PHASING OUT RENT CONTROL

Mr S. Dhanabalan: Mr Speaker, Sir, in October 1988, my Ministry announced that it would use the Controlled Premises (Special Provisions) Act to phase out rent control.

Under Phase 1 of the exercise, which covered the conservation areas, 1,590 tenanted and rent-controlled properties were gazetted on 31st March 1989. Today, I would like to announce the other phases of this exercise.

Under Phase 2 of the exercise, about 1,250 tenanted premises in the Central Area will be designated for development under the Controlled Premises (Special Provisions) Act in September this year.

Under Phase 3, about 2,720 tenanted premises in Kallang, Geylang, Marine Parade and Bedok areas will be designated as development areas in March 1991.

Under Phase 4, the last Phase, about 2,260 tenanted premises in the rest of the island will be designated in December 1991.

Mr Speaker, Sir, by designating areas under the Controlled Premises (Special Provisions) Act, owners of rent-controlled properties in such areas can recover possession of their properties if they have development plans approved by the Urban Redevelopment Authority.

Owners and tenants can settle the matter of compensation between themselves. Where the owners and tenants are unable to reach agreement, they can turn to the Tenants' Compensation Board, which is provided for under the Act, to assess the amount of compensation that tenants, sub-tenants and occupiers are entitled to.

The Tenants' Compensation Board is being restructured, and its membership increased, to cope with the anticipated increase in workload when more areas are designated for development. Both tenants and landlords can avail themselves of the Board's jurisdiction to expeditiously resolve compensation disputes.

The Control of Rent Act applies to buildings completed on or before 7th September 1947. The Act was designed to protect tenants from unscrupulous landlords during the housing shortage in the post-war years.

Conditions today are different. Our successful public housing programme has made the Control of Rent Act unnecessary. Because rents have been kept at nominal levels, relative to market rates, landlords have allowed their buildings to deteriorate into unsightly structures. The structures are a blight on our environment and hamper the efforts of our planners to develop a more elegant city. The Act has, in fact, virtually frozen the development of some areas in Singapore. By designating more and more areas under the Controlled Premises (Special Provisions) Act, we can redevelop our city without any further delay.

Mr Ng Pock Too (Nee Soon Central): Mr Speaker, Sir, I have three matters which I hope the Minister can clarify. First, in announcing these phases of designated rent-controlled areas for conservation development, does the Ministry have further plans to declare more new areas for conservation in each of these phases? In other words, apart from those which have already been earmarked for conservation, will there be more tenanted premises under rent control to be declared designated development areas for conservation?

Second, if more new areas are designated for conservation development, would owners then not lose out in terms of development potential? Because better development potential can be achieved if their properties can be knocked down and rebuilt rather than redeveloped through conservation works. Conservation by itself imposes restrictions in a manner with which owners can redevelop, thereby limiting the development potential of affected areas.

Third, my GPC Members and I have frequently come across cases of dispossessed tenants and sub-tenants who are totally ignorant of their rights, who have no knowledge of the proper recourse to adequate compensation ---

Mr Speaker: Order. Mr Ng, can I remind you that a Ministerial Statement has been made and you are to ask questions and not to make a speech.

Mr Ng Pock Too: I will ask my questions.

Mr Speaker: You may proceed.

Mr Ng Pock Too: --- which they are entitled to and they were totally unaware of HDB's schemes which are designed to help them seek alternative accommodation. Would the Minister ensure that standard compensation guidelines which are used to assess the amount of compensation that tenants, sub-tenants and occupiers are entitled to are made known to those who are affected? Would he also ask HDB to give more publicity to the scheme to look after those who do not have families and are dislocated by repossession of their premises for conservation development?

Mr Dhanabalan: Mr Speaker, Sir, the first point I would like to make is that this phasing out of rent control is not limited to conservation areas. In fact, Phases 2 to 4 will for the larger part be non-conservation areas. However, there will be some conservation areas in these Phases 2 to 4. In fact, the URA is now studying some new areas to be conserved and therefore these three more phases that I have mentioned will include both conservation and non-conservation areas.

I must emphasise that conservation should not be linked with the phasing out of rent control. They are two quite separate exercises. Conservation is one of the tools of planning control in order to regulate development just like other tools that we have such as usage, density and micro zoning plans such as height that we specify for areas within the city or in some cases even outside the city. So conservation is just one type of development control tool that we have. Owners of properties, whether rent-controlled or not, are required to conform to these planning controls.

The areas that we are looking at for conservation in addition to those that have already been gazetted are as follows.

Within the Central Area, certain areas in Blair Plain, River Valley/Mohamed Sultan Roads and Jalan Besar are being actively looked at and if the present studies are confirmed that we should declare these areas as conservation areas, then they will be declared very soon. Details will be released, within the next few months.

