Update on 7 Jun 2007:
As Shakespeare said: "Life is a stage ...".
From the time the Ministry of Law announced in March 2007 about the upcoming legislative review of the Land Titles (Strata) Act and the commencement of MinLaw's Public Consultation in April 2007, it was interesting to observe various en bloc happenings and the evolution of "The Bagel Class" of Singaporeans:
ACT 1 - Super-duper rush by various Sales Committees in a last-pitch push of hasty deals as if Apocalypse Now + Armageddon combined will soon be descending upon us!
ACT 2 - Vibrant cyber chatter even in official REACH Forum and AsiaOne Forum, fostering valiant active citizenry efforts by Owner-Occupiers who are facing or are being threatened with enforced en bloc sales in various parts of Singapore [do scroll down and click on the links to their blogs that I have created on the right-hand side of this blog-page].
ACT 3 - Journalistic integrity courageously manifested by the Today newspaper who took the lead to give voice to the Dissenters as part of balanced reporting to counter the hyped-up rah-rah of en bloc windfall! [Look out for The Straits Times' article (finally) on en bloc dissent tomorrow, 30 May, and followed up with another ST special report on 16 June 2007.]
ACT 4 - Anarchy finally hit Singapore with the latest fiasco of Watten Estate having two Sales Committees, each with their own marketing agent and lawyer - a scoop reported by The New Paper!
ACT 5 - PAP's INconsistency in fostering a "sense of community" as part of our nationhood in HDB estates versus private residential estates. Are Singaporean owners of private residential apartments 2nd class citizens in a way?
Compare this SCENE (i): At the completion of HDB Selective En Bloc Scheme (Sers) for Sembawang, Minister Khaw Boon Wan said that it is important "to try to keep the community intact" and "ensure that even as we modernise, we make sure that we don't unsettle the population" (Today, 4 June 2007).
Contrast this SCENE (ii): At the parliamentary sitting on 22 May 2007, Opposition MP Mr Chiam See Tong asked if the Gahmen could incorporate a provision into the law to enable SOME owners to exchange one-for-one in the same en bloc site. However, Senior Minister for State (Ministry of Law) Ass Prof Ho Peng Kee replied that "this is one area where we should leave it to the owners to decide, because not ALL owners may want a replacement flat. Different people have different considerations. But I know on the ground that owners who want a replacement, in fact, negotiate with the developers who are buying the property. This has happened in some of the developments. So, let the owners negotiate with the developers and get a deal that suits them".
Perhaps the good Senior Minister for State couldn't follow the thrust of Opposition MP's question which suggests a mandatory "OPTION" for SOME (not ALL) owners to select, knowing that their selection would then have the full force of legal protection to cap their multitude of key exchange risks. This is NOT (i) mandating it for ALL owners or (ii) leaving owners (especially Owner-Occupiers) in a lurch in a dog-eat-dog market infested by Developers who must account $$$ bottomline to shareholders and Investor-Owners who see quick $$$ or (iii) saddling en bloc exchange owners with very serious risks if the Developer-Buyer fails.
Ahhh ... maybe the good minister is NOT close enough to the ground to realise that exchange negotiation is either NOT on a level playing field OR NOT even entertained by the Buyer-Developer/Sales Committee/Majority Owners (A) if the 80% (90%) consent is likely to be hit or (B) if distribution of collective sales proceeds is to the obvious advantage of Majority Owners who reckon that the Developer-Buyer would reduce the price for the cash option if an exchange option is bundled with the en bloc deal or (C) if incremental development/profit potential is limited in certain sites due to small size land plots, new building height restrictions which may be lowered by the planning authorities or already maxed-out Gross Plot Ratio or additional pay-outs arising from Development Charge/development baseline issues, land premium for lease top-ups, etc. In the face of all these risks and challenges that seem to be blithely ignored by the Ministry of Law in giving this type of reply, surely the PAP must realise that it will be that much harder to move back to the same community space after an en bloc and thus preserve that "sense of community".
ACT 6 - Deja vu all over again when former NMP, Mr Shriniwas Rai, suggested in ST Forum that yet another Select Committee be formed to review the findings of MinLaw’s Public Consultation - Geez!
JUSTICE DELAYED IS JUSTICE DENIED.
In 1998/1999, NMP Shriniwas Rai spoke in support of this law and the present law came into being only after going through a time-consuming Select Committee process. Nonetheless, we ended up with the present law that has facilitated outright exploitation and unscrupulous behaviour.
INTERMISSION (go grab a coffee or a whiskey!) ...
I’d urge MinLaw to expedite review of the present law and gazette it as soon as possible to address the woes of the evolving "Bagel Class" of Singaporeans and prevent further anarchy and stop the blatant exploitation/short-change running into possibly six figures!!! SEE THE 30 MAY 2007 UPDATE IN MY OTHER COMMENTS UNDER "SHARE VALUES; SALES COMMITTEE".
Previously, the Government concocted HUDC and Executive Condominiums to cater for the “Sandwich Class” of Singaporeans who did not qualify for HDB flats but who could not afford private property.
Now, we have a “Bagel Class” of Singaporeans because collective sales of private property with freehold air-space entitlement based on 80% (or 90%) consensus are forcing dissenters to sell and consequently become a Squatter, Refugee, Downgrader or Downsizer. Like a bagel sliced along the circumference with a hole in the centre on both halves, Singaporeans are whacked with two holes:
1st Hole: Singaporeans are pushed out by foreigners (the really rich ones, not the so-called "foreign talent" employed on local terms) from the prime/central districts to the suburbs.
2nd Hole: Otherwise, Singaporeans have to make a yet bigger hole in our CPF/private savings to buy an equivalent replacement (ie, private strata-title property) where the price of disposal and the time of liquidation are both beyond the control of the CPF member (this makes it a Uniquely Singapore asset class!).
Can (and will) the Government redress the needs of this "Bagel Class" of Singaporeans in 2007 following the 1999 amendment of the Land Titles (Strata) Act? Following on from the predicament of the "Bagel Class" in the prime residential districts, the "Sandwich Class" of HUDCers/Exec Condoers is also finding out that they now need to revert to the "Roti Kaya Class"(bread with coconut jam) of HDBers where the heartlander ground is kept necessarily sweet but chocked-a-block with saturated fat from the very "shiok" (yummy) coconut milk that is not very good for the Heart! A happy "Roti Kahwin" (bread with a marriage fusion of butter + coconut jam) it does not make when the ex-HUDCers/Exec Condoers start competing with the Real McCoy Heartlanders for HDB public flats! Errr ... The Government Governs!
