SINGAPORE, July 3— Law and Home Affairs Minister K Shanmugam had decided to rent the black-and-white bungalow at 26 Ridout Road as he was putting his family home up for sale, he told Parliament today, adding that he was not making money from the arrangement.

"Taking into account property tax, because the family home is now non-owner occupied, and income tax on the rental proceeds, there is a net deficit. I top up the deficit,” he said during a ministerial speech he delivered during a parliamentary debate over the properties at 26 and 31 Ridout Road.

Questions regarding these bungalows, occupied by Shanmugam and Foreign Affairs Minister Dr Vivian Balakrishnan, arose in early May after a series of online articles by opposition politician and Reform Party chief Kenneth Jeyaretnam, who asked if the ministers were "paying less than the fair market value” for the properties.

Last week, findings from separate probes by the Corrupt Practices Investigation Bureau (CPIB) and Senior Minister Teo Chee Hean cleared both ministers of any wrongdoing in relation to the rental of the properties.

Today, Dr Balakrishnan also made a ministerial speech on the issue, where he said that he and his wife decided to move into 31 Ridout Road because they wanted a home that could house three generations of their family, including their children and grandchildren.

Ridout road paid for by previous income: Shanmugam

Giving a timeline that led to his rental of the Ridout Road property, Shanmugam said on Monday that while reviewing his finances in 2016, he found that too much of his savings were tied up in his family home, a good class bungalow, which he had bought using his previous income as a lawyer.

"After I became a minister, my income changed, and thus I found that too much of my savings was tied up in one house. I was advised that it would be wiser not to have most of one's savings in one asset. So I decided to put my family home for sale,” he said.

He said that he did not sell his home due to "financial need” and that he did not regret foregoing his previous earnings as a senior counsel to enter public service.

To prepare for the sale, he decided to move out and live in a rental property.

He decided on making an offer for 26 Ridout Road in 2018 after looking at several rental properties and because he had "long liked black-and-white houses”.

His family home was later put on the market in November 2021 after he took some time to decide on selling it and Covid-19 delays.

Turning to the question of profits, Shanmugam said that he was not making any money from the difference in rentals.

Accounting for taxes, there is a net deficit which he has to top up for.

"I am, in essence, using my previous lawyer’s income to pay for the rental for 26 Ridout Road,” he said.

"Based on my current income, I would not have offered to rent 26 Ridout Road. That is based on my personal approach to finances.”

In his speech, Mr Shanmugam also elaborated on the additional 150,000 square feet of land that had been added to his lease.

He said that he did not need or want the additional land as it would entail additional legal responsibility, but only wanted it cleared of health and safety issues.

However, the Singapore Land Authority had said that the surrounding land would need to be part of the lease if he wanted to maintain it. As he did not want to negotiate on the matter, he agreed to it, Mr Shanmugam added.

Regarding the condition of the house and its upkeep, the minister said that he had spent more than S$400,000 (RM1.4 million) on improvement works.

"The money that I put in, I knew that I would not benefit from it, after my lease is over — it would all go back to the State. That is the deal when one rents a black-and-white (bungalow), and I knew that,” he added.

On the issue of conflict of interest, Shanmugam reiterated how he had taken steps by recusing himself to ensure that there was no actual or perceived conflict.

Bring entire extended family together: Balakrishnan

Dr Balakrishnan on Monday said that the decision to move into the Ridout Road property in 2018 was to bring together his extended family, including his four children and the two grandchildren he had at the time.

At that time, he said they were aware of "hundreds" of rustic black-and-white bungalows scattered around Singapore. The rental market at the time was also "declining", he added.

The minister said his wife chanced upon the Ridout Road property one day, while visiting a friend nearby and noticed a "For Lease" sign outside it.

In his speech, Dr Balakrishnan outlined the extent of the dilapidated condition of the house, including holes in the flooring and leaking roof, among others. During an inspection, he said he saw a termite mound and snakes both inside and outside the house.

"We have since spent more than S$200,000 on a variety of improvement works to the property," he added.

Dr Balakrishnan said that at the point when his wife signed the rental contract in October 2019, they were not aware of the guide rent.

"We were not even aware that there had been two prior bids in July, in August 2018. And the two prior bids were at S$12,000 and at S$5,000," he added.

Dr Balakrishnan said throughout the entire process of dealing with the management agent and staff from SLA, his family had been "scrupulously careful to ensure that everything was above board".

On the part of the agent and government staff, Dr Balakrishnan observed they had "conducted themselves professionally and with utmost integrity in all engagements with us".

"We should be grateful that we have civil servants and people from the private sector who act as our agents who behave and conduct themselves to this standard because this maintains the integrity of our system," he said. — TODAY