COMPULSORY ACQUISITION OF LAND FOR NORTH-EAST MRT LINE (Alternative accommodation for affected residents)

Dr Lau Teik Soon asked the Minister for Law whether he will allow the residents who have given up their homes as a result of the compulsory acquisition of land for the North-East MRT line and comprehensive development to stay on in the acquired homes at a nominal rental until they are able to relocate to their new homes, and, if not, whether he will consider providing alternative accommodation at a nominal rate to the residents affected.

The Senior Parliamentary Secretary to the Minister for Law (Assoc. Prof. Ho Peng Kee) (for the Minister for Law): Mr Speaker, Sir, the question of rental only arises if the landowner has received his full compensation moneys but wants to remain on the acquired land. He has, in fact, the alternative of receiving only 20% of the compensation moneys and staying on rent-free on the acquired land until it is due for possession by the Land Office.

Once a landowner surrenders his acquired land in return for full compensation, he should vacate the site. Allowing him to remain on the land at nominal rental after the acquisition would defeat the purpose of paying him full compensation at vacant possession rate. The Government already makes a concession by allowing him to remain on State land by paying a rental as assessed by the Chief Valuer.

Dr Lau Teik Soon: Sir, in view of what the Minister for Labour has just said that he would not relent to the owners' request that the 20% advance compensation be waived from the CPF charge and that there would also be a charge by commercial banks, some owners will have tremendous difficulty in moving to their next home. And in view of the fact that some of them have to move by March of 1997, they need time. They need the money to buy the next home and need time to move. And some of them need time to renovate. In view of all these, after they have received the full compensation, will the Minister concerned take this into consideration and allow them to continue to stay in their previous homes at nominal rental?

Assoc. Prof. Ho Peng Kee: Sir, Government realises that this is indeed a massive infrastructural project. Completion is estimated at seven years. And, in fact, for the land acquisition exercise, we have phased it out over five years - three scheduled dates for taking possession - and all landowners already know at this point in time when they are supposed to move out. In other words, there is advance notice and they can plan accordingly. So they have a choice. If they do not want to move out and they want to stay, they will get the 20%. Very soon we are processing that, and we are going to pay that very shortly. And if they want to stay, they stay on rent-free until the time when they have to give possession. If they want to move out, then they are paid full compensation. They do not have to move out until the date of giving possession is up. And for those in the other phases - there are three phases (first phase is March 1997, second phase is July 1999, third phase is July 2001) - they have ample notice. So taking these factors into consideration - the fact that there is advance notice, the fact that there is a choice and the fact that regardless of when you are leaving, you will be getting a 20% advance compensation very soon - I think the Government, being sympathetic to the plight of affected landowners, has acted to soften the impact.

Dr Lau Teik Soon: Sir, in the event the Ministry concerned is not going to pull down the homes after full compensation has been paid and therefore the homes are left vacant, will the Ministry then consider allowing them to stay on at nominal rates? Because the homes are just being left vacant.

Assoc. Prof. Ho Peng Kee: For those staying on after they have been paid full compensation is not the problem. The question is at what rental. The principle is if you are given full compensation at vacant possession rate, in other words, it is a quid pro quo, you are paid that amount to deliver vacant possession, and if you want to stay on, then I think it is fair that you pay market rental as assessed by the Chief Valuer.

Dr Lau Teik Soon: Sir, the Senior Parliamentary Secretary will appreciate that this is a very unusual situation where home owners are being asked to move out in view of compulsory acquisition. They are willing to go. It is a question of facilitating their relocation. So can I ask the Senior Parliamentary Secretary what is the problem with allowing them to stay on in a vacant building at nominal rental? It is going to be empty.

