HDB AND JTC COMMERCIAL PROPERTIES (Rentals)

Mr Charles Chong asked the Minister for National Development if his Ministry will consider extending the rental rebates and deferring the rental increases or the upward adjustments to 'market rental' of HDB and JTC commercial properties until the economic situation improves.

The Minister of State for National Development (Dr Vivian Balakrishnan) (for the Minister for National Development): Mr Speaker, Sir, existing rental rebates provided by HDB to its commercial tenants will expire at the end of the year. The Government is currently reviewing these rebates taking into consideration the economic outlook.

As for the upward adjustments to "market rental" of HDB commercial properties, HDB has already moderated their impact on its tenants by staggering the rental adjustments over four renewals at 3-yearly intervals since 1988 - a 12-year period. Tenants who are renewing their tenancies with rental increases from November 2001 onwards can further stagger their rental increase equally over a 3-year term.

Mr Charles Chong (Pasir Ris-Punggol): Mr Speaker, Sir, could the Minister of State confirm when were these market rentals established? Was it before the recession or after the recession?

Dr Vivian Balakrishnan: Mr Speaker, Sir, the proposal to adjust rentals to the market is not a new one and, in fact, was negotiated back in 1988. The intention then was to ensure equity between shopkeepers who have heavily subsidised rentals versus the newer comers who were paying market rents. So this is not a new policy. Having said that, however, in view of the conditions, since November 2001, we have provided for a stagger within a stagger. And for those in their final term of adjustment, we stagger out the increases over three years.

Mr Charles Chong: Mr Speaker, Sir, I think the Minister of State has not answered my question. My question was: when were these market rental rates established? Is it still current?

Dr Vivian Balakrishnan: The market rental rates are decided by valuers and they will ensure that, at any point in time, the level at which it is set takes into account the current market conditions. And for those facing renewals from now onwards, the current market conditions are certainly taken into account.