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15 Oct 2013

HDB calls time on assignment of tenanted business spaces

Source: Business Times

By: Ong Chor Hoa

THE Housing & Development Board (HDB) yesterday acted to curb rising operating costs and speculation in its rental commercial and industrial properties - a move that market watchers said will lead to a more level playing field for genuine businesses seeking space in those sectors.

The board said it has introduced a two-stage plan to end the practice of assignment where tenants can pass on their tenancy to a new party for a one-time fee. It added that it currently has 8,000 commercial tenants and 10,700 industrial tenants, and sees an average of about 500 cases of assignment for each group every year.

The new rule came after the agency noted rising average assignment fee and tendered rent in the past few years for these premises, which can contribute to higher operating costs that may be then passed on to residents and consumers. "Assignment may also encourage unhealthy speculation," HDB said. The intention for assignment fees had been to facilitate the exit of tenants that need to close down their businesses and minimise disruption.