25 March 2007

30-year en bloc time-bar

UPDATE on 26 Apr 2007:
Following Indonesia's sand ban and granite chip control, the Gahmen's new buzzword is "Sustainable Construction".

I'd like to propose the flip-side of this coin: "Sustainable DE-Construction"!

Home ownership in Singapore: 90.9% in 2006 (Dept of Statistics).
Singaporeans in HDB flats: 86% in 2006 (Ministry of National Development).
After discounting PRs in HDB flats and those in landed properties, it may be a fair estimate that strata-title private residential estates probably account for 8% of Singapore's residential housing.

With the last decade's en bloc frenzy and this millennium's frenetic en bloc pace, I would suspect that a fair portion of this 8% aggregate have been or will be redeveloped after successful collective sales. Therefore, it is high time that the Ministry of National Development must work hand-in-hand with the Ministry of Law on "Sustainable DE-Construction" and seriously consider imposing a time bar of 30 years from TOP (Temporary Occupation Permit) against collective / en bloc sales for private strata-title residential properties.

If this 30-year time-bar is adopted in this 2007 legislative review, it would effectively mean that residential estates that obtained TOP on or after 1977 would NOT be available for collective sales in 2007 but in 2008, those apartments that got TOP in 1977 would become available for collective sales.

MACRO SOCIO-ECONOMIC BENEFITS of this proposal - In addition to all the other equally cogent justifications set out in paragraphs 1-6 below, this 30-year en bloc time-bar mechanism will:

(i) calibrate the supply of developed land relative to the land released by the Gahmen in Government Land Sales, thus improving the accuracy of the Gahmen's target land supply;

(ii) temper the supply of apartments available for rental to the foreign talent/migrant influx, thus minimizing demand/supply distortions and keeping rental rates and Cost of Living Index on a more even keel;

(iii) reduce the immediate demand for sand and granite chips as there will be a curtailed supply of private strata-title land for redevelopment under collective sales; and

(iv) buy time for more incisive studies on "Sustainable LIVING" in glass-and-steel structures in our Tropics which will only get hotter with global warming (surely the Gahmen is not just interested in solving the Developers' one-time problem of higher construction cost without caring about the Citizens' ongoing problem of higher utilities bill if we need more air-conditioning to cool down the heat trapped in our new glasshouses with windows shut tight when we are at work/school, thus negating any cross-ventilation designs and further accelerating global warming).

1. Existing law: 10-year time-frame - The present law says "less than 10 years" and "10 years or more" . Ten years! This would be hilariously funny if it wasn't so tragic. Technically, collective sale is possible on Day 1 of issuance of TOP (Temporary Occupation Permit)! Bizarre, eh?

2. Context - How long did your fridge last? Mine is still frightfully cold after 13 years! Man, we are talking about bricks and mortar here. And we are talking about an asset ranging from at least half a million bucks to nearly $3mn - depending on size and location!

3. Proposed 30-year en bloc time bar - Given our finite-resource Planet Earth, shouldn't the Gahmen legislate a minimum time bar against collective sales for the first 30 years from TOP? To put things in context, even a JTC factory lease is commonly 30 years + 30 years. That's for a factory - What more of our "apartment homes" with presumably legal freehold/99-year leasehold "air space"?

The first Collective Sale Agreement (CSA) attempt on my estate was four years from TOP - even the central air-conditioning system provided by the developer to me was still under warranty! There were two apartment buildings in District 9 that met their demise at a tender age (viz, a 10-storey apartment block called Devon-something near the junction of Killiney Road/Devonshire Road was demolished some 6-7 years after TOP and it is now part of the construction site for the upcoming One Devonshire condo; another block of about that height called Saint Thomas View at Saint Thomas Walk is about 11 years old and is now under demolition).

4. Other countries - One lawyer commented at a talk given at my town club said that Singapore is the only country in the world with this kind of en bloc / collective sale legislation based on a specified percentage of majority consensus for PRIVATE properties. Not surprising to me as Singapore usually aspires to be the First in something or other, eh? Recently, I gathered from another source that Hongkong is also contemplating urban renewal legislation but the earliest date for a building to be considered for such enforced collective sale is 40 years from TOP equivalent.