ACT 7 - Yeehah ... in gallops the dark horse with a cart trailing behind when during an interview about en bloc sales (Sunday Times, 17 June 2007), Minister for National Development Mah Bow Tan advocated that Singaporeans should downgrade. He said: "If you can't buy an executive flat, buy a 5-room. If you can't afford central area, go to the suburbs. If you can't afford Tampines, go to Woodlands or Yishun." Ahem ... I thought the Gahmen has been goading us Singaporeans to be No. 1 in this and that, feeding into our aspirations of Up, Up and Away ...
Minister Mah did not say what happens if you can't afford Woodlands or Yishun. However, Minister for Health Khaw Boon Wan did say on Channel News Asia on 17 April 2006 (14 months ago to the day): "My personal view is, our land is expensive. But we have nearby neighbours in Johore, Batam and Bintan. The elderly want to reach their doctors within half to one hour. So retirement villages in neighbouring countries is possible, barring the cross-border hassle. It is best to find cheap land on short leases." ... now, I'm beginning to see where the "Up, Up and Away" is leading us to - 7th Heaven no doubt!
Tsk, tsk ... except that there are some knotty kinks in this scene:
(a) To live outside of Woodlands or Yishun in a retirement home in Johore, Batam and Bintan, you first have to be "retired".
(b) You may still be of active working age at the point of a successful en bloc - So how? UPGRADE your skills but DOWNGRADE your lifestyle??? Kind of sucks, doesn't it?
(c) You may already be of retirement age at the point of a successful en bloc except that they keep pushing official retirement to a later age and even if you are so "heng" (Chinese dialect for "lucky") to hit that magic number, you need to keep working to qualify for more of the "national goodies" that they strategically time in handing-out - Then how? Work till you drop dead, ugh? And if you must get sick before dropping dead, don't stay too sick for too long ... you know lah, your en bloc windfall Fixed Deposit won't last forever and now that you are left with a flat in Woodlands or Yishun (as helpfully suggested by Minister Mah), it ain't gonna worth much!
(d) Oooops ... after galloping a few rounds, Minister Mah FAILED to notice why the cart is now suddenly before the "Ma" (Mandarin for "horse") - If they didn't force you into an en bloc in the first place, you wouldn't be in this unenviable position of not being able to afford "an executive flat, or in central area, or in Tampines" as mentioned by Minister Mah after putting the much-vaunted en bloc windfall in the cart - Neigh, neigh ... that's why horses say "Nay" although one may say "Aye"!
(e) Hey ... wait, our dear Minister did explain (quite rightly too) that "the fundamental reason behind an en bloc redevelopment is really to make sure that older parts of Singapore have a chance to be rejuvenated and redevelop themselves" and "if we don't have this, we are going to have a static situation where things are going to run down and there is no opportunity for people to naturally redevelop". [APPLAUSE please for Minister Mah who should take a Bow ...]. People, that's why we do en blocs - NOT for your own windfall at the expense of others but for the country ... Yeh! See, I told you so - SEE MY OTHER COMMENTS UNDER "MAJORITY versus MINORITY versus INDIVIDUAL" IN THIS BLOG-SITE. EXCEPT that our dear Minister also solemnly pronounced that "these people" in the central area "can take care of themselves". Excuse me, sir ... "these people" are also "your people" and they were also forced to sacrifice their homes FOR THE COUNTRY for, say, a grand sum of $2mn (increased to $2.5mn in July 2007) only to pay a more princely ransom of $3.75mn (increased to $4.5mn in July 2007) in replacement! Unless you are of ministerial calibre, I dare say that not many of "these people" earn $1.75mn (differential widened to $2mn in July 2007) in a year (or even five years) - in reality, "these people" are not that bright (and understandably, therefore, not that well-paid) to fork out a huge premium for "freehold air space" in the first place!
(f) Errr ... except that what does our dear Minister mean by "older parts of Singapore"? How "old" is old when the present law allows en bloc from Day 1 of Temporary Occupation Permit based on 90% consent which drops to 80% when the estate is 10 years old??? I may be wrong but I reckon there's a Bell Curve to the age profile of our en bloc blocks - after discounting the extreme ends of the Bell Curve, I guestimate that the likely age of apartments in this 2006-07 en bloc frenzy is in the range of 15-25 years. In this age of throw-away consumerism (never mind about the irksome issue of environmental sustainability), perhaps "15-25 years old" is terribly old for a building, eh?
SAGA TO BE CONTINUED ... The FINALE is "akan datang" (coming soon) when the legislative amendment is finally gazetted as law (process is likely to start in Sep, go through three parliamentary readings, home run by Dec perhaps)? Will it be a limp squid? Will good triumph over evil? Will the hero get the girl? Will those wailing now go home with less tears? Will those guffawing now go home more sobered?
After the curtain falls, will we move together as a more inclusive people? Or do we each go off in splinter directions, our disillusion reinforced that we are truly staying at "Hotel Singapore Inc", forever in transit as "A Nation of Immigrants, Migrants and Emigrants" except that we are now into the Third Wing?
[Immigrants as we continue to harbour the mindset of our Ancient Immigrant Forefathers.]
[Migrants as we now live amongst New Migrant Neighbours who do NOT share our Modern Singapore History, distinctly choosing to retain their native citizenship even after milking the perks of Singapore PR status for decades (our Ministry of Home Affairs hasn't caught on to the idea that Permanent Residence could potentially embed an expiry - no doubt, giving up one's native citizenship is a momentous decision but surely one needs to "commit" at some point after sponging on PR benefits and tasting for 7 years what life in Singapore is really like - I'm suggesting 7 years because of the "7-year Itch Syndrome" - shouldn't we separate wheat from chaff with an oxymoron "Temporary Permanent Resident" or would the Truth cut too deep for this Gahmen to publicly acknowledge that pathetically few PRs take up citizenship?).]
[Emigrants as we are losing Old Emigrant Friends who are increasingly moving to other shores not necessarily greener but definitely more edgy or gracious than ours.]
Without diminishing the other hard-nosed and technical issues raised in this blog ... May I also ask if there are still some things left in this world that money can't buy? Have we hit the stage where we know the Price of Everything but the Value of None? Sigh ...
26 April 2007
Sustainable DE-Construction and Sustainable Living
GENTLE REMINDER: The Ministry of Law's Public Consultation on the forthcoming legislative review of this law is ENDING SOON (Closing Date: 12 May 2007).
Pls, pls, pls do your part and e-mail your views to:
MLAW_enbloc@mlaw.gov.sg
___________________________________________________
With the Gahmen's latest buzzword being "Sustainable Construction" following Indonesia's sand ban and granite chip control, I have coined the flip-side of:
"Sustainable DE-Construction" and
"Sustainable Living".
PLS SEE THE UPDATE IN MY OTHER COMMENTS UNDER "30-YEAR EN BLOC TIME-BAR" IN THIS BLOG-SITE.
Pls, pls, pls do your part and e-mail your views to:
MLAW_enbloc@mlaw.gov.sg
___________________________________________________
With the Gahmen's latest buzzword being "Sustainable Construction" following Indonesia's sand ban and granite chip control, I have coined the flip-side of:
"Sustainable DE-Construction" and
"Sustainable Living".
