Introduction

Land is a scarce commodity that is in limited supply. This is especially so in Singapore, which makes land a very precious possession and ownership rights are sacrosanct. Notwithstanding this, there will be a need from time to time to acquire land from private landowners to achieve a wider public good, most commonly for public development. In aspiring to a higher level of land development, Singapore has developed some form of expropriation laws to achieve national objectives, which is manifested in the Land Acquisition Act (the Act).

Background

The Land Acquisition Act sets out the Singapore Government’s comprehensive powers and compensation framework when compulsorily acquiring land for economic and infrastructure developments. Most recently, a four-storey building along Thomson Road, comprising twelve (12) residential units and four (4) shops, has been acquired by the Government and will be demolished by the end of the year to facilitate the construction of the North-South Corridor (NSC). The tenants and owners of these units vacated the premises in February 2021 to allow for strengthening works on the foundation of the building. A subsequent assessment revealed that it would be impractical and risky to carry out such strengthening works to withstand excavation works for the NSC tunnel. In light of this, the Government exercised its compulsory land acquisition powers and will compensate the private landowners based on the market value of their individual properties as of 16 April 2021 – the date of acquisition – in accordance with the Act.

The Acquisition Process

 Prior to acquiring a piece of land for public development, the Government and its respective agencies undergo planning to optimise land use without resorting to land acquisition. Occasionally, planning considerations may inevitably involve land acquisition, which is a last resort. A prominent example is the case of Eng Foong Ho v Attorney General [2007] 2 SLR 542, where the property known as Jin Long Si Temple (the Temple) was compulsorily acquired for comprehensive redevelopment that includes building of and optimising land use around new MRT stations. The planning includes amalgamating the acquired land with the adjoining state land to intensify land use and maximise the development potential of the amalgamated land.

The typical acquisition process consists of five (5) stages:

1. Notice of Acquisition

Landowners will receive this notice, stating the details of the property to be acquired and the date of the Collector’s Inquiry.

2. Collector’s Inquiry

At this inquiry, the Collector will obtain information to access the compensation amount. Landowners may also submit their claims to the Collector at this point.

3. Collector’s Award

The Collector’s Award is a document issued by the Collector, that indicates the compensation amount awarded for the acquisition of the land or property.

4. Payment of Compensation and Site Possession

The payment is made to the Landowner when the Collector takes possession of the acquired land or property.

5. Appeal Process

If the Landowner is not satisfied with the Collector’s Award, he/she may lodge an appeal with the Appeals Board. This appeal process is unaffected by the payment of compensation to the owner and the handing over of the land or property.

Compensation Framework And The Appeal Process

The compensatory framework in the Act is often a major point of contention, in that the landowners feel inadequately compensated for the acquisition of their land. The Act sets out the factors for consideration in determining the compensation, which is broadly based on the market value of the land. These factors include, but are not limited to, recent sales transactions for the property, other comparable sales transactions, adjustments for condition, size, location, tenure and time difference between transactions, which can influence the valuation.

The landowner, whose property was compulsorily acquired for public development, has the option to appeal for a higher compensation of the acquired property. This was the situation in Novelty Dept Store Pte Ltd v Collector of Land Revenue [2016] SGCA 15, where the appellant (Novelty) appealed to the Land Acquisitions Appeal Board, which was rejected, and later appealed to the Court of Appeals. The court reaffirmed that compulsory acquisition of land pits the interests of the individual landowner against those of the state. In this case, the appellant’s contention was on the valuation of the land acquired (i.e. the appellant argued that there was a sale and leaseback (SLB) arrangement that enhanced the value of the land). In an SLB arrangement, the owner sells the property and, at the same time, leases it back from the buyer. The court found that no SLB arrangements were involved and that the Board was correct in finding that Novelty’s land was not subject to any SLB arrangement at the acquisition date. Therefore, Novelty’s land lacked the enhanced value that comes with properties that are subject to such SLB arrangements.

Road Reserves

In light of the foregoing, it is therefore imperative for us as your acting solicitors to conduct legal requisitions to the various governmental agencies to understand whether the land and/or property in which you are purchasing had been gazetted for any forms of acquisition.

For example, we as acting solicitors will extract a road line plan the Land Transport Authority (LTA) to know whether the land and/or property is affected by lines of road reserve and land required for road reserve. The land required for road reserve are usually required to be set aside when re-development takes place on the Property or when road construction/improvement is carried out by LTA, whichever is the earlier.

It is noteworthy that while the Government may acquire the Property or part thereof under the Land Acquisition Act (Chapter 152 of the 1985 Revised Edition) and the Land Acquisition (Amendment) Act 1995 should Land Transport Authority (LTA) decide to carry out road improvements (in which case, the compensation payable will be based on the market value as at 1st January 1995 or the market value as at the date of the acquisition, whichever is lower), however if the Government acquires the land under the Street Works Act, no compensation shall be payable based on section 14 of said act.

Conclusion 

Compulsory acquisition of land is a power vested in the Singapore Government to acquire land for a fair market value for public development. In recent years, there has been a recent spike in projects to build and strengthen Singapore’s economic and social infrastructure. Inevitably, some areas of privately-owned land may be involved in the Government’s planning considerations. As a last resort, land is compulsorily acquired in the interest of the wider community. Compensation remains a contentious subject between landowners and the Board even though a wide variety of factors are considered in assessing the market value of the land acquired. An appeal process like the one discussed may even involve legal considerations to assess the market value, e.g. sale and buyback arrangements. At Sim Mong Teck & Partners, our conveyancing team keep ourselves updated on the most recent property-related matters and developments and our experience allows us to share our knowledge on such topics. Should you have any queries pertaining to your property or other conveyancing matters, please reach out to our lawyers or Business Development team.