Thursday, December 25, 2008

18th Dec Letter to Ministry of Trade and Industry

From: karen ho
Date: 2008/12/18
Subject: Re: Urgent Request to Review Extremely High Rental Renewal Rates for Existing Residents of Chip Bee Gardens
To: Chor Ling KUEK , lim_hng_kiang@mti.gov.sg
Cc: Swee Say LIM , linda_ng@pmo.gov.sg, dominic@sph.com.sg, twong@sph.com.sg,
Dear Ms. Chor and Minister Lim Hng Kiang -

Thank you for your prompt response to our heightened appeal.

Unfortunately we do feel that you have taken an incorrect perspective to the background you present below.

1. As a Residents' Group we are NOT arguing the context of prevailing market rates. ALL the examples you have indicated below refers to New, Incoming Tenants who bidded in a tender system and who understand their financial thresholds BEFORE entering into leases with the relevant landlords.
o For the INCOMING NEW TENANT at Halton Rd – they are paying $1.92 psf
o For the INCOMING NEW TENANT at Upavon Rd – they are paying $1.98 psf
2. The Residents Group is arguing the case of exorbitant, one-stage rental hikes for INCUMBENT/EXISTING TENANTS at the precise time of the bleakest economic downturn to face the world in 40 years!
o For an INCUMBENT/EXISTING Resident in Monk's Hill Terrace, Newton Circus) - LTA has only charged a 15% rental renewal increase for a 2000 sqft house in Dec'08 - taking the PSF for that household to $1.15 psf
o For an INCUMBENT/EXISTING Resident in Alexander Park - SLA will be charging a 14% rental renewal increase for a 2700 sqft house in Jan'09 - taking the PSF for that household to $1.48 psf
o For an INCUMBENT/EXISTING Resident in Chip Bee Gardens - JTC is charging a 76% rental renewal increase for a 1356sqft house in Dec'08 - taking the PSF for that household to $2.73 psf
To increase rentals by 76-80% as we enter into one of the worst recession the world has ever faced does not showcase any social and/or civic responsibilities that as a government agency, JTC should be demonstrating.
Particularly when JTC themselves announced a huge surplus profits this year (July 29, 2008: The Straits Times….total surplus of S $ 1.18 billion for the year ended March 31st, up to 50 % from the previous year).
To break up families and neighborhoods so that JTC can make more profit appears devoid of any social and civic obligations to the community.
During a time of extreme economic uncertainty and especially when the Singapore Government is represented daily in the press as encouraging companies big and small to look to cost-cutting measures where possible for the good of the community and its workers before resorting to retrenchment; and when other government agencies like the LTA, SLA and CAAS etc are demonstrating and balancing both social and fiduciary consciousness in their dealings with the public ….. WHERE is the social and civic consciousness in JTC's act of imposing extreme rental RENEWAL hikes of 76-80% to incumbent residents? Where the average tenancy tenure of those affected is 15-19 years. Where we are talking about homes and families and not just factories and office furniture.
We are confident that LTA and SLA are also managing their respective properties against market rates and maintaining their fiduciary duties. However, in addition, it would appear that LTA and SLA are also able to balance their social and civic duties when they deal with rental renewals for incumbent/existing residents.
Please re-evaluate your stance on this because the argument presented thus far totally ignores the point of our appeal which is for JTC to balance the social and civic aspect into their decision making for incumbent/existing tenants renewing leases.
In comparison of the Rental Renewal PSF's above, it would appear that there are significant inconsistencies with which the 3 separate government agencies execute their rental renewal policies in 2008. Based on our analysis of the previous rental renewal hikes in 2006; this inconsistency did not exist then.
On a last note, we would like to add that in the 30 year history that we can recall for Chip Bee Gardens; there has NEVER EVER been a One-Time Price Hike for Rental Renewals in excess of 20-25%. Why now in Oct/Nov/Dec 2008 to impose the severest one-time percentage price hike of 76-80%? Why now when we are facing the worst economic outlook the world has ever faced?
Sincerely,
The Residents of Chip Bee Gardens




2008/12/18 Chor Ling KUEK

Message Classification: Restricted

Dear Ms Karen Ho

1. I refer to your email dated 16 Dec 2008 to Minister for Trade and Industry, highlighting the concerns of some Chip Bee Gardens tenants over the high rental rates being charged for units in the estate.

2. We have looked into the matter and are satisfied that the rentals charged by JTC are fair and reasonable. Residental rental rates have increased significantly over the last two years. Based on URA's Rental Index, the average rental of terrace houses has risen by close to 60% over the last two years. Chip Bee Gardens, is a premium and well sought after location and the rental increase for the area would be even higher.

3. For example, houses at Changi (near Changi Camp) and Seletar were successfully tendered out by SLA one month back at about $2,560 to $4,620 per month (see Table 1 below). These houses are in an inferior location and of poorer condition compared to Chip Bee Gardens where rentals range between $3,400 to $3,850 per month for similar sized units. External valuers have also validated JTC's proposed rental for the units as being fair market rates.

Table 1: Recent Market Comparables
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4. You have indicated that residents were only given 7 days to accept the tenancy renewal and have appealed for an extension of the deadline for acceptance. JTC has clarified that the deadlines were only imposed after the affected tenancies had already expired. The tenants are thus actually over-staying. Under the terms of JTC's Tenancy Agreement, the onus is on the tenants to inform JTC at least 3 months before the expiry of their tenancies if they wish to renew their tenancies. Notwithstanding this, JTC would as a matter of practice remind tenants of the impending expiry of their tenancies some 2 to 3 months prior to expiry date and make an offer of renewal at prevailing rental rates. In contrast, the market practice for rental renewals amongst private sector landlords, is to give tenants only 1 to 2 months notice. Hence, JTC has given sufficient notice to affected tenants. Given that the rental contracts have already expired, a further extension of the deadline to accept the renewal offer would not be warranted. Tenants are advised to make their individual decisions and not prolong the matter further.

5. Chip Bee Gardens is managed commercially, with a long waiting list of potential tenants. It would not be justifiable for JTC to freeze or stagger the increase to market rates as this would be tantamount to subsidizing certain groups of tenants. As a government agency, JTC has the responsibility to ensure that they charge all tenants fair market rentals.

6. It was mentioned that there is a petition that residents would like to submit. You may send it or hand it directly to JTC at their office for their consideration and acknowledgement.

Yours sincerely

Kuek Chor Ling (Ms)
for Permanent Secretary
Ministry of Trade and Industry
Kuek Chor Ling ▪ Deputy Director (Corporate Communications) ▪ Ministry of Trade and Industry ▪ DID: +65 6332 7705 ▪ FAX: +65 6334 0306

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