PLS SEE THE UPDATE IN MY OTHER COMMENTS UNDER "30-YEAR EN BLOC TIME-BAR" IN THIS BLOG-SITE.
17 April 2007
What a lawyer specialising in en blocs said ...
The "Today" newspaper, Weekend Edition of 14 April 2007, splashed a front-page article on en bloc sales. In this "Today" news article, a pre-eminent lawyer, Dr SK Phang, who specialises in en bloc / collective sales (in fact, Dr Phang is the pioneer in this arena), was quoted as saying that "a bona fide home owner should be offered an exchange ...".
Yeh!!! I'm so, so heartened ... perhaps, civil society in Singapore is not quite dead after all. you think?
This blog-site sets out my entire wish-list. I know Santa won't come to town until December (even then, this is far from the Land of Oz)! So if I could gleefully rub Aladdin's lamp ... perhaps the 108 Heroes from The Water Margin would wrangle from the Ministry of Law just Three Die-Die-Must-Get Wishes:
1. An additional option (the other option is still cash) for one-for-one "exchange" unit of same-level and same-size for Owner-Occupiers with ONLY one residential property in Singapore at the point of completion of the collective sale - For details, pls click on the relevant page in this blog-site.
2. Mathematical factual basis for distribution of collective sales proceeds using (i) ratios as a 1st cut and (ii) precise strata-title-area and precise share-values as a 2nd cut - For details, pls click on the relevant page in this blog-site.
3. Scaled time-bar to next collective sale attempt pegged to estate age - For details, pls click on the relevant page in this blog-site.
Are you, the readers of this blog-site, one of the 108 Heroes? Nothing ventured, nothing gained, eh?
Yeh!!! I'm so, so heartened ... perhaps, civil society in Singapore is not quite dead after all. you think?
This blog-site sets out my entire wish-list. I know Santa won't come to town until December (even then, this is far from the Land of Oz)! So if I could gleefully rub Aladdin's lamp ... perhaps the 108 Heroes from The Water Margin would wrangle from the Ministry of Law just Three Die-Die-Must-Get Wishes:
1. An additional option (the other option is still cash) for one-for-one "exchange" unit of same-level and same-size for Owner-Occupiers with ONLY one residential property in Singapore at the point of completion of the collective sale - For details, pls click on the relevant page in this blog-site.
2. Mathematical factual basis for distribution of collective sales proceeds using (i) ratios as a 1st cut and (ii) precise strata-title-area and precise share-values as a 2nd cut - For details, pls click on the relevant page in this blog-site.
3. Scaled time-bar to next collective sale attempt pegged to estate age - For details, pls click on the relevant page in this blog-site.
Are you, the readers of this blog-site, one of the 108 Heroes? Nothing ventured, nothing gained, eh?
02 April 2007
Ministry of Law Public Consultation
Thank you, Dr Minority from www.enblocsingapore.blogspot.com for your comment to my "Message for blog-site visitors". It's an excellent suggestion.
Further to the Minister for Law's parliamentary speech on 2 Mar 2007, the Public Consultation for REVIEW of the present laws on Collective or En Bloc Sales has just started today, 2 Apr 2007 and will end on 12 May 2007.
You could snail-mail or e-mail your suggestions and comments to:
Snail mail:
The Ministry of Law, 100 High Street, The Treasury, #08-02, Singapore 179434, Attn: Mr Gary Goh
E-mail:
MLAW_enbloc@mlaw.gov.sg
Do consider the wide-ranging implications of this law. For most of us, real estate purchase is a chunky investment of our LIFE SAVINGS as it is a HOME for ourselves and our loved ones.
What do your instincts tell you when buildings of 10-20 years age are torn down if en bloc is successful OR estates are left to deteriorate or minimally maintained if en bloc has failed? Is it ok that when you buy, you pay for every sq cm and every share value but when you sell, it is NOT on that same FACTUAL basis? The owners of Paterson Lodge were really smart - they cut a deal with the developer such that they each would get a replacement unit at the same location after redevelopment. This way, they don't need to be a Downgrader or Downsizer or worse still, become Squatter or Refugee!
There are 2 types of Consenters:
1. Investor-Owners: They have more than one property (either because they are so well-off and are able to own multi-properties OR they bought the property speculatively for its en bloc potential OR they had over-committed themselves and are struggling with bank loans because of higher interest rate these days). For this 1st group, the dollar proceeds from the collective sale have a HIGHER time-value because they can take the money and wait out the property cycle to re-invest (if at all) only after the property market slows down/crashes. Moreover, they are NOT losing their homes as they have another roof over their heads.
2. Owner-Occupiers with only 1 property: They are indeed losing the roof over their heads but they are seemingly resigned to their fate of being a Downgrader or Downsizer after the en bloc. OR they are long-time expats/emigrant Singaporeans only waiting to cash-out from the Singapore property market to buy a much cheaper property in their original/new home country, respectively. Generally, in contrast - For this 2nd group, the dollar proceeds from the collective sale have a LOWER time-value because they need to buy a replacement unit in Singapore at the height of a property boom unless they are prepared to be a Squatter or Refugee for the next few years. Not wanting to miss out the current property boom, they consent to the en bloc by cashing-out, thus unlocking the equity in their real estate. They may also be worried about having enough cash to see them through retirement, especially with the escalating Cost of Living as Singapore evolves into a Global City. If you are of this profile, I'd urge A SERIOUS RETHINK - Why???
(a) You had the vision to invest your capital into your present property years ago. Shouldn't you preserve your capital by getting a replacement unit? Real estate is about 3 things only: LOCATION, Location, location. In the process of unlocking the equity in your real estate by taking the cash, do you realise that you are in fact unlocking the land use potential for the happy-happy Developer-buyer?
(b) You take the cash now - fine. But are you an astute investor with a healthy risk appetite and a dose of good luck? If not, by leaving the cash hoard as a Fixed Deposit in a bank or in some conservative investment instrument, do you think that you will get a better rate of return from your Fixed Deposit compared to (i) selling your replacement unit in the open market (if you still prefer cash after redevelopment, say, some 3 years later) OR (ii) moving back to the same vicinity and enjoying the replacement unit until you have an eventual need for the funds, say, some 5-25 years later?
(c) You downgrade, say, from Tanglin area to Seletar area OR from freehold to 30-year lease/HDB. Or you downsize from, say, 180 sq m to 100 sq m. With the passing years, let's say you fall very sick or grow old with chronic illness or your retirement savings have dwindled to a low level. At that future point in time, you may need to liquidate your home to meet medical/long-term care expenses. REGARDLESS of the state of the property market at that future point in time, which asset will have better value appreciation - an apartment in Tanglin or Seletar, a bigger unit or a unit half the size? If the remaining lease is less than 30 years at the time of liquidation, the property is not even marketable.