Assoc. Prof. Ho Peng Kee: Again, as I said, the Government is mindful of the sacrifices that may be made by landowners. In fact, Mr Mah Bow Tan, when he announced in Parliament in January this year, said, and I quote him:

`The North-East line will bring many benefits to the residents of the North-East. ... But let me stress that there will be sacrifices involved. ... The Government will need to acquire land ... . But these sacrifices are inevitable if we take a long-term perspective and do what is best for the nation. ...' So bearing this in mind, knowing that the project is indeed massive, as I have said earlier on, Government has taken measures in terms of the length of the project, in terms of acquiring these properties in different phases and in terms of even allowing the person to stay on after he has been fully compensated. The Member is right in saying that if the flat or the house is vacant, why not let him stay. And we say, yes, he can stay. He does not even have to physically move out. He can continue staying but, as I said, having been paid full compensation at vacant possession rate, it is fair that he pays market rental.

Mr R. Sinnakaruppan (Kampong Glam GRC): Sir, I think the compensation that some Sennett Estate residents got was not full compensation and there was a lot of apprehension as to what was full compensation. And that is why the Member is asking for nominal rental in vacant premises.

Mr Chiam See Tong (Potong Pasir): Can I have a clarification? Should the owner stay back and not move out, the Senior Parliamentary Secretary has said that he pays market rental. I have the impression that he does not pay the market rental but he pays only for the interest that the Government would have lost by giving full compensation. Is it right?

Assoc. Prof. Ho Peng Kee: No. He wants to remain on the premises after being paid full compensation, ie, the statutory compensation, which is the value of the property as of 1st January 1995. Beyond that, of course, the ex-gratia payment will take some time to compute. Ex-gratia payment is the difference between the value as of 1st January 1995 and 4th March 1996. Going back to Mr Chiam's point, if the owner wants to remain on the premises after being paid full compensation at vacant possession rate, he pays market rental as assessed by the Chief Valuer. And, Sir, in fact, this is the practice. A property owner who sells his property and wishes to remain on the property after the sale will make an arrangement with his buyer. If he wants to remain on the premises, and the buyer allows him to do it, he will pay market rental, not nominal rental.

Dr Lau Teik Soon: Sir, the responses of the Minister for Labour as well as the Minister for Law have been standard answers and they are terms which have already been well publicised and made known to home owners. My point is that in view of the fact that the residents affected by the compulsory acquisition need to facilitate relocation, that they need to reduce the unhappiness and hurt they have suffered all these months in view of the Government's action, that this is a concession on the part of the Ministry concerned. So my question to the Senior Parliamentary Secretary is whether we could allow them to stay on at nominal rates in buildings/flats which would otherwise remain empty and therefore less revenue for Government.

Assoc. Prof. Ho Peng Kee: Sir, Government has made many concessions for this NEL exercise. Earlier on, I have mentioned about the time-frame, the advance notice and also the ex-gratia scheme was amended in June 1996. The ex-gratia scheme is a top-up scheme where besides the statutory compensation as of 1st January 1995, if the property is worth more than what you get for statutory compensation, we value it on 4th March 1996, date of acquisition, and you get the difference subject to a ceiling of $2 million. In addition, this ceiling has been raised from $1.8 million to $2 million. And besides that, previously there was a condition that if you were an owner-occupier of a residential property and you had another residential property, then you were not entitled to ex-gratia payment. But we have lifted that and as long as you are occupying a residential property, despite the fact that you may have other residential properties, and you are dislocated, you will get ex-gratia payment. And more than that, under the revised scheme in June 1996, owners of acquired shophouses who are doing business in the shophouse will also be entitled to ex-gratia payment.

So I hope the Member will appreciate this. As I have mentioned earlier, quoting the Minister for Communications, Government is sympathetic to the plight that MPs present on behalf of their constituents. But it is not as though Government has not moved. We have looked at the whole thing in its entirety and, in fact, have packaged in several features that will show that this exercise has been softened for the constituents.

Mr Chiam See Tong: The Minister says that in relation to shophouses, ex-gratia payments will also be given. Will it be given to the owners of the shophouses or to the tenants?

Assoc. Prof. Ho Peng Kee: Sir, compensation money is always paid to the owners because the quid pro quo is that he gives title of the property over to the State.