5. Other perspectives - Let's look at this issue from various perspectives:

(a) Mega Picture: The Gahmen has announced a target population of 6.5mn people within the next 40-50 years (up by a whopping 45% from the 4.483mn as of 2006). The Singapore Tourism Board's target tourist arrivals for 2007 (just one year) is 10.2mn visitors.

(b) Helicopter View: Pre-1960s, Singapore’s area was 581.5 sq km. After nearly 50 years, we are 699.4 sq km as of 2005 (geez wheez, we are 20% bigger!). Unless Mother Nature and/or God (sorry lah, even the PAP in their angelic white is not in this league) cause tsunamis to shift our neighbours' coastline further away, or seismic movements to shrink their land mass or meltdown from global warming to submerge the nearby lands, this 699.4 sq km plus another 3-7% is about it. Anything more will probably trigger "Close Encounters of the Fourth Kind"!

(c) Roof-top View or more accurately, your kitchen window view): Bearing in mind the above Mega Pic and Chopper View - if you peer out from your kitchen window, you may see salivating developers/ housing agents/ neighbours hovering around and hoping to force you into a collective sale with various bits of legislation and policies and regulatory gaps whereever convenient in order to facilitate this forcing as the Unseen Hand. Hey, come to think of it ... since Singapore can have an ANTI-SPAM LEGISLATION, shouldn't there be similar protection of home owners from incessant cold calls and other forms of harrassment from marketing agents/developers? We can't even live in peace in our own homes every time the property market goes into a spasmodic en bloc frenzy!

6. Other implications - I am also advocating a minimum 30-year time bar from the date of issuance of TOP because:

(a) Land use efficiency: Given the pressures of urban renewal, shouldn't the Gahmen first review the area set aside for Good Class Bungalows? These will continue to be the most inefficient use of land even as they tear down bungalows to squeeze in a few semi-Ds. No doubt, it would represent a loss of part of our architectural heritage but at least it is on willing-buyer-willing-seller basis and affects only one property owner. Likewise for golf courses - get real, man! Our 699.4 sq km is already pushing the boundaries to the limit before we hit (nah - more likely - get hit with) "Close Encounters of the Fourth Kind" with our neighbours. On this teeny red dot, access to a golf course in Singapore is an ultimate luxury - and rightly so! If I have to lose my home, you can stop playing golf in Singapore unless you are of ultra-high-net-worth or you just trundle your golf cart up north or down south. It's almost obscene when you put things in context. Where GCBs and golf courses are concerned, we have optimal correlation of Minimum Impact-Maximum Benefit.

(b) Environmental impact: Now that Indonesia has banned sand exports and controlled granite supply, it may be timely for the Gahmen to consider the environmental impact of such a feverish pace of CSAs.

This Land Titles (Strata) Act has unwittingly created a senseless contradiction. We harp on Asian values, of which frugality is one. Yet this piece of legislation fosters wanton wastage as gleaming marble floors of less than 10 years (or even of 35 years if well-maintained) go under the wrecker's ball. Expensive double-glazed full-height glass panes get smashed to smithereens. Window frames in perfect condition are left mangled in the demolition rubble. Did you know that to make just one metric tonne of aluminium for our window frames, it takes an obscene amount of energy and causes greenhouse gas emissions of 991 kg of carbon dioxide equivalents?

Whilst we can source for alternative building materials and go hi-tech with intelligent building designs and surround our whole apartment with planter boxes, our tropical climate (which will only get hotter and drier with progressive global warming) unfortunately doesn't lend itself to all-glass-and-metal buildings as these will be more energy-intensive with more powerful air-conditioning needs and lots of planter box watering. Before the advent of air-conditioners, the maharajahs of India built really thick concrete/stone walls to keep cool in their searing summer heat. Even the rural poor in China continue to live in caves to protect themselves from weather extremes. Unlike those in Dubai, we have no oil! Unlike those in Malaysia, the Philippines or Vietnam, we also have no fields to grow oil palms, sugar cane or maize for our bio-fuels!

(c) Architectural legacy: We have already razed a huge part of our architectural heritage from colonial and pre-war days. We are now razing even our modern Singapore architectural legacy. Ever noticed the design differences in apartments built in the 60s, 70s, 80s, and 90s? Even the window grille designs are different from each decade. Our architectural legacy speaks to us - in terms of cultural influences, climatic environment, social values, political events (eg, why apartments built a year or so after the 2007 Indonesian sand-ban have so little concrete structures)!

