The revised HDB policy on Oct 15 aims to weed out unhealthy speculation and high assignment fees for HDB commercial and industrial tenanted properties ("New HDB measure will lead to higher business costs" by Mr Tan Yee and "Rein in rising retail rents" by Mrs Lillian Lee; both on Oct 21).
The assignment fee is a private agreement in which an incoming tenant pays to the existing tenant, the amount of which is negotiated between the two parties and is over and on top of the rent.
Such assignment fees could ultimately be passed on to the public in the form of higher-priced goods and services.
Tenants who do not wish to operate their businesses any more will have to return their premises to HDB for retender under the new rule. This will also allow HDB premises to be more easily available to business operators to bid for.
To help new tenants with their businesses, HDB offers a two-month rent-free period for renovation works as most incoming tenants do not take over the old fittings and fixtures left behind.
Recent reports on high transaction prices for coffee shops come under the category of sold properties. They are freely transacted in the open market on a willing seller-willing buyer basis and are not directly affected by the new Oct 15 rule.
Ng Leong Keng
Director (Policy and Planning)
Housing and Development Board
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