SLA’s view was that the tenant’s responsibility would not extend to maintain the area beyond the tenant’s property boundary. If Mr Shanmugam was to maintain the adjacent land at his own cost, the adjacent land had to be included into the tenancy of the No 26 Ridout Road property.
SLA then did the fencing of the adjacent land within the property boundary. As a result, the land size increased from 9,350 sq m to 23,164 sq m.
The cost of the site clearance, replanting of greenery and fencing was S$172,000, which was initially borne by SLA and subsequently recovered from the tenant’s rent.
The cost of maintaining this additional land, approximately S$25,000 per year, was incurred by Mr Shanmugam, which would otherwise be borne by SLA.”
RENTAL OF 26 RIDOUT ROAD
“Mr Shanmugam and his agent were not aware of the guide rent. His agent studied the rental of comparable neighbouring properties, and independently determined and valued the rent. Mr Shanmugam instructed his property agent that he should not be paying less than his neighbours.
A neighbouring unit was tenanted at S$26,000. The final negotiated rent amount was S$26,500, which met the minimum rental to be achieved by SLA.
As the property had not been in use since 2013, substantial repairs were needed. The total cost of essential repair works borne by SLA to restore No 26 Ridout Road State property was S$515,400.
The landlord, i.e. SLA, has the responsibility to undertake essential repair works to ensure that the condition of the property is habitable.
Mr Shanmugam paid S$61,400 to build a car porch. In addition, he stated in his interview with CPIB that he paid over S$400,000 for additional improvement works to the state property not covered by SLA’s restoration works.
Mrs Shanmugam signed the tenancy agreement of 3+3+3 years in June 2018. After the first three-year term, the tenancy was renewed in June 2021 for a second three-year term. The rental of the second term was maintained at S$26,500 per month, as determined by SLA, considering the then prevailing market conditions.”
INCORRECT USE OF THE TERM “GUIDE RENT”
“CPIB discovered that there was a lack of precision in SLA’s use of the term ‘guide rent’.
As a result of this lack of precision, the earlier SLA statement dated May 12, 2023 that the offer by the tenant (S$26,500) was above the guide rent was incorrect. In fact, the S$26,500 rental Mr Shanmugam paid was equal to the correct guide rent of the property.
The guide rent is intended to be the minimum rental to be achieved. With the additional cleared land at No. 26 Ridout Road, SLA valued the minimum rental of the property at S$26,500. SLA therefore assessed the Guide Rent to be equal to this minimum rental, i.e. S$26,500.
Instead, SLA assessed the guide rent to be S$24,500. SLA’s rationale was that on top of the S$24,500, it intended to charge the tenant another S$2,000 to recover the amortised cost of works to clear and incorporate the additional land. This would bring the total minimum rental to the correct value of S$26,500.
This lack of precision over the guide rent carried over into the second valuation for the renewal of the lease. It was discovered when CPIB investigated the matter and informed SLA.
Despite this issue with the guide rent, SLA did ensure that Mr Shanmugam paid not less than S$26,500, the minimum rental to be achieved.
CPIB has confirmed that this lack of precision in the process of deriving the guide rent did not result from any ill intent on the part of any SLA officers involved. It found no evidence of any mala fide abuse of position in the valuation.”