The two black-and-white bungalows at Ridout Road rented by ministers K Shanmugam and Vivian Balakrishnan need significant retrofitting, like most older heritage properties. Incoming tenants often have to undertake capital expenditure to upgrade the units to raise them to modern standards, especially if they have been vacant for prolonged periods. The conservation requirements also often impose constraints on how far the tenant can retrofit them. Everything that is upgraded by the tenant returns to the Singapore Land Authority (SLA). There is therefore a need to find a tenant who is prepared to invest capital to upgrade the unit to meet modern-day standards, accept that the benefits of investment can only be enjoyed for the length of the tenancy, and take on the risk of a higher rental price to renew, or not renewing, and writing off the cost of the capital expenditure altogether. This limits the pool of prospective tenants for black-and-white bungalows. Second Minister for Law Edwin Tong outlined these challenges in maintaining older heritage properties, saying most tenants would prefer a property which they can furnish and almost immediately occupy, and not have to fork out capital expenditure. He also detailed in Parliament on Monday (Jul 3) SLA’s risk management strategy and approach concerning older heritage properties, covering marketing, valuation and leasing which MPs raised. He stressed that the Corrupt Practices Investigation Bureau found no evidence of corruption or wrongdoing in either of the rental transactions for 26 and 31 Ridout Road. It had found that the leasing was adhered to scrupulously by SLA, with no preferential treatment given to the ministers. Both ministers had access only to publicly available information concerning the leases, he said. Mr Tong also detailed how SLA handled the process for both properties, saying offers of rental were made which met the guide rent. In addition, both tenants would be making substantial capital expenditure to renovate and enhance the properties. SLA will then be able to retain these enhancements at the end of the tenancy period. Mr Tong said both offers were made at a time when the rental market in Singapore was depressed and there was every reasonable commercial basis for SLA to have entered into those transactions. The terms of both leases were standard and did not contain any unusual clauses, he said. All parties concerned operated in accordance with the usual processes and procedures, he added.
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