HDB SHOPKEEPERS (Adjustment of rental on renewal of lease)

Dr Ker Sin Tze asked the Minister for National Development whether the Housing and Development Board will consider having moderate rental adjustments in stages when HDB shopkeepers are renewing their third lease so as to ease the severe hardship suffered by these shopkeepers, especially those who are paying low rentals.

Mr Matthias Yao Chih (for the Minister for National Development): Mr Speaker, Sir, before 1987, all HDB commercial and industrial premises were let out on monthly tenancies. This practice, however, did not allow tenants to plan for the longer term, as the tenancies could be terminated or their rentals revised within one month's notice.

HDB revised the rental policy in 1987. All the existing tenants were invited to convert their monthly tenancies to fixed term tenancies at their existing rents. Tenants could opt for terms of one, two or three years. The rent was fixed for the duration of the term, but was adjusted in subsequent renewals of the tenancy.

To safeguard tenants from any large increases in rents, the rental revisions for the first and second tenancy renewals are capped at a maximum of 30% for a three-year tenancy. Upon the third tenancy renewal, the rental will be revised to the full prevailing market rent. This rental policy gave HDB tenants up to nine years to adjust to market rents.

Despite the nine years grace period, some shop tenants could still face big rental increases when their tenancies are due for third renewal. Arising from this feedback, the Ministry of National Development will look into the current rental policy to see how best to ease the financial impact on these tenants.