On the one hand, our Gahmen spends a lot on museums, parks and the arts. On the other hand, it unwittingly destroys our Living Heritage (be it buildings which are our homes, the flora and fauna in little pockets of natural forest, the homegrown artistic talents).

Do we want to see a model of our National Library monument in some exhibition? [Up to now, I still can't believe that we tore down a piece of Singapore history for a short dinky tunnel that saves possibly up to 12 minutes' travelling time in a worst-possible traffic jam ... unless it provides some strategic underground alternative to the nearby Istana that we can only guess at.]

Do we only want to see photos of apartments built in the 60s or 80s? Do we want to just walk in a manicured park? Do we want to visit the Raffles Museum to be sure that we will see what a stuffed-up Buffy Fish Owl looks like instead of keeping alive the habitat where you are likely to chance upon this rare bird as one of Life's unexpected and unplanned pleasures?

Majority vs minority vs individual

1. What majority? - Labels of "majority" versus "minority" are misplaced.

2. Eminent domain/police power? - These collective sales are not the result of exercising "eminent domain" to serve larger public interests of, say, infrastructural projects or slum clearance. Nor are there structural weaknesses or public health/safety issues afflicting these private properties, thus invoking "police power".

3. Collective greed? - We are talking about Private Property that we bought at prevailing market prices with our hard-earned money WITHOUT government subsidy and WITHOUT dipping into taxpayer's money. There is NOTHING to prevent an owner from selling his property individually. Are we living on some communal farm like some Jewish kibbutz all of a sudden when it comes to collective sale?

All because of collective greed (facilitated by legislation, convenient regulatory gaps and suitable ambiguity), hankering after the so-called "premium" from a collective sale as opposed to an individual sale even if it means forcing dissenters into selling their private property. If collective greed is the driving force, then it is IRRELEVANT whether it's 21% minority or 1% dissent - it is PRIVATE property nonetheless!

4. Urban renewal and land use efficiency - I don't refute these larger societal needs of urban renewal and greater land use efficiency. Hence, it is ONLY on this basis that the concept of "majority over minority" gains some credence. However, there must be a FINE BALANCE between societal needs and individual rights.

Let's NOT forget that we probably plundered our CPF retirement savings, and/or hocked ourselves up to our eyeballs to buy our property and worked our butt off to service and repay the bank loan and build-up our CPF retirement savings. In stark contrast to investor-owners who force others to sell in the greed for collective sale premium whilst they keep a roof over their own heads, we owner-occupiers are immediately time-disadvantaged because we would need to buy a replacement roof upon a successful enbloc despite feverishly hot prices.

If we have to subordinate our individual PRIVATE PROPERTY rights at the price of losing something so basic as the roof over our heads and possibly compromising our long-term financial security in terms of CPF retirement savings as a "SACRIFICE" for the larger community needs, then it is only EQUITABLE to address the following issues:

(a) One-for-one "exchange": That's why I am advocating a mandatory property exchange as one of the settlement options with ancillary regulatory support. SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE. To be a Squatter, Refugee, Downgrader or Downsizer in spite of being in the so-called privileged class of a private property owner isn't exactly the standard definition of a First World Global City!

(b) Mathematical basis for distribution of collective sales proceeds: That's why I have suggested a mathematical formula to be mandated under law, especially in view of the legacy problem created by the previous broad band-widths of strata title area for share values, the varying composition mix of unit sizes and the different estates' occupancy / ownership profiles. SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" IN THIS BLOG-SITE.

(c) Degraded time-value of the dollar amount received as collective sales proceeds: That's why I have highlighted this inherent inequity that the Gahmen needs to seriously redress. SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" IN THIS BLOG-SITE.

(d) Skewered voting power: That's why I have highlighted the composition of unit sizes and the estate's occupancy / ownership profile which may inherently skewer the voting power of the Sales Committee and/or the Majority Owners even before voting begins! SEE MY OTHER COMMENTS UNDER "SHARE VALUES; SALES COMMITTEE" IN THIS BLOG-SITE.

