Shanmugam says he rented Ridout Road property to prepare for sale of family home, not profiting from rental

SINGAPORE: Law and Home Affairs Minister K Shanmugam said on Monday (Jul 3) that he became a tenant at 26 Ridout Road after deciding to put his family home up for sale.

Delivering a ministerial statement in parliament, the minister said he rented out his family property while deciding on the sale. He stressed that he was “not making any money from the difference” in rents by renting out his family home and living at 26 Ridout Road.

The scrutiny over the rental of two black-and-white colonial bungalows along Ridout Road by Mr Shanmugam and Foreign Affairs Minister Vivian Balakrishnan first arose in early May, following a series of online articles by opposition politician and Reform Party chief Kenneth Jeyaretnam.

Mr Jeyaretnam had questioned in his articles if the ministers were “paying less than the fair market value” for the properties.

Prime Minister Lee Hsien Loong announced on May 23 that a review headed by Senior Minister Teo Chee Hean would be conducted on the matter.

Two investigation reports, by Mr Teo and the Corrupt Practices Investigation Bureau (CPIB), released on Jun 28 said they found no evidence of criminal wrongdoing or preferential treatment given to the two Cabinet ministers.

HOW 26 RIDOUT ROAD CAME TO BE RENTED: SHANMUGAM

Mr Shanmugam first rented 26 Ridout Road in 2018 and renewed his lease three years later.

Addressing the flurry of questions that have been raised over his tenancy of the state property, the minister said: “Many will appreciate that the choice of a person’s home is typically a personal and private matter.

“But I am mindful that as an elected official whose authority is conferred on me by the trust of Singaporeans, the lines between what is personal and public may not always be clear. So, I will speak of them.”

Explaining why he was living in a rented home, Mr Shanmugam said he had decided to put his family home - a good class bungalow where he was living before June 2018 - up for sale.

This came after a review of his finances in 2016, where he realised that “too much of (his) savings” were tied up in his family property which he had bought using his previous income as a lawyer.

“When I bought my family home, I had assumed a future stream of income based on what I was earning in the private sector. After I became a minister, my income changed, and thus I found too much of my savings was tied up in one house,” he said.

“I was advised that it would be wiser not to have most of one’s savings in one asset. So I decided to put my family home for sale.”

To prepare for the sale, Mr Shanmugam said he decided to move out and live in a rental property. After looking at several rental options, including black-and-white houses which he had “long liked”, he decided to make an offer for 26 Ridout Road in 2018.

The offer, made on the back of advice from his property agent, was S$25,000 (US$18,500) a month. He said he was advised that this would be a “fair offer” based on rentals for similar properties at that time, while taking into account the built-up area and the condition of the property.

The Singapore Land Authority (SLA) then came back with a counter-offer of S$26,500, which the minister said he “accepted without further negotiations”.

“I had no idea, when I accepted SLA’s counter-offer, what the guide rent or the minimum rent was. These were decisions internal to SLA that I wasn’t privy to,” he added.

Mr Teo, who delivered a separate ministerial statement on Monday, said the SLA valuer who reviewed the guide rent of 26 Ridout Road did not know the identity of the prospective tenant, and only learnt that the tenant was Mr Shanmugam after the matter was reported in the media.

They also did not know about the rental amount that SLA's leasing division had negotiated with the tenant, he added. 

Mr Shanmugam also noted that it took him “a while” to decide on the sale of his family home and during which, he rented out the property.

“It took me a while to decide to sell and then COVID intervened. My family home was put on the market in November 2021,” he said.

The minister elaborated that he is paying market rent for 26 Ridout Road and stressed that he was “not making any money from the difference in rentals”.

“I pay for the rental of 26 Ridout Road, mostly from renting out my family home. But taking into account property tax, because the family home is now non-owner occupied, and income tax on the rental proceeds, there is a net deficit. I top up the deficit,” he told parliament.

“I am, in essence, using my previous lawyer’s income to pay for the rental for 26 Ridout Road. Based on my current income, I would not have offered to rent 26 Ridout Road. That is based on my personal approach to finances.”

NO ACTUAL OR PERCEIVED CONFLICT OF INTEREST: SHANMUGAM

There have also been questions about potential conflict of interest given how the SLA is a statutory board under the Ministry of Law, which is helmed by Mr Shanmugam.

Mr Shanmugam, in his speech, pointed to the CPIB investigation and review which have “made clear that there was no conflict of interest ... and everyone acted properly and honestly”. 

