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13-02-07, 15:00
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Published February 13, 2007
Land acquisition: market rates proposed
Proposed amendments to Act also change basis of govt compensation to take into account permitted use and potential value under Master Plan
By KALPANA RASHIWALA
(SINGAPORE) In a change seen by some as welcome if long overdue, the government proposes to peg compensation to market value for land acquired from yesterday.
http://img408.imageshack.us/img408/4919/bt565298813022007lt3.jpg
Under amendments to the Land Acquisition Act tabled in Parliament yesterday by Deputy Prime Minister and Law Minister Prof S Jayakumar, compensation will be pegged solely to market value at the date of acquisition.
In contrast, the Act now pegs statutory compensation to the lower of the market value of a property on a) Jan 1, 1995, or b) the day a property is gazetted for acquisition.
Importantly, the basis of compensation will also change, to take into account permitted use and potential value under the Master Plan, subject to planning requirements and restrictive covenants - such as restrictions on title or tenure, for example.
In contrast, compensation is now based on the lower of existing use or development baseline, taking into account the Master Plan zoning.
Development baseline refers to the entitlement rights of land in terms of use and plot ratio which an owner has paid for. The new basis of compensation is comparable to market practice, since the sale of a property in the open market takes into account these same considerations.
The change seeks to ensure that compensation reflects the market value of acquired property.
Owners who disagree with the market value used by the government to determine compensation may still appeal to the Appeals Board.
Property players generally welcomed the new moves. 'The change is long overdue, especially in the context of fast-rising property values over the past 24 months,' said Credo Real Estate managing director Karamjit Singh.
'Anything to do with the Land Acquisition Act was a potential horror story with dreadful consequences as it has been wide enough to leave its victims thoroughly at the losing end. The changes will bring relief to owners who may be affected by the development of new MRT stations and other infrastructure works to be announced,' Mr Singh said.
Players generally do not see the changes having any direct or immediate impact on the real estate market.
'However, in specific instances, where, say, landed properties or part of a site is required for road widening even before they are redeveloped, the changes pegging compensation to current market values will no longer depress prices of such properties,' Mr Singh said.
The proposed amendments are the first fundamental change to the Act, which was enacted in 1966 to facilitate the development of Singapore in its early years after independence. Some observers say the Act was weighted towards the wider public interest as opposed to individual land owners' interest. The proposed changes reflect a shift towards individual interest.
Putting things in perspective, DTZ Debenham Tie Leung executive director Ong Choon Fah said: 'The pace of acquisition has slowed considerably in recent years compared with the earlier years after Singapore's independence, when the government had to acquire land for economic development, such as building Jurong Industrial Estate, some HDB estates, Changi airport. Therefore, the government can afford to acquire land at market rates going forward.
'In the earlier years, it would not have been possible for a young nation to have paid everyone market rate for land acquisition,' said Mrs Ong, noting that the government has nonetheless tried, especially in recent years, to alleviate hardship caused to owners whose land was acquired by giving them ex-gratia payments on top of the statutory compensation spelt out in the Land Acquisition Act.
Ex-gratia payments, which are made outside of the Act, are goodwill payments on compassionate grounds to help owners hit badly by acquisition and facing huge financial hardship. This is determined on a case-by-case basis, and factors taken into account include whether an owner occupies the property and how many other properties he owns.
The proposed changes to the statutory compensation do not affect ex-gratia payments, which the Government will continue to make on compassionate grounds.
Published February 13, 2007
Land acquisition: market rates proposed
Proposed amendments to Act also change basis of govt compensation to take into account permitted use and potential value under Master Plan
By KALPANA RASHIWALA
(SINGAPORE) In a change seen by some as welcome if long overdue, the government proposes to peg compensation to market value for land acquired from yesterday.
http://img408.imageshack.us/img408/4919/bt565298813022007lt3.jpg
Under amendments to the Land Acquisition Act tabled in Parliament yesterday by Deputy Prime Minister and Law Minister Prof S Jayakumar, compensation will be pegged solely to market value at the date of acquisition.
In contrast, the Act now pegs statutory compensation to the lower of the market value of a property on a) Jan 1, 1995, or b) the day a property is gazetted for acquisition.
Importantly, the basis of compensation will also change, to take into account permitted use and potential value under the Master Plan, subject to planning requirements and restrictive covenants - such as restrictions on title or tenure, for example.
In contrast, compensation is now based on the lower of existing use or development baseline, taking into account the Master Plan zoning.
Development baseline refers to the entitlement rights of land in terms of use and plot ratio which an owner has paid for. The new basis of compensation is comparable to market practice, since the sale of a property in the open market takes into account these same considerations.
The change seeks to ensure that compensation reflects the market value of acquired property.
Owners who disagree with the market value used by the government to determine compensation may still appeal to the Appeals Board.
Property players generally welcomed the new moves. 'The change is long overdue, especially in the context of fast-rising property values over the past 24 months,' said Credo Real Estate managing director Karamjit Singh.
'Anything to do with the Land Acquisition Act was a potential horror story with dreadful consequences as it has been wide enough to leave its victims thoroughly at the losing end. The changes will bring relief to owners who may be affected by the development of new MRT stations and other infrastructure works to be announced,' Mr Singh said.
Players generally do not see the changes having any direct or immediate impact on the real estate market.
'However, in specific instances, where, say, landed properties or part of a site is required for road widening even before they are redeveloped, the changes pegging compensation to current market values will no longer depress prices of such properties,' Mr Singh said.
The proposed amendments are the first fundamental change to the Act, which was enacted in 1966 to facilitate the development of Singapore in its early years after independence. Some observers say the Act was weighted towards the wider public interest as opposed to individual land owners' interest. The proposed changes reflect a shift towards individual interest.
Putting things in perspective, DTZ Debenham Tie Leung executive director Ong Choon Fah said: 'The pace of acquisition has slowed considerably in recent years compared with the earlier years after Singapore's independence, when the government had to acquire land for economic development, such as building Jurong Industrial Estate, some HDB estates, Changi airport. Therefore, the government can afford to acquire land at market rates going forward.
'In the earlier years, it would not have been possible for a young nation to have paid everyone market rate for land acquisition,' said Mrs Ong, noting that the government has nonetheless tried, especially in recent years, to alleviate hardship caused to owners whose land was acquired by giving them ex-gratia payments on top of the statutory compensation spelt out in the Land Acquisition Act.
Ex-gratia payments, which are made outside of the Act, are goodwill payments on compassionate grounds to help owners hit badly by acquisition and facing huge financial hardship. This is determined on a case-by-case basis, and factors taken into account include whether an owner occupies the property and how many other properties he owns.
The proposed changes to the statutory compensation do not affect ex-gratia payments, which the Government will continue to make on compassionate grounds.