(e) Retrospective effect of the 1999 legislative amendment: Whether the retrospective effect is witting or unwitting, I'd like to give the benefit of doubt to the Gahmen. However, it does NOT change the fact that this legislative amendment amounts to such retrospection because there are inherently two legs to a property purchase (ie, Acquisition and Disposal). This law was gazetted and came into effect on 11 Oct 1999 but it has changed the fundamental basis of purchases made PRIOR TO 1999 because the collective sale would no longer be based on 100% consensus applicable AT the time of purchase but on 90% / 80% consensus promulgated AFTER the time of purchase. SEE MY OTHER COMMENTS UNDER "CONSTITUTION; GAHMEN POLICIES" IN THIS BLOG-SITE.

5. Personal financial planning / retirement savings in CPF - Real estate is likely the most chunky element in our investment portfolio. Each investor has different risk appetite profile, cashflow need, time horizon, etc. As there is nothing to stop my neighbours from selling their respective units individually based on their personal financial planning needs, why are these neighbours lumping my investment with theirs by forcing me into a collective sale?

How can CPF policies allow such sizeable withdrawals from Ordinary Accounts to buy an asset where (a) the disposal and sales price is outside of my control, (b) the depreciation is likely accelerated due to withholding of maintenance given that the en bloc cycle goes into infinity and (c) asset-churning is the most likely result as I need to buy a replacement unit and possibly sell+buy repeatedly if I evolve to be a Refugee after each collective sale? SEE MY OTHER COMMENTS UNDER "CONSTITUTION; GAHMEN POLICIES" IN THIS BLOG-SITE.

Impact versus Regulation

What is even more galling is that after passing this "innovative" piece of legislation in 1997, the Gahmen have conveniently left a huge void on everything else related to it.

1. To sell the entire estate - There is NO regulation or legislation to govern the Sales Committee who dictates the terms of such collective sale and the apportionment method of sales proceeds that are binding on ALL owners. SEE MY OTHER COMMENTS UNDER "SHARE VALUES; SALES COMMITTEE" IN THIS BLOG-SITE. In the event of a dispute or disagreement and even if the dissenting owner goes for review by the Strata Title Board (STB), so what? STB is bound by the existing guidelines (or lack thereof) and isn't it a case of fait accompli by then? In form, we have a recourse but in substance, it counts for little or almost nothing. As they say, "the devil is in the details".

2. To repair a broken lock in the estate – In stark contrast, there is an entire statute under the Building Maintenance and Strata Management Act to regulate the Management Corporation and the Management Council down to the last minute detail.

Constitution; Gahmen policies

UPDATE post-Oct 2007: ____________________________________________________

1. Constitutional or not? - Is it even constitutional, I wonder? I hope I won't be hauled up for treason or something for merely asking. I seek your indulgence as I am a newbie at blogging.

Perhaps, it is only in this little red dot where a legislative amendment to the Land Titles (Strata) Act (LTSA) could be passed in 1999 with such equanimity by a Parliament of 82:2 mandating collective sale of Privately-Owned property based on 90% share-value and total-area majority if your estate is less than 10 years old from the date of issuance of TOP (Temporary Occupation Permit) or CSC (Certificate of Statutory Completion), for any building (not being common property), whichever is later (for 80% majority if 10 years or older, subject to approval by the Strata Titles Board (STB) who would NOT issue the collective sale order ONLY on the grounds of (a) financial loss and/or (b) lack of good faith.

2. Financial loss - Under the LTSA, "financial loss" is defined as follows: "if the proceeds of sale for his lot, after any deduction allowed by STB, are less than the price he paid for". Essentially, if you paid $1mn in Year 1 as the purchase price for your property and you are now getting exactly $1mn in, say, Year 15 as the collective sales proceeds AFTER the "deductions allowed by STB" - Presto, there is NO financial loss. As to what "deductions" are "allowed by STB", there is - Ooops - a deafening silence! For nearly over a decade since 1999, we have been (and still are) on this incredible "Journey of Discovery" as to which deductions are allowed and which are not. We are a tad slow, aren't we? Yet, this little red dot is supposed to be very "on", right?

Interest already paid to the bank (which over the common 15/20-year loan tenure may well comprise 50% of your aggregate acquisition cost for this property) is NOT allowed as a deduction - that's confirmed. If the collective sales proceeds are insufficient to redeem any mortgage or charge on the property, it would count as financial loss.

