Derivation of Prices of Land Leases to Religious Organisations
Ministry of LawSpeakers
Summary
This question concerns Ms Sylvia Lim’s inquiry into how land lease prices for religious organisations are determined for both new issues and renewals. Minister for Law K Shanmugam explained that land for Places of Worship is sold at fair market value, usually through competitive tenders, though mosque land is directly alienated at market prices determined by the Chief Valuer. The Minister noted that proceeds go to the Past Reserves and any pricing adjustments require changes to the Reserves Protection Framework and the President’s approval. A government review of the land allocation and pricing framework is currently underway to address rising costs caused by competitive bidding. Consequently, religious organisations have been advised to take up short-term tenancies until the review is finalized to benefit from potential policy changes.
Transcript
10 Ms Sylvia Lim asked the Minister for Law how are the prices of land leases issued and renewed to religious organisations, such as temples and churches, derived.
Mr K Shanmugam: State land parcels, including those that are allocated for Place of Worship (PW) use, are required to be sold at fair market value (FMV). In general, they are sold through a competitive tender process where the highest acceptable bid becomes the land price for the specific site.
A different approach is taken for mosque land. Land for mosques is directly alienated to Majlis Ugama Islam Singapura (MUIS) which centrally coordinates mosque development, at market price as determined by the Chief Valuer (CV). This would, generally, result in mosque land being less expensive, because there is no bidding.
The proceeds from the disposal of state land, including land sold for PWs, go to the Past Reserves. This is because land is part of the Past Reserves, and land sales simply convert physical assets to financial assets. The sale proceeds of land cannot, therefore, be used as revenue for spending in the Budget.
For lease renewals of PWs, the premium is also at current market price, as determined by the CV generally. In determining the current market price, the CV takes into consideration relevant transactions of PW land and makes necessary adjustments for attributes of the site, such as location and land area.
In recent years, the PW land prices have risen because of competitive bidding by religious organisations.
The Government cannot unilaterally adjust the price of land that is sold for PW use, as it is covered by the Reserves Protection Framework to dispose of land at FMV. Any change will require a change to the Reserves Protection Framework and the approval of the President.
The Government has been in discussions with various religious organisations to consider how best to assist them in mitigating the price rises, which come from such bidding. At the same time, the Government has been doing a review of our PW land allocation and pricing framework, to see how the price rises can be mitigated.
This was publicly disclosed and reported in the media in July this year in an article titled "Religious groups hope to pay less for leasehold land after policy review."
Pending the conclusion of the review, the Government has also advised PWs, where the lease has come up for renewal, to consider taking up a short-term tenancy or Temporary Occupation Licence, so that once the review is completed, the PWs will get the benefit of the review. This has also been reported in the media. Thus far, 20 PWs have done this, while six PWs have decided, nevertheless, to proceed with a 30-year lease renewal at current market prices.
Significant progress on the review has been made. Details will be released when the process is completed.