Since October last year, HDB has stopped the practice of transferring tenancies among HDB commercial and industrial tenants.
The past practice had the advantage of allowing the exit of tenants whose businesses were not doing well. Unfortunately, over time it had led to high rental bids by businesses, in the hope of reaping high assignment fees down the road. Such high rents and assignment fees translate directly to higher operating costs which must eventually be passed on to consumers.
The new HDB rule has been effective. The average assignment fees for HDB commercial and industrial properties have fallen by about 33% and 42% respectively since. To allow the existing tenants to adjust to the new rule, they were allowed a 3-year grace period (i.e. until Oct 2016) to make any business adjustments.
Over the last few months, HDB met up with various groups of tenants, to explain the rationale of the policy and to seek their understanding. Some tenants who have been operating out of the same premises for many years, asked HDB for a longer grace period, to give them more time to make business adjustments. A significant proportion of them will in fact be retiring in a few years’ time, or would be near retirement then.
In view of this feedback, HDB has reviewed the rule and has decided to make a policy tweak. As a special concession for these long-time tenants, HDB will double the assignment grace period from 3 years to 6 years. This concession will apply to existing HDB commercial and industrial tenants who have already been HDB tenants for at least 15 years (as of 16 Oct 2013).
About 7,100 long-time tenants, or 40% of HDB commercial and industrial tenants, will benefit from the special concession. Among them, 77% are aged 55 years and above.
I hope the extended grace period would better help them make the necessary business adjustments to dovetail with their retirement plans. This concession is a good way to recognise their many years of serving the local community. I commend this HDB gesture.
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