Other areas for conservation have also been identified outside these areas that I have just mentioned and these will be in Joo Chiat, East Coast, Geylang and Pasir Panjang. These areas will be progressively gazetted as conservation areas before the properties are designated as development areas under the Controlled Premises (Special Provisions) Act. In other words, by the time we designate these areas as areas ready for decontrol under the Controlled Premises (Special Provisions) Act, the owners would know whether their particular properties are affected by conservation. In these conservation areas, owners can recover their properties for rehabilitation in the same way as they have been allowed to do under Phase 1. In such cases, "development" would be defined to mean renovation works as specified in URA's conservation guidelines.

On the question of development potential in conservation areas, in the areas that we are looking at, most of the properties being considered for conservation will not be adversely affected and will not suffer any loss of development potential. In fact, initial studies show that more than 90% of the properties in the conservation areas will not suffer any development potential loss.

The proposed conservation areas are already subject to certain development control guidelines under the Master Plan. They are, for example, height restrictions and plot ratio restrictions for the whole area. These restrictions have been applied to new building built in these conservation areas. One way of measuring the development potential would be to measure the gross floor area that an owner is allowed to build. For properties which are gazetted as conservation areas, the gross floor area in more than 90% of the cases will be no less than that allowed for new developments on vacant lots in the area. In other words, the owner of the conservation property will at the end of the day be able to get the same amount of gross floor area as a new developer next door if there happens to be a vacant lot next door.

How can we achieve this? This can be achieved by allowing owners to keep the front part of the old building, restore it, and building a new 3- or 5-storey development at the rear abutting the old building so that the streetscape will still be the old conserved buildings, but behind there would be a 3-or 5-storey building. This is quite often done even in other cities which have very active conservation programmes. The owner would therefore be able to achieve the same intensity of development under conservation guidelines as he would if he were allowed to demolish the old building and build a new one. Experience in Tanjong Pagar and Chinatown conservation areas also shows that buildings which are conserved appreciate more in value than similar new developments. There seems to be a premium now attached to conservation buildings. So I do not think the owners of properties in the conservation areas would lose out. First of all, they will be able to develop as much gross floor area in more than 90% of the cases, as much as somebody who puts up a new building. Secondly, under present circumstances, conserved buildings seem to command a premium over new buildings in the same area.

The question may still be asked, of course, why go through the bother of keeping all these old buildings. Would it not be better to knock them down and build completely new buildings? The answer really is related to the kind of city that we want. We can knock down all the old buildings and have a city of new buildings which looks like any new area in a foreign city. There will be nothing Singapore about it. There will be nothing to distinguish it from any other modern city elsewhere. We think it is better to identify critical masses of old buildings, conserve them and combine these with new developments so that the city will have a distinctive character and at the same time such old buildings will be reminders to our people of our past. It is for this reason that we think that conservation is a worth while policy to pursue.

The Member also asked about the compensation and whether we should give publicity to the compensation offered under the Act. The first point to make is that measures announced so far to phase out rent control under the Controlled Premises (Special Provisions) Act do not allow landlords to indiscriminately increase rents. They cannot increase rents. The rent controlled properties continue to be rent controlled properties even after they are gazetted. It is only after the owner has submitted plans for redevelopment and the plans are approved that he can begin to get his tenants out. If tenants feel that owners are interpreting Government's measures to their own advantage, then they should seek either legal advice or at least go and see their MP and perhaps the MP can give them some general advice and refer them to some lawyers.

The Controlled Premises (Special Provisions) Act only sets out the minimum compensation that has to be awarded, but there are certain criteria that are set out. The minimum, for example, for a commercial premise would be 8 years' rent. In the case of residential property, it is 6 years' rent. But in addition to this minimum, worked out on the basis of rent, the Act also specifies items which the Board has to consider in assessing compensation and the items would be items such as loss of income in the case of commercial properties, loss of goodwill, cost of removal, annual rent paid which I have already mentioned, location and siting of the premises. The Board will also take into account any other relevant matters depending on the facts of each case. So it is difficult to give clear guidelines because every case will have its own peculiar problem. Each case is therefore examined by the Board according to its own merits and I am not able to give a fixed formula that can be applied in all cases. But the criteria are fairly clear and what these criteria will do is that they will prevent tenants from being unreasonable in their demands for compensation.

I think the Member also raised the question of old folks. Yes, there is a special scheme to assist many old single persons, especially in the Central Area, who now live in rent controlled premises. What we do is we get the owners to pay four years' rent for a one-room flat in advance and then we will house these old single persons in these flats. We have had this scheme for some time but very few people have taken advantage because many of these old single persons have found their own solutions or they have gone back to live with their own families. But we will certainly give publicity to this scheme and owners who cannot remove their tenants or tenants who feel that their owners are not being reasonable can approach the URA and we will help them. But the owners have to pay the rentals in advance as part of the compensation.

I think I have answered the questions that the Member has raised.