He added that he had taken himself “completely out of this personal matter” and took steps “to deal with any perceived or potential conflict of interest”.

These include informing then-Senior Minister of State for Law Indranee Rajah and then-deputy secretary at the Law Ministry that he was looking at black-and-white bungalows.

He had told the then-deputy secretary at the Law Ministry that he would recuse himself from any discussion related to the rental of the property.

He had also asked Ms Indranee to handle any issue relating to the property that might come up to the ministry and told her that she could approach Senior Minister Teo Chee Hean, which he later informed, if she needed to check anything.

Mr Shanmugam said he also spoke to his agent on this matter.

“I took these steps, although rental issues don’t come up to ministers in the usual course. Nor in this case, as it transpired, did anything go up to (Ministry of Law), Senior Minister of State Indranee or Senior Minister Teo for guidance or decision,” he said.

“So no actual conflict. I removed myself completely from the decision-making process, and no potential or perceived conflict either because I had recused myself.”

Mr Shanmugam also touched on other questions, such as the size of the land area for his rented property.

He said that he did not want the extra land, amounting to 150,000 sq ft, which is now part of his lease.

“Indeed, I offered to maintain that land outside of the house boundary, at my own cost – because if the outside land was not properly maintained, there would be serious problems for me,” he said.

“But I did not want it as part of the lease,” Mr Shanmugam added, citing additional legal responsibility. 

“But SLA took the position that if I wanted to maintain the surrounding land, the surrounding land had to be part of the lease. I did not want to negotiate, and agreed to this.

“Even now, if SLA agrees to take back the extra land – which is more than 60 per cent of the total – I would be extremely happy to give it up. And I would be happy to maintain it if SLA agrees,” he said.

Mr Shanmugam also shared that he had spent more than S$500,000 on improvements at 26 Ridout Road, including paying for the car porch and planting many trees.

These were improvement works that were allowed within the limits for the colonial bungalow, which was a conservation property.

“Like other black-and-white bungalows, 26 Ridout Road required a fair amount of work. It is an old property and it had been unoccupied for more than 4 years. There certainly were no chandeliers,” he said.

“The money that I put in, I knew I would not benefit from it after my lease is over – it would all go back to the State. That is the deal when one rents a black-and-white, and I knew that,” Mr Shanmugam added.

HOW 31 RIDOUT ROAD CAME TO BE RENTED: BALAKRISHNAN

In a separate ministerial statement, Dr Balakrishnan also explained how he came to be a tenant at 31 Ridout Road which he first rented in 2019 before renewing his lease three years later.

The Foreign Affairs Minister explained that he had wanted to bring his entire extended family together under one roof, while his grandchildren were still young.

Dr Balakrishnan has four children aged 17 to 34. By 2018, two were married and had children.

“We were aware that time that there were hundreds of rustic black-and-white bungalows scattered throughout Singapore,” he told parliament, while adding that he and his wife did some “initial due diligence” by going through the State Properties Information Office (SPIO) website.

In September 2018, Mrs Balakrishnan drove past 31 Ridout Road on her way to a friend’s house and saw a “prominent 'for lease' sign with a phone number". 

She called the number displayed and reached a property agent from Colliers International Consultancy and Valuation. The agent then showed Mrs Balakrishnan several black-and-white properties in the vicinity and indicated an asking rent of S$19,000 for 31 Ridout Road. 

The property had been vacant since 2013, and was “in an advanced state of disrepair”, according to Dr Balakrishnan.

He describes a leaking roof, holes in the floor, a rotting staircase, major termite infestation, uprooted trees around the house, a damaged fence and snakes both indoors and outdoors.

“It was obvious that extensive repairs would have been necessary to make the house liveable,” said the minister, adding that he later spent more than S$200,000 on a variety of improvement works.

“We also know that all this money that has been spent cannot be recovered when the tenancy expires,” he added.

Dr Balakrishnan also noted that when the tenancy agreement was signed in 2019, he and wife were “not aware” of the guide rent.

They were also not aware of two prior bids made in July and August 2018 – at S$12,000 and S$5,000 respectively. “I wasn't aware of this until CPIB published its report,” said the minister.

Dr Balakrishnan added: “My wife and I were acutely aware that although we were dealing with the Colliers property agent, the ultimate counter party to our tenancy agreement was the government of Singapore. 

“At all times, we were scrupulously careful to ensure that everything was above board.”