A freeze on rent will be unfair: Fu

THE Housing and Development Board will not freeze industrial and commercial rental increases made before the recession took root, but tenants who have renewed their leases since January have had their rent reduced by 5 per cent.

This approach, Senior Minister of State (National Development) Grace Fu said, ensures HDB rents are not “disconnected” from market realities.

In both instances, rents were adjusted to the market conditions at the time. Freezing earlier rental increases, as suggested by MP Lee Bee Wah (Ang Mo Kio), would then result in unfair outcomes for tenants, whose rents are fixed and reviewed every three years, said Ms Fu. “A freeze on rent increases is not equitable as it will result in different rental subsidies for different tenants who may have renewed their tenancies over different periods of time.”

Instead, the 15-per-cent rental rebate announced during the Budget was a better way of helping industrial and commercial tenants, she added. “For the small number of tenants who face substantial rental increases in spite of these measures, HDB will stagger the rent increases over the tenancy term.”

But HDB, which conducts regular reviews of market rents, will monitor the situation closely.

Meanwhile, the Government will also not step in to guarantee loans to property developers, National Development Minister Mah Bow Tan said in reply to another question by Ms Lee. Total loans to the building and construction sector, mostly to developers, grew by 22 per cent in the 12 months to February, and while loan growth to the sector has tapered recently, it is still at the relatively high level of $50 billion, said Mr Mah.

“Besides bank loans, a number of developers have also managed to raise capital through other means, such as rights issues or private placements,” he said.

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From TODAY, News - Tuesday, 14-April-2009