BID SYSTEM FOR RENTING STATE PROPERTY - NO LONGER 'DIRT CHEAP'?

Some say scheme is fair, others brace themselves for higher rates

By Cara van Miriah
December 10, 2007

CALL it a property lottery.



Be prepared to pay more if it's a hot property.

Rents for some state-owned bungalows and apartments that used to be 'dirt cheap' are going up and up.

A terrace house that used to fetch $1,700 a month may now fetch $3,000 due to strong demand.

This is because the Singapore Land Authority (SLA) has introduced a new bidding system for its residential properties, which include bungalows, terraces, apartments and flats.

Recently, a 2,637-sq-ft semi-detached house at Seletar Camp was leased out for $6,500 a month. You can rent one for less than $3,000 previously.

A two-storey bungalow at King Albert Park with a floor area of 9,149 sq ft - valued at $18,500 monthly - was snapped up for $23,222.

With the buoyant rental market, state-owned properties have seen rents shoot up under the new bidding scheme.

RENT HIKE
Landed properties with a monthly rental valuation of between $1,500 and $18,500 saw at least a 20 per cent hike.

Previously, interested parties could contact SLA's managing agents, such as Premas United and DTZ Debenham Tie Leung, to rent a house under a fixed rate.

They would be put on a waiting list and then selected through a balloting exercise or a first-come-first-served basis.

The new system has seen two pilot biddings in October and November for SLA's five properties at Malcolm Road, Maida Vale, Mornington Crescent, Stevens Road and King Albert Park, which drew a total of 60 bids.

Of course, you could pay less than the market rate, if there are only a few bidders. But don't expect to fork out just a few hundred dollars in rent.

This is because SLA and its managing agents will exercise discretion when awarding such bids.

So far, the new bidding system has drawn lukewarm responses.

Mr Simon Ho, 34, a sales manager who's looking for a place to rent, said: 'With the old system, there is a fixed rate and you can rent a no-frills apartment at Rowell Road for less than $1,200. Now you will have pay a lot more because everyone can bid for it.'

Mr Gerald Edwards, 45, an events organiser, whose family has lived in a 3,000-sq-ft terrace at Seletar Camp for eight years, said he will not be bidding when his two-year lease ends next year.

The father of two is now paying $1,500 each month.

During SLA's pilot bidding, a 1,668-sq-ft terrace house at Mornington Crescent at Seletar Camp went for $3,333 a month.

Mr Edwards said: 'Previously, you can rent it for between $1,500 and $1,700. Now we will be competing with the rich and with companies who have the money to splurge.

'A family with an income of $6,000 can't afford to rent a state property these days. You need an upfront payment of over $10,000 once you sign the lease.'

This amount includes a three-month deposit, along with a month's advance rent. This works out to $13,332 for the Mornington house.

Another requirement: Your salary should be at least three times the monthly rental, so the tenant of the Mornington house needs to earn at least $10,000 a month.

And those living in the bungalows with a five-figure monthly rent must earn close to a million a year.

OTHER FACTORS
But SLA said that they would consider other factors, like the bidder's other sources of income and savings - if their salary is less than three times the monthly rent.

Ms Dolores Chiam, 38, a banker who lives in a rented apartment in Holland Village, thinks the bidding system is fair.

She pays $3,800 rent a month for her two-bedroom apartment.

She said: 'Now there are more choices for people like me who have never rented a state property. The rates are not unreasonable - they are going by demand and market conditions.'

Most of the successful bidders were new tenants of SLA.

The SLA's guide rent or valuation will be provided on each featured property at www.spio.sla.gov.sg

SLA said the rates are based on the property's market value, like the condition of the unit, location and tenure.

From its pilot, SLA noted that the winnings bids reflected the buoyant rental market and the strong interest in state properties.

Mr Teo Cher Hian, SLA's deputy director of land lease private, told The New Paper on Sunday: 'With a wider property database, there are more choices for interested parties.'

In January, another batch of properties will be up for bid.

They include three apartments and two bungalows at Clemenceau Ave North and Hyderabad Road.

The guide rents for them will be available from 14 Dec.

Property agents said the Clemenceau apartments could fetch at least $2,000, while the bungalows could go as high as $20,000 a month.

A SLA spokesman said: 'Even if the highest bid is below the guide rent, we will consider renting out the property to the bidder.'

In total, there are 2,360 state properties for residential rental. This excludes those at Chip Bee Gardens, managed by JTC Corporation.