Dr S. Vasoo asked the Minister for National Development (a) what is the estimated number of neighbourhood shop-houses whose businesses are affected by the Housing and Development Board's relocation of rental flats scheme; and (b) what actions are being taken to assist them for the time being until their neighbourhoods are redeveloped.

Mr Dhanabalan: Mr Deputy Speaker, Sir, the relocation exercise of HDB rental flats in the various estates will be carried out in phases over the next 10 years. There are about 3,000 shops in these estates affected by the relocation exercise. Of these, about 1,300 shops will also be removed as they are located in rental blocks which are due for demolition. Under the Phase 1A relocation exercise from 1986 to 1988, 150 shop tenants are to be relocated.

With the reduction of shops in the vicinity, the shop to flat ratios before and after the relocation exercise will still be comparable to what is found in other HDB estates. It should improve, of course, when neighbourhoods are developed.

However, if the remaining shop tenants feel that they are paying rents higher than the prevailing market rates, they may tender for shops in other estates or give up their shops and re-tender for their existing shops. They will, of course, have to make their own business calculations as to what they want to do.

Dr S. Vasoo (Bo Wen): Sir, what immediate steps would be taken for existing shops that are in the neighbourhood to liven their social and economic activity? Another supplementary question is, would a temporary rental rebate be considered until the estate is rebuilt and its economic activity reactivated?

Mr Dhanabalan: Mr Deputy Speaker, Sir, can I take the second part of the question on temporary rebate first?

Sir, there are many factors that affect the business of shops. People move in, people move out; houses are knocked down, new flats are built. I do not think the Government should intervene in these market factors. It is for each shopkeeper to make up his mind whether the location that he chose continues to be a good location. If, in his opinion, the location is not a good location any more, then he should make up his mind to move somewhere else or give up his shop and re-tender for the same shop. No temporary rebate will be given. Once the Government or HDB begins to give temporary rebates because business in the shops is affected by various factors, there is no end to the kind of factors that would be presented to the Government or to the HDB in requesting for rebates.

As far as the shops affected are concerned, those who are directly affected, in other words, in blocks which are due for clearance, will be offered alternative shops. Those in the vicinity who are not affected by the relocation exercise but who may be indirectly affected because people in the neighbouring blocks have moved out, have to make their own business calculations, as I have mentioned just now. There is no scheme at the present moment to give them any special assistance. The HDB will try as much as possible to redevelop the areas vacated so that life is re-introduced, but in the period that the blocks are cleared, demolished, new flats are built, the shopkeepers have to make their own business calculations.

Mr Eric Cheong Yuen Chee (Toa Payoh): Sir, in view of what the Hon. Minister has just stated, will he consider the question of the Housing Board delaying the projected increase in rental for the next two years? I am sure he is aware that the Housing Board has projected annual increases for the past three years, and this has been suspended due to economic recession. Will he consider, as a measure to help these shopkeepers, suspending the increase in rentals projected for next year?

Mr Dhanabalan: Mr Deputy Speaker, Sir, the increases, if any, are not determined by any pre-determined rental increase. It is determined by market factors. If shops are knocked down and less people live in the area, obviously the market rental rate for that area will be less. And if the prevailing market rate is about the same as what they are paying now, then there will be no increase. But if the prevailing market rate, in spite of blocks being knocked down is higher, then of course the rentals will be increased. So the HDB is not working on any pre-set increases. The increases are determined by market rates. If the market rates have gone up and those who are paying current rates are, in fact, paying lower than the market rates, then there will be increases. But if the market rates have not gone up, there will be no increases.

Mr Eric Cheong Yuen Chee: Sir, in view of the fact that the Foreign Minister has taken over the portfolio recently, he may not be aware that the increase in rentals was targeted for 1st September each year for the next three years. But these increases were suspended during the past two years, and the next increase is due next year, 1st September.

Mr Dhanabalan: I may have taken office lately, Mr Deputy Speaker, Sir, but I was also in this House, so I know what was discussed. The reason why the increases were phased out was that the market rate was so much higher than what people were paying that it was felt that it would be unreasonable to have an increase suddenly from the rates that they were paying to the prevailing market rates. At the time that this scheme was introduced to increase the rates, the gap was so big that it was projected that it would be closed over a number of years and every September there was to be an increase to bring it closer to the prevailing market rate. If the prevailing market rate is still where it was determined sometime ago, then of course the increases have to proceed. But if the prevailing market rate has come down from what we determined sometime ago, then there will be no increase. Although at that time there was supposed to be a schedule of increases every September, every time an increase is to be made we look again at the market rates and if there is a difference, of course there will be an increase.

Dr S. Vasoo (Bo Wen): Sir, is the Minister aware that some of these factors are beyond the control of the shopkeepers? At the same time, can the Board consider hastening redevelopment programmes in the neighbourhoods which are affected?

Mr Dhanabalan: I am afraid I do not follow the first part of the question, ie, the factors are beyond the control of the shopkeepers. But what is the HDB expected to do?

Dr Vasoo: I mean the redevelopment plans that are being put forward are plans which are beyond the control of the shopkeepers because they themselves are affected in the process of redevelopment.

Mr Dhanabalan: Mr Deputy Speaker, Sir, I have stated that the HDB will try and redevelop cleared areas as soon as possible but there are many, many factors that will determine the actual timing of redevelopment. It will be determined by development in neighbouring areas, availability of flats in neighbouring areas, demand in that area and so on. But as a general rule, when an area is cleared, HDB will try and redevelop as soon as possible.