3. Have your cake and eat it too: not you, my dear; CPF of course - However, with the CPF change of policy in Sep 2002 reversing the priority sequence of CPF charge and bank mortgage, the bank mortgage would rank FIRST and the CPF charge would come SECOND if you took up a property financing or refinanced an existing bank loan after Sep 2002. Again, wittingly or unwittingly, this change of CPF policy in fact facilitates collective sales. Why? Because CPF will release its charge on your property even though the net sales proceeds after discharging the bank mortgage are INSUFFICIENT to cover the withdrawn CPF principal and/or the interest that would otherwise have accrued on the amount withdrawn. You see, CPF does NOT require members to top-up. That's what Mr Yeo Loo Keng and his wife, Cheryl Lim, of Waterfront View realised when they recently lost the collective sale appeal. In contrast: Under the old ranking, CPF would NOT release their 1st-ranking charge against the property UNLESS the withdrawn principal and interest that would otherwise have accrued on the amount withdrawn are setttled first and only then will the balance be available to pay off the outstandings owed to the bank. Hence, I reckon if the couple at Waterfront View did NOT refinance their bank loan after Sep 2002, they would have succeeded in using "financial loss" as a basis to defeat the collective sale.

Therefore, this CPF change of policy in Sep 2002 would reduce the incidence of owners successfully citing “financial loss” to STB as a basis to fob off enforced collective sales. Too bad if you now end up with less for your eventual retirement. Remember, CPF Board has always been telling you to take charge of your retirement financial planning - now, have you been naughty or what?

However, IF your net sales proceeds after discharging the bank mortgage COVERS the withdrawn CPF principal and/or the interest that would otherwise have accrued on the amount withdrawn, CPF now requires you to REFUND all or part of these amounts into your CPF account before releasing the remaining cash dregs (if any) to you. That is only prudent of course because your CPF is part of your retirement savings.

Why do I say CPF will have its cake AND eat it too? Just basing on this Sep 2002 policy - do you notice the difference between the two "cakes"??? If you are short after paying the bank, tough luck if your retirement savings are now less. BUT if you have extra after paying the bank, CPF will now ensure that you refund back to your CPF A/c to preserve your retirement savings in case you squander it away. It looks inconsistent technically. But it is prudent in the overall spirit.

4. Good faith - Under the Act, the "good faith" element is correlated ONLY to the following factors: sales price, distribution/apportionment basis for the collective sale proceeds and the relationship (if any) between the developer-buyer and any of the collective sale owners. When taken within the context of a self-appointed unregulated Sales Committee where the sales price and distribution formula are decided without objective mathematical foundations at ad hoc Sales Committee meetings with possibly skewered representation and voting power, it is - to me - kind of "fait accompli" by the time the requisite Extraordinary General Meeting (EGM) is convened in connection with procuring STB's collective sale order - there is a time lag which distinctly works against dissenters despite the protection of more stringent requirements inherent in an EGM. SEE MY OTHER COMMENTS UNDER (a) "SALES PROCEEDS FORMULA; DISTRIBUTION" and (b) "SHARE VALUES; SALES COMMITTEE" IN THIS BLOG-SITE.

5. NMP Simon Tay - Back in late 1998, NMP Associate Prof Simon Tay spoke out strenuously in Parliament against this legislative amendment but to no avail. He voted against it but was of course outvoted. Several other MPs also had their reservations, especially in respect of the tender 10-year criterion for real estate.

I am in the course of trying to extract Prof Tay's parliamentary speeches from the Singapore Parliament Reports (as soon as I can find the time to do so). Then I will try to figure out a way to post or extract it on this blog-site (a raw newbie, remember?). If anyone has the pedigree to speak on the various facets of this 1999 legislative amendment, it would be Prof Tay (LLM from Harvard and LLB from NUS), Faculty of Law of the National University of Singapore (NUS), especially given his research interest in the "Governance" arena.

6. Lay-person's view - To me as a lay-person, a property transaction inherently has two legs: First, an acquisition, and then eventually, a disposal. Laws in Singapore do NOT have retrospective effect. Therefore, should an owner who BOUGHT (viz, 1st leg) a private property PRIOR TO the enactment of this law be forced to SELL subsequently (viz, 2nd leg) under a collective sale by a 90% / 80% majority promulgated only IN 1999 under the legislative amendment? And without even so much as an OPTION TO OPT-IN (ie, accepting the retrospective effect of this law because maybe his apartment is already quite run down at 40 or 50 years old and he wants to facilitate en bloc interest from developer-buyers)? SEE MY OTHER COMMENTS UNDER "MAJORITY VS MINORITY VS INDIVIDUAL" IN THIS BLOG-SITE.