If you are an Owner-Occupier and you are NOT in dire straits for cashflow now, it makes sound financial sense to gun for a replacement unit based on size (NOT based on value). In a way, you are "cashing-out" too - NOT in DOLLARS but in KIND. Even in an ENFORCED collective sale, I see this as the next best win-win for all: The owner-occupiers with only 1 property get an option to move back to familiar territory if they wish and preserve their capital for eventual liquidation into cash or bequest to a loved one at a time of their choice. The Investor-Owners grab the $$$. The Developer-buyers have a shot at making profit (still profitable - only less so) from redevelopments at prime/popular locations which are much more saleable. The Gahmen achieves the social objectives of intensive land use, urban renewal and a greater semblance at preserving community ties.
This suggestion is valid financially for ALL age groups: To the post-65s (ie, those in their late 30s up to the 40s) because you need to build-up your retirement savings for maximum multiplier effect, to those in their 50s-60s as you may live past 80 and capital preservation and asset value appreciation are therefore key to your financial security, to those in their 70s and beyond if you are NOT needing the cash now and want to bequeath something valuable to your loved ones. There are various intricacies involved in such "exchange" - SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
It is one thing to lament (eg, seeking empathy because you are losing your home). It is yet another thing to do something constructive about your lament (eg, giving MinLaw a suggestion to mandate developers to do an "exchange based on size" for the apartment that you are forced to sell in the en bloc exercise or some other better idea that you could spin off from here). So Stand Up (constructively) for Your Home (even if it is a reconstructed one in the end)!
Further to the Minister for Law's parliamentary speech on 2 Mar 2007, the Public Consultation for REVIEW of the present laws on Collective or En Bloc Sales has just started today, 2 Apr 2007 and will end on 12 May 2007.
You could snail-mail or e-mail your suggestions and comments to:
Snail mail:
The Ministry of Law, 100 High Street, The Treasury, #08-02, Singapore 179434, Attn: Mr Gary Goh
E-mail:
MLAW_enbloc@mlaw.gov.sg
Do consider the wide-ranging implications of this law. For most of us, real estate purchase is a chunky investment of our LIFE SAVINGS as it is a HOME for ourselves and our loved ones.
What do your instincts tell you when buildings of 10-20 years age are torn down if en bloc is successful OR estates are left to deteriorate or minimally maintained if en bloc has failed? Is it ok that when you buy, you pay for every sq cm and every share value but when you sell, it is NOT on that same FACTUAL basis? The owners of Paterson Lodge were really smart - they cut a deal with the developer such that they each would get a replacement unit at the same location after redevelopment. This way, they don't need to be a Downgrader or Downsizer or worse still, become Squatter or Refugee!
There are 2 types of Consenters:
1. Investor-Owners: They have more than one property (either because they are so well-off and are able to own multi-properties OR they bought the property speculatively for its en bloc potential OR they had over-committed themselves and are struggling with bank loans because of higher interest rate these days). For this 1st group, the dollar proceeds from the collective sale have a HIGHER time-value because they can take the money and wait out the property cycle to re-invest (if at all) only after the property market slows down/crashes. Moreover, they are NOT losing their homes as they have another roof over their heads.
2. Owner-Occupiers with only 1 property: They are indeed losing the roof over their heads but they are seemingly resigned to their fate of being a Downgrader or Downsizer after the en bloc. OR they are long-time expats/emigrant Singaporeans only waiting to cash-out from the Singapore property market to buy a much cheaper property in their original/new home country, respectively. Generally, in contrast - For this 2nd group, the dollar proceeds from the collective sale have a LOWER time-value because they need to buy a replacement unit in Singapore at the height of a property boom unless they are prepared to be a Squatter or Refugee for the next few years. Not wanting to miss out the current property boom, they consent to the en bloc by cashing-out, thus unlocking the equity in their real estate. They may also be worried about having enough cash to see them through retirement, especially with the escalating Cost of Living as Singapore evolves into a Global City. If you are of this profile, I'd urge A SERIOUS RETHINK - Why???
(a) You had the vision to invest your capital into your present property years ago. Shouldn't you preserve your capital by getting a replacement unit? Real estate is about 3 things only: LOCATION, Location, location. In the process of unlocking the equity in your real estate by taking the cash, do you realise that you are in fact unlocking the land use potential for the happy-happy Developer-buyer?
(b) You take the cash now - fine. But are you an astute investor with a healthy risk appetite and a dose of good luck? If not, by leaving the cash hoard as a Fixed Deposit in a bank or in some conservative investment instrument, do you think that you will get a better rate of return from your Fixed Deposit compared to (i) selling your replacement unit in the open market (if you still prefer cash after redevelopment, say, some 3 years later) OR (ii) moving back to the same vicinity and enjoying the replacement unit until you have an eventual need for the funds, say, some 5-25 years later?
(c) You downgrade, say, from Tanglin area to Seletar area OR from freehold to 30-year lease/HDB. Or you downsize from, say, 180 sq m to 100 sq m. With the passing years, let's say you fall very sick or grow old with chronic illness or your retirement savings have dwindled to a low level. At that future point in time, you may need to liquidate your home to meet medical/long-term care expenses. REGARDLESS of the state of the property market at that future point in time, which asset will have better value appreciation - an apartment in Tanglin or Seletar, a bigger unit or a unit half the size? If the remaining lease is less than 30 years at the time of liquidation, the property is not even marketable.
If you are an Owner-Occupier and you are NOT in dire straits for cashflow now, it makes sound financial sense to gun for a replacement unit based on size (NOT based on value). In a way, you are "cashing-out" too - NOT in DOLLARS but in KIND. Even in an ENFORCED collective sale, I see this as the next best win-win for all: The owner-occupiers with only 1 property get an option to move back to familiar territory if they wish and preserve their capital for eventual liquidation into cash or bequest to a loved one at a time of their choice. The Investor-Owners grab the $$$. The Developer-buyers have a shot at making profit (still profitable - only less so) from redevelopments at prime/popular locations which are much more saleable. The Gahmen achieves the social objectives of intensive land use, urban renewal and a greater semblance at preserving community ties.
This suggestion is valid financially for ALL age groups: To the post-65s (ie, those in their late 30s up to the 40s) because you need to build-up your retirement savings for maximum multiplier effect, to those in their 50s-60s as you may live past 80 and capital preservation and asset value appreciation are therefore key to your financial security, to those in their 70s and beyond if you are NOT needing the cash now and want to bequeath something valuable to your loved ones. There are various intricacies involved in such "exchange" - SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
It is one thing to lament (eg, seeking empathy because you are losing your home). It is yet another thing to do something constructive about your lament (eg, giving MinLaw a suggestion to mandate developers to do an "exchange based on size" for the apartment that you are forced to sell in the en bloc exercise or some other better idea that you could spin off from here). So Stand Up (constructively) for Your Home (even if it is a reconstructed one in the end)!
