When considering buying a landed property in Singapore, it's essential for buyers to be aware of the potential for compulsory land acquisition.
Land in Singapore is a scarce commodity that is very limited in supply making our 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, mainly 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 Land Acquisition Act empowers the government to acquire land for public purposes and it outlines the rights of landowners and the process of acquisition where the government has the authority to acquire private land for public purposes or development projects, such as infrastructure, public housing, or urban redevelopment. The Land Acquisition Act ensures that landowners are compensated fairly, but the compensation may not always reflect the full market value, as it is based on statutory valuation guidelines.
"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." said real estate consultant Kiwi Lim.
The Land Acquisition Act sets out the procedures and compensation mechanisms for landowners. Here's what you need to know:
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.
Risks to Landed Property Owners
- If you're purchasing a landed property, particularly in areas earmarked for redevelopment or new infrastructure projects, there's a risk that your property could be subject to compulsory acquisition.
- While compulsory acquisition is not common, it's a possibility in areas undergoing significant urban renewal or infrastructure expansion.
Compensation
- Landowners are entitled to compensation based on the market value of the property at the date of acquisition. However, this value is determined by government appointed valuers and may differ from private valuations.
- Additional compensation may be provided for other factors, such as loss of business or disturbance, but these are typically subject to strict criteria. The Act sets out the factors for consideration in determining the compensation, which is broadly based on the market value of the land which 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.
Mitigating the Risk
- Before purchasing a landed property, especially in areas of potential development, check the Urban Redevelopment Authority’s (URA) Master Plan. This plan outlines land use zoning and possible future developments, which may indicate areas at risk of acquisition.
- Engage a real estate lawyer or consultant to assess the risk and provide advice on the potential for compulsory acquisition based on the property’s location and surrounding developments.
What to Do If Your Property Is Acquired
- If your property is subject to compulsory acquisition, you'll receive a Notice of Acquisition. You have the right to contest the compensation amount through the Appeals Board if you believe it's inadequate.
- Engage a professional valuer or legal advisor to assist with the compensation claim and appeal process, if necessary.
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.
It is noteworthy that while the Singapore 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.
"In 2021, the government compulsorily acquired a four-storey building along Thomson Road and the freehold 776-sqm site that it sits on were acquired under the Land Acquisition Act. The building comprised of twelve residential units and four shops which the government will acquire and demolish by the end of the same year for the construction of the North-South Corridor nearby." said Kiwi Lim from Propnex Realty.
"Therefore, if you purchase a land and / or property that is affected by lines of road reserve which is required to be set aside, you run the risk of being uncompensated for the reduction in your land / property area."
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