7. CPF investments - Again, context is important. The Central Provident Fund (CPF) Board has been exhorting us to be prudent in our use of CPF monies, to take charge of our financial planning as CPF savings are our retirement nest eggs. More so than in any other country, home ownership has been and continues to be an integral cornerstone of Singapore's social policy with deep political implications.

CPF Board has a whole matrix of policies to discourage speculation, preserve principal capital and minimize investment expenses. Even for unit trust investments (the scale of which is generally a fraction of real estate investment in private property) using CPF monies, the CPF Board distinguishes between funds which could be bought with monies from Ordinary A/c, Special A/c or Supplementary Retirement Scheme, depending on the asset volatility, expense ratio, fund performance, etc. There are also legislative requirements to discourage frequent asset-switching as investors and financial advisers are obliged to declare if the switches are done at the behest of financial advisers who - as INTERMEDIARIES - have a vested interest in earning sales commission arising from each switch.

Traditionally, in the use of CPF for the purchase of residential property, the policies for second/multiple property purchases (on the basis that it would be for investor-ownership) are invariably MORE STRINGENT than for single property purchases (on the assumption that it would be for owner-occupation). CPF Board and the Monetary Authority of Singapore (MAS) as the central bank acting in concert would previously tweak the quantum of financing and/or cash deposit, etc, evolving to the present policy requirements for (a) the cash component of the Minimum Sum to be first set aside and (b) a lower percentage of Valuation Limit for investor-owners.

8. Collective sale law vis-a-vis other Gahmen policies - 85% of Singaporeans live in very decent PUBLIC housing flats built by the Housing & Development Board (HDB), a statutory board under the Ministry of National Development. Hence, the remaining 15% who live in PRIVATE housing - which is expensive real estate by world standards due to this island's land-scarcity - is considered "so-called privileged". However, the cumulative effect of this 1999 legislative amendment and all other nicely dovetailed policies would turn us (owners of only ONE private property) into Squatters, Refugees, Downgraders, Downsizers ... so much for our Founding Father's 1984 vision of Singapore to be the "SWITZERLAND OF THE EAST" by 1999 ... sigh! Time flies, doesn't it? What a Classic Irony, eh? 1999 also happens to be the date that this fundamental change in private property law came into effect! SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.

It is now 2007 and thanks to the 1999 LTSA amendments, my prudent investment in a single PRIVATE property now EXPOSES me to:

(a) the spectre of an asset disposal at a time and price beyond my control (any investment guru will confirm it sucks - who in their right mind will invest in such an asset?);

(b) the certainty of an accelerated rate of asset depreciation or deterioration with the inevitable lack of maintenance (whether of individual units or common property) as collective sales go into an infinity cycle and pressure tactics are applied by the consenters or frugality measures are adopted as a precautionary measure;

(c) the possibility of churning my investments as I sell-and-buy, dipping into my CPF account to pay hefty legal fees and stamp duties, benefitting only the INTERMEDIARIES of lawyers and Gahmen many times over if I evolve to be a REFUGEE;

(d) the likelihood of compromising my accumulation of retirement savings if I choose NOT to be a Perforced DOWNGRADER or DOWNSIZER, COMPOUNDED by the change of CPF policy in Sep 2002 reversing the ranking of bank mortgage;

(e) the risk of a lower-quality asset IN ADDITION to losing a roof over my head and thus ending up as a SQUATTER although I should derive cold comfort that I am not likely to be left "roofless" because ...

(i) in Jul 2006 CPF has relaxed the Minimum Lease Period from 60 to 30 years so that I can use my CPF savings for my next downgraded short-lease property (so better don't exercise and eat healthily because I may outlive my lease tenure OR if I get really sick and need to liquidate my asset to pay for medical expenses, the short-lease asset is not even marketable, eh?) - viz, moving from freehold property to 30-year lease, and

(ii) in Mar 2007 HDB has helpfully relaxed the Minimum Occupation Period for sub-letting the entire HDB flat so that I will have more rental options - viz, from owning private property to renting HDB flat.
Wah lau, suddenly all these stat boards are so "coordinated"!

I say the above half-seriously of course in a bizarre worst-case scenario but - based on investment principles - it really sucks! And Singaporeans are "prudently investing" our CPF savings in increasingly more pricey apartments!

In fact, the people who benefit the most from the LTSA amendment and CPF policies are those who are investor-owners as they reap a windfall by forcing everybody else to sell (instead of just selling their own unit based on their own investment/cashflow or relocation needs) whilst they continue to keep a roof over their own heads.

There is another interesting development that may have fuelled to some degree the en bloc fever. In Jul 2005 CPF changed their policy to allow non-related singles to use CPF for purportedly their "first and only" property purchase if they have not used CPF monies or have refunded such CPF monies previously used (ie, "currently not using CPF for any existing property"). Even married persons are getting into the act by partnering with parents/siblings in various permutations. Hence, the CPF figure of "only 3% of members using CPF to finance properties have two or more properties" may BELIE a larger reality because CPF Board has confirmed that this piece of statistic is sliced based on the member using CPF savings for both/all properties.

MORAL OF THE STORY: Maybe I shouldn't heed Gahmen exhortations in future, ugh?

9. Whiter-than-white -
As our Parliament has a 82:2 composition, it is all the more important for the People's Action Party (PAP) to ensure a “whiter-than-white” approach to legislation and policies. Nice pun, eh, given PAP's all-white attire as party colours? Lest I be misunderstood - let me state categorically that I fully agree with the top marks accorded by international rating agencies (PERC, BERI, etc) to our Gahmen for its "whiteness".

Nonetheless, it cannot be “anything goes just because we say so”. So what even if the 1999 LTSA amendment was debated, gazetted and published? As Dr Martin Luther King, Jr, said: “There are two types of laws: JUST and UNJUST”. The PAP can be technically right in substance and yet wrong in spirit (in contrast to what I said earlier about CPF Board having its cake and eating it where the Board may be off-mark technically but spot-on in spirit).

Perhaps, the following example will help me in elaborating on this point:

Consider these two FAQs that I downloaded from CPF website:

Q1: If I buy my property under RPS in September 2002, will I be affected when the Valuation Limit is gradually reduced to 120%?

A1: No, the CPF Withdrawal Limit applicable at the time of purchase will apply throughout the loan repayment period. Therefore, in your case, the amount of CPF that you can use for your property is 150%, subject to AHWL. This Limit will not change even if you refinance your loan subsequently.

Q2: I bought my property under RPS before 1 September 2002. What happens if I refinance my housing loan which was also taken before 1 September 2002? Will the new housing rules - the revised CPF Withdrawal Limit and financier's first charge on the property apply to me?

A2: When you refinance your housing loan (i.e. there is a new contract between your bank and you), your new CPF Withdrawal Limit will be capped at x% of Valuation Limit, subject to sufficient AHWL. The x% of Valuation Limit corresponds to the date you re-finance your loan (determined by the date you sign the contract with your bank - please refer to Table A below for schedule of x%). When you sell the property, the sale proceeds will first be used to pay off your housing loan, followed by the CPF principal amount and accrued interest. [Table A showing various time periods and withdrawal limits.]

In both cases, it involves (i) loan refinancing and (ii) CPF Withdrawal Limit. For property bought IN Sep 2002, the “CPF Withdrawal Limit applicable at the time of purchase will apply” and “this limit will not change even if you refinance your loan subsequently”. However, for property bought PRIOR TO Sep 2002, the “new CPF Withdrawal Limit will be capped at x% of Valuation Limit” and “the x% of Valuation Limit corresponds to the date you refinance your loan” because CPF says in this 2nd case that “when you refinance your housing loan (ie, there is a new contract between your bank and you)”. But, hang on ... when you refinance your loan in the 1st case, there is no new contract between your bank and you???

Somehow, the logic escapes me but the intent is not lost on me (ie, CPF is credibly fostering prudence in real estate investments). But it goes to prove my point that “anything goes just because we say so”.

Hence, my plea that (A) this 1999 LTSA amendment cannot be rammed-down the throat of buyers who entered into sales and purchase agreements for private properties pre-1999 WITHOUT so much as an option to opt-in and (B) even with the provision of majority consensus, there must be many more buttons and levers by way of legislation, policy or regulation (eg, 30-year time bar for new buildings, calibrated time-bar to next en bloc attempt, exchange units, mathematical apportionment, re-calibrated compensation, etc) to balance the needs of the individual against the larger societal demands, prevent abuses and distortions and ensure equity and justice.