28 March 2007
Message for blog-site visitors
Thank you for visiting this blog-site.
En bloc / Collective Sales hits close to home (pun fully intended) for all private property owners.
I have created this blog-site to share my thoughts and whatever little I know about this topic ... some of the inherent gaps and pitfalls that Dissenters to an en bloc / collective sale may want to be mindful of, especially if you are in the midst of one or under imminent threat.
I welcome you to share your views.
If you AGREE with my suggestions or you have BETTER IDEAS, post your comments and share with us your sentiments (your affirmation would also encourage me in this quest and create greater awareness of our common woes).
If you DISAGREE, feel free to post your comments too. We all have different needs and therefore we come from different angles. I trust that we can AGREE TO DISAGREE AMICABLY. No need to be rude or crass and if you must be sarcastic, then at least be witty about it!
We each have varying needs as Tenants, Investor-Owners, Owner-Occupants or merely as Concerned Citizens with a social consciousness. Surely, we can create "space" (pun again fully intended) for each other in a civil society, eh?
En bloc / Collective Sales hits close to home (pun fully intended) for all private property owners.
I have created this blog-site to share my thoughts and whatever little I know about this topic ... some of the inherent gaps and pitfalls that Dissenters to an en bloc / collective sale may want to be mindful of, especially if you are in the midst of one or under imminent threat.
I welcome you to share your views.
If you AGREE with my suggestions or you have BETTER IDEAS, post your comments and share with us your sentiments (your affirmation would also encourage me in this quest and create greater awareness of our common woes).
If you DISAGREE, feel free to post your comments too. We all have different needs and therefore we come from different angles. I trust that we can AGREE TO DISAGREE AMICABLY. No need to be rude or crass and if you must be sarcastic, then at least be witty about it!
We each have varying needs as Tenants, Investor-Owners, Owner-Occupants or merely as Concerned Citizens with a social consciousness. Surely, we can create "space" (pun again fully intended) for each other in a civil society, eh?
27 March 2007
Sales proceeds formula; Distribution
Update on 6 Jan 2007:
As eloquently argued in a Straits Times Forum Letter published on 5 Jan 2008, there is another school of thought that postulates distribution of collective sales proceeds should be based only on area because "condo units are sold by area and not by share value" and "especially when the INTRINSIC VALUE of each square foot is computed as an aggregate of area, premium for high floor level, unit design, open view and so on". The writer went on to say that share value "is a guide for conservancy charges calculation".
Based on the statutes, I believe the Forum letter writer's statement about share value being a guide for conservancy changes calculation is erroneous! The Land Titles (Strata) Act, Section 13(1) states that "... the common property shall be held by the subsidiary proprietors as tenants-in-common proportional to their respective share value and for the same term and tenure as their respective lots are held by them" and "The Registrar on issuing a subsidiary strata certificate of title for a lot shall certify therein the subsidiary proprietor's share in the common property, but no subsidiary strata certificate of title shall be issued for the common property". Similarly, the Building Maintenance and Strata Management Act of 2004, Section 62(1) states that "the share value of a lot as shown in a schedule of strata units shall determine — ... (b) the quantum of the undivided share of the subsidiary proprietor of that lot in the common property comprised in that strata title plan". These statutory provisions underpin my explanation on "share values" in the subject-topic page of this blog.
As for the "INTRINSIC VALUE" mentioned by the Forum letter writer, I believe this "intrinsic value" comprises two elements:
(A) Core Value - based on the strata-title-area of the unit owned by the subsidiary proprietors which is factual and is categorically stated on the title document (ie, the Subsidiary Certificate of Title); and
(B) Consumption Value - based on the state of affairs affecting each unit at the point of purchase and "consumed" (ie, enjoyed) by the occupants during the tenure of their residency at that unit.
The Core Value of strata-title-area MUST necessarily be a key component for apportionment not only because it is factual and objective but because it underpins the very basis of the collective sale in terms of the land footprint.
The Consumption Value is a facetious basis and is worthless because a collective sale results in wholesale demolition/ redevelopment of the estate (unless it is a conservation project involving en bloc A&A (Alteration and Amendment) works). Hence, any open vistas or preferred sun-facings, etc, are no longer relevant in a collective sale. Also, at the point of purchase at, say, the soft launch, the top floor unit at Level 10 may have a great lakeview but at the point of collective sale, that same unit may now be overlooking a neighbouring estate's garbage centre or is now overshadowed by a new condo at an adjoining site of 35 storeys! What is a good design generally at one point in time may be not so great design at the point of collective sale as real estate/demographic trends change over time. The Consumption Value of each unit remains pertinent only in an individual sale-and-purchase (eg, in a resale transaction), but certainly NOT in a collective sale!
IN ADDITION TO THIS BLOG PAGE, SEE MY OTHER COMMENTS on Apportionment Method, Para B-4.3 (scroll to picture of South Korean flag) and Para C-4.2 (scroll to picture of thorny hedgehog) UNDER "AFTER THE 2007 LAW, WHAT'S NEXT" IN THIS BLOG SITE.
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Update on 13 Jun 2007 and post-Oct 2007:
These days, even the price of condensed milk cannot hold for 12 months. Yet our present en bloc law keeps the Collective Sale Agreement alive on life support for up to 12 months by which time the Reserve Price and condensed milk price would both be totally irrelevant. This is yet another aberration under the law - what can I say???
Add to that 12-month period, the likely ADDITIONAL 6-12 months for completion of the collective sale going through Strata Title Board's approval process if owner consensus did not hit 100%. This means owners could potentially wait for up to 2 years or more before they get the bulk of the collective sales proceeds to commit for a replacement unit. In any case, you should NOT sign the Collective Sale Agreement if you are against such sale - SEE MY OTHER COMMENTS on The Position of the Dissenter UNDER "SHARE VALUES; SALES COMMITTEE" IN THIS BLOG SITE.
As en bloc frenzies typically occur during property market upturns, by the time you (particularly as an Owner-Occupier with only one property to your name) lay your hands on the bulk of the actual collective sales proceeds some 12-42 months (!!!) from the time you were committed to the Reserve Price for such sale (firstly, the collective sale process under the law could take up to 24 months and, secondly, the cash settlement process could take another 6-24 months from the time that the Sales Committee binds you to a sale and purchase transaction with a Developer-Buyer, depending on how smooth or litigious the enforced collective sale process goes so long as you do not have 100%), you don't need a fortune teller to tell you that your sorry future is the stark reality of being a Squatter, Refugee, Downgrader or Downsizer for possibly the rest of your life! ... unless MinLaw changes the present law ...
For Owner-Occupiers with only one property to their name and who therefore need to buy a replacement unit - More surprises are in store as you will soon realize the maze and the web of financing intricacies and hurdles that you have to navigate around/under/over/through. Some hurdles are simply insurmountable because of bridging issues, time lags, banking constraints, CPF operational procedures, etc.
As eloquently argued in a Straits Times Forum Letter published on 5 Jan 2008, there is another school of thought that postulates distribution of collective sales proceeds should be based only on area because "condo units are sold by area and not by share value" and "especially when the INTRINSIC VALUE of each square foot is computed as an aggregate of area, premium for high floor level, unit design, open view and so on". The writer went on to say that share value "is a guide for conservancy charges calculation".
Based on the statutes, I believe the Forum letter writer's statement about share value being a guide for conservancy changes calculation is erroneous! The Land Titles (Strata) Act, Section 13(1) states that "... the common property shall be held by the subsidiary proprietors as tenants-in-common proportional to their respective share value and for the same term and tenure as their respective lots are held by them" and "The Registrar on issuing a subsidiary strata certificate of title for a lot shall certify therein the subsidiary proprietor's share in the common property, but no subsidiary strata certificate of title shall be issued for the common property". Similarly, the Building Maintenance and Strata Management Act of 2004, Section 62(1) states that "the share value of a lot as shown in a schedule of strata units shall determine — ... (b) the quantum of the undivided share of the subsidiary proprietor of that lot in the common property comprised in that strata title plan". These statutory provisions underpin my explanation on "share values" in the subject-topic page of this blog.
As for the "INTRINSIC VALUE" mentioned by the Forum letter writer, I believe this "intrinsic value" comprises two elements:
(A) Core Value - based on the strata-title-area of the unit owned by the subsidiary proprietors which is factual and is categorically stated on the title document (ie, the Subsidiary Certificate of Title); and
(B) Consumption Value - based on the state of affairs affecting each unit at the point of purchase and "consumed" (ie, enjoyed) by the occupants during the tenure of their residency at that unit.
The Core Value of strata-title-area MUST necessarily be a key component for apportionment not only because it is factual and objective but because it underpins the very basis of the collective sale in terms of the land footprint.
The Consumption Value is a facetious basis and is worthless because a collective sale results in wholesale demolition/ redevelopment of the estate (unless it is a conservation project involving en bloc A&A (Alteration and Amendment) works). Hence, any open vistas or preferred sun-facings, etc, are no longer relevant in a collective sale. Also, at the point of purchase at, say, the soft launch, the top floor unit at Level 10 may have a great lakeview but at the point of collective sale, that same unit may now be overlooking a neighbouring estate's garbage centre or is now overshadowed by a new condo at an adjoining site of 35 storeys! What is a good design generally at one point in time may be not so great design at the point of collective sale as real estate/demographic trends change over time. The Consumption Value of each unit remains pertinent only in an individual sale-and-purchase (eg, in a resale transaction), but certainly NOT in a collective sale!
IN ADDITION TO THIS BLOG PAGE, SEE MY OTHER COMMENTS on Apportionment Method, Para B-4.3 (scroll to picture of South Korean flag) and Para C-4.2 (scroll to picture of thorny hedgehog) UNDER "AFTER THE 2007 LAW, WHAT'S NEXT" IN THIS BLOG SITE.
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Update on 13 Jun 2007 and post-Oct 2007:
These days, even the price of condensed milk cannot hold for 12 months. Yet our present en bloc law keeps the Collective Sale Agreement alive on life support for up to 12 months by which time the Reserve Price and condensed milk price would both be totally irrelevant. This is yet another aberration under the law - what can I say???
Add to that 12-month period, the likely ADDITIONAL 6-12 months for completion of the collective sale going through Strata Title Board's approval process if owner consensus did not hit 100%. This means owners could potentially wait for up to 2 years or more before they get the bulk of the collective sales proceeds to commit for a replacement unit. In any case, you should NOT sign the Collective Sale Agreement if you are against such sale - SEE MY OTHER COMMENTS on The Position of the Dissenter UNDER "SHARE VALUES; SALES COMMITTEE" IN THIS BLOG SITE.
As en bloc frenzies typically occur during property market upturns, by the time you (particularly as an Owner-Occupier with only one property to your name) lay your hands on the bulk of the actual collective sales proceeds some 12-42 months (!!!) from the time you were committed to the Reserve Price for such sale (firstly, the collective sale process under the law could take up to 24 months and, secondly, the cash settlement process could take another 6-24 months from the time that the Sales Committee binds you to a sale and purchase transaction with a Developer-Buyer, depending on how smooth or litigious the enforced collective sale process goes so long as you do not have 100%), you don't need a fortune teller to tell you that your sorry future is the stark reality of being a Squatter, Refugee, Downgrader or Downsizer for possibly the rest of your life! ... unless MinLaw changes the present law ...
For Owner-Occupiers with only one property to their name and who therefore need to buy a replacement unit - More surprises are in store as you will soon realize the maze and the web of financing intricacies and hurdles that you have to navigate around/under/over/through. Some hurdles are simply insurmountable because of bridging issues, time lags, banking constraints, CPF operational procedures, etc.
Sooooo ... unless you happen to have "petty cash" of a million bucks or so ready at hand for the 20% deposit for a new private residential property ... and are quite prepared to possibly end up with two properties if the en bloc should fail for some reason ... you would NOT be able to lock-in your market risk exposure by buying a replacement unit at the time the Sales Committee locked-in the en bloc deal on your behalf with the Developer-Buyer. By the time you lay your trembling hands on the bulk of the collective sales proceeds within the abovementioned 12-42 month window, who knows what the property market will be at that future time??? Que sera, sera, whatever will be, will be - are we some pathetic born losers or what??? Those Owner-Occupiers who happy-happy signed the Collective Sales Agreement WITHOUT sussing-out the ins-and-outs of the financial trail may be in for a rude shock ... by which time, the 5-day "cooling-off period" allowed under the amended law for you to back-out of a signed agreement would have long passed ... and you are stuck, stark naked in the face of a red-hot property market ripe for en bloc orgies!
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Update on 30 May 2007:
This page should be read in conjunction with MY OTHER COMMENTS UNDER "SHARE VALUES; SALES COMMITTEE".
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A rocket scientist it does NOT take to derive a mathematical basis of apportionment.
1. Objective versus subjective basis - At the time of purchase, you pay for every sq cm of space. Every month, you pay for every share value as approved by the Commissioner of Buildings (COB). Every cent you pay is based on facts and law – all very objective. Now, based on a collective sale forced down your throat if you are amongst the dissenters, you are obliged to accept the apportionment based solely on share value or some dreamed-up weightage decided by the self-appointed unregulated Sales Committee as at present or possibly by the Majority Owners in future. Suddenly your privately-owned property has been communalized and how much you’d get after the collective sale is now decided subjectively?
2. Mathematical formula for distribution of collective sales proceeds - As Singapore prides herself on transparency and certainty in our laws and policies, I’d like to propose that the Gahmen should mandate a mathematically-based apportionment method involving (A) ratios as a 1st cut and (B) precise strata-title area and share values as a 2nd cut.
Example:
(a) Ratio: A surveyor's report would establish the ratio of common property (say, 10,000 sq m) vis-a-vis aggregate strata-title area of all units in the estate (say, 30,000 sq m) to derive a ratio of, say, 1:3. The total collective sales proceeds (say, $100mn) should then be divided into 4 portions (1 + 3).
(b) Share value: One portion (ie, $25mn) should be divided by the total number of share-values to derive the value of each share-value and each owner should then get the precise dollar amount for each share-value that he holds.
(c) Strata title area: The remaining three portions (ie, $75mn) should likewise be divided by the aggregate strata-title area to derive the value of each strata-title sq m and each owner should then get the precise dollar amount for each sq m that he owns.
Similar ratio principles could be applied to mixed-development estates where market valuation, share values and unit sizes are all factored-in in the apportionment method based on the professional opinions of independent real estate appraisors and quantity surveyors.
3. Owner-occupiers who are time-disadvantaged after heeding Gahmen policies - In Singapore, we already have many forms of affirmative discriminatory policies (eg, household income must be below a certain amount to qualify for HDB public flats, quantum of CPF withdrawals is lower for subsequent property purchases, tax perks for women to have children at a younger age, more Edusave funds, New Shares or Progress Package payments for those who have sacrificed or served our country or who are disadvantaged, such as NSmen, senior citizens, poorer financial status, etc). They serve to temper or balance out inherent inequities in the larger communal interests and to cultivate certain societal mores.
En bloc sales typically escalate only when the property market is bullish and property prices are on the uptrend. Right after a collective sale, these owner-occupiers have to buy a replacement roof at that point in time (unlike investor-owners who can wait out the property boom cycle). Assuming that all units are identical in size and all owners receive an equal amount of collective sales proceeds, it looks fair-and-square on the surface BUT the same dollar amount received by an owner-occupier is of significantly reduced time-value compared to the same dollar amount in the hands of an investor-owner. Hence, owner-occupiers who have only one property are seriously time-disadvantaged even though they have faithfully heeded the policies of our Gahmen and Central Provident Fund (CPF) Board to NOT over-commit in real estate investments. The Gahmen must find some way to redress this inherent inequity in the apportionment or distribution of collective sales proceeds ... just as they have devised so many ingenious ways to re-distribute the puffed-up government coffers after the 7% GST hike to the disadvantaged!
Those of us who heeded Gahmen policies are now being punished ruthlessly in the property market if the en bloc succeeds. If I didn't listen to the Gahmen and went ahead with at least two property purchases, then I need not fret endlessly about this en bloc fever, worrying over something so basic as a decent roof over my head in this so-called First World Global City! Maybe the Gahmen is sending us another message, eh? Without a mandatory unit exchange, the owner-occupiers will end up as Squatter, Refugee, Downgrader, Downsizer. SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
4. Decency in humanity values: Beggar-Thy-Neighbour (BTN)? - In contrast: The investor-owners and other owners who have additional properties or other standby accommodation alternatives are cashing-out their property investment by forcing this group of owner-occupiers to surrender their only roof - all because they want to gain the so-called "premium" from a collective sale. Let's NOT forget that there is nothing to stop these investor-occupiers and other owners from selling their apartments individually if they need the cashflow or want to relocate due to changed family circumstances or other personal reasons. What more when you hear accounts of Management Corporation members who withhold expenditure for essential maintenance, deliberately allowing the estate to deteriorate as part of the pressure tactics, neighbours indulging in rumour-mongering, devising scare tactics a la "Ah Long" style, giving dirty looks or passing spiteful comments in distinctly loud overtones ... [Actually, in our inimitable Hokkien-Malay-English patois, BTN also stands for “Buay Tahan Neighbour” – whichever angle you are coming from … majority consenter or minority dissenter … we just hate each other’s guts in our own neighbourly fashion, don’t we)?
Essentially, it is a "Beggar Thy Neighbour" mentality translated into ugly action - and yet many of us are purportedly of some major religious faith, each striving to live by our declared values - be it Buddhism, Christianity, Islam or Hinduism. At another level of humanity, may I respectfully appeal to each of us that - en bloc fever or not AND regardless of whatever agnostic/ atheistic/ religious belief - this calls for a pause to do some introspective reflection ...
26 March 2007
One-for-one "exchange"
UPDATE on 6 Jan 2008:
Flurry of letters published in Today newspaper ... I am no clairvoyant when I posited in Mar 2007 (that's when I started this blog) that Owner-Occupiers with only 1 residential property would end up as Squatter, Refugee, Downgrader or Downsizer after an en bloc sale!
In the Today newspaper (27 Dec 2007 edition), there was an "I say" commentary by Lucy Huang recounting her pathetic plight as an En Bloc REFUGEE as she and her husband have already been hit by two en bloc sales. In looking for a replacement unit in the not-brand-new private residential estates, Lucy Huang was told that these replacement possibilities are likely en bloc potentials! Hence, she may be hit for the 3rd time! Lucy Huang also mentioned the option of renting but that would put her at the mercy of lessors who may keep upping rentals or take rental unit out from the market (effectively, she will be reduced to a SQUATTER during tenancy).
In response to Lucy Huang's piteous plight, there were two Voices Letters published in Today newspaper (28 Dec 2007 edition) on how to break the vicious refugee/squatter cycle.
===> One letter suggested that Lucy Huang should buy a brand-new (a) private apartment that has just obtained Temporary Occupation Permit or (b) HDB public flat under the Design-Build-Sell-Scheme. On the one hand, human territorial instincts tend to gravitate back to same neighbourhood vicinity (even evidenced in next-generational's preferences in selecting their matrimonial abode) but on the other hand, collective sales proceeds are far, far short of the replacement cost of a brand-new unit around the neighbourhood unless one opts to DOWNSIZE significantly (eg, by 50% usually)! To buy a HDB public housing flat (DBSS or otherwise) or a private apartment way out in the suburbs after a so-called "en bloc windfall" from selling (or being forced to sell) a Private Condo or HUDC/Executive Condo is a DOWNGRADE, however you dress it up!
===> Another letter said that Singapore should follow the lead of South Korea's en bloc laws that mandate a 1-4-1 EXCHANGE to break this vicious cycle of being a Squatter, Refugee, Downgrader or Downsizer. You will notice from this blog that I have been expounding this idea of 1-4-1 exchange option since I started this blog in Mar 2007 and I learned of South Korea's en bloc laws in this respect only in Aug 2007.
In Lucy Huang's rejoinder (Today newspaper, 2 Jan 2008 edition), she lamented about where to stay in the meantime. This is a VERY REAL problem indeed! And solutions???
In response (Today newspaper, 4 Jan 2008 edition), it was suggested that Lucy Huang's concerns about "where to stay in the meantime" could be overcome if the Gahmen and Developer-Buyers play their part in a tripartite effort. Surely, solutions are NOT beyond the imagination of the Gahmen as evidenced by the Gahmen's immediate and innovative responses to the recent office space squeeze. So why did the well suddenly run dry on this en bloc issue??? We know of "selective amnesia" ... perhaps, there is also "selective abdication"! Wicked, eh?
Anyway, here are some ideas for consideration:
- HDB flat rental priority could be ranked high for en bloc exchangers, or the ethnic quota for HDB flats could be waived for temporary accommodation of such exchangers with resale back to HDB upon TOP of en bloc redevelopment. All HDB rules and regulations for qualifying criteria should be suspended for Owner-Occupiers with only one residential property in Singapore who are caught in an en bloc sale.
- REDAS (Real Estate Developers' Association of Singapore) members could pool resources from their massive en bloc purchases under the Remaking of Singapore within this decade or two. Not all of these purchases are meant for immediate redevelopment. Those designated as part of the Developer-Buyers’ longer-term land banks could serve as temporary accommodation for en bloc exchangers whose sites were slotted for immediate demolition/construction. Units owned by Investor-Owners of these longer-term land banks would be made available upon expiry of the vacant possession period under the Collective Sale Agreement for such temporary accommodation of en bloc exchangers. As a quid pro quo, the Gahmen could waive property tax on such temporary sites.
- Developer-Buyer’s compensation for temporary displacement could be used by en bloc exchangers to source for alternative accommodation within a 3 km radius. The displacement compensation should be based on industry rental benchmark for private residential property of the immediately preceding calendar quarter within such radial distance.
- Given Singapore's teeny size, this en bloc phenomenon is a permanent hallmark. The Gahmen could consider designating a few newly built HDB blocks in the 4 corners of Singapore for rotational rental to qualifying Owner-Occupiers during an en bloc frenzy who would qualify for top priority or service apartments for short-stay travellers (eg, tourist families, small-scale foreign entrepreneurs doing market studies or starting up new businesses, professionals on short project contracts) during an en bloc doldrums.
If you have any brilliant flashes of inspiration to add other possible solutions, I welcome you to share them and contribute comments to this blog ... c'mmon ... tease those grey cells, stand on your head or do whatever works for you ...
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1. Precedent set by HDB - Our Housing & Development Board (HDB) has set a laudable precedent called SERS (Selective En Bloc Scheme) that alleviates to some degree the displacement suffered by existing owners in such an en bloc redevelopment.
2. Tapping on original owners' land use potential - For private properties under collective sale, it should be recognized that the buyer/developer is tapping on the land use potential belonging to the original unit owners. The original unit owners had the foresight to invest in their respective properties at the point of purchase which the developer is capitalizing upon at the point of collective sale. SEE MY OTHER COMMENTS UNDER "MAJORITY VS MINORITY VS INDIVIDUAL" IN THIS BLOG-SITE.
3. One-4-one "exchange" - Hence, developer-buyers should be mandated by law to offer a same-size, same-level replacement unit at the redeveloped estate or within a 1-km radius of same or higher quality to Owner-Occupiers with ONLY 1 RESIDENTIAL property at the point of completion of the collective / en bloc sale as one of the “settlement consideration” options in addition to outright cash.
This argument is particularly cogent for properties because "Property" means 3 things: location, Location, LOCATION!!! Also, the stakes are very high for owner-occupiers with ONLY 1 property because they are losing the roof over their heads UNLIKE (a) owner-occupiers with MORE THAN 1 property and (b) investor-owners who force through the en bloc in a cavalier manner because they already have another roof elsewhere.
The status of "Owner-occupier with ONLY 1 residential property at the point of completion of the collective sale" can be factually established by running checks through the records of the Singapore Land Registry (SLA) and the Housing & Development Board (HDB). Hence, if Mr and Mrs A own Apartment 1 which is under en bloc and Mrs A owns Apartment 2 in another estate under a single name or jointly with her daughter Ms A, then Mr and Mrs A do NOT qualify as Owner-Occupier with ONLY 1 residential property at that point in time.
4. Completion and financial risks in an "exchange" - If Singapore can have a Housing Developers (Control and Licensing) Act to cap the risks of buying properties under construction, we should have an equivalent statute to cap the completion risks faced by collective sale owners who are SACRIFICING their private property rights in the larger interests of urban renewal and land use efficiency.
5. Business flexibility required by developer-buyer - No doubt, the developer-buyer needs business flexibility to build units of a design layout and size which would be saleable in today's market. This can be preserved by stipulating upfront conditions for the redeveloped units to be within a certain range of sizes. As construction costs are clearly defined under the Housing Deveopers (Control and Licensing) Act, these figures can be established by the auditor. The development charge paid to the Gahmen is also very transparent.
(a) Where the replacement unit is BIGGER, then the en bloc owner who opted for "exchange" should pay for the differential area at the collective sale price plus construction cost.
(b) If the replacement unit is SMALLER, then such en bloc owner should be paid for the differential space at the first soft launch price less 20% discount.
(c) Upper and lower caps could be set as ADDITIONAL SAFEGUARDS to prevent abuses (say, a differential of plus/minus 30%) so that (i) an en bloc owner with an original small unit of 100 sq m cannot opt to buy a unit of 200 sq m at the redeveloped estate at such preferential price OR (ii) an en bloc owner with a original penthouse unit of 250 sq m can opt to have two units of 100 sq m each and be paid for the 50 sq m shortage based on the upfront formula.
This proposal in the SPIRIT of the law is configured on the basis that the impact of this law is disproportionately huge on owner-occupiers with ONLY 1 residential property and the land use potential belongs to the en bloc owner who also bears (a) the disruption of moving house, (b) the expense of alternative accommodation during the construction period and (c) the vagaries of the property market (although the risks are evened out over the long term for Owner-Occupiers).
Based on the LETTER of the law, there may be no basis to differentiate between the different types of strata-title owners except for the varying (i) unit numbers, (ii) unit size and (iii) share-values. But laws are formulated not for TECHNICALITIES but for EQUITY. Clearly, the impact of the law as it presently stands is vastly different for the different categories of owners.
6. Prohibition against developers building-up land banks - Where developers want to build up their land bank for market cyclical reasons, they should look to Government Land Sales (GLS) and not boot people from their homes. Hence, when the Strata Title Board issues the order for collective sale, it must regulate and set - as one of the conditions for such order - a narrow range of target dates for issuance of Temporary Occupation Permit which would necessarily entail prompt redevelopment. It is NOT the job of regulators to time the inevitable ups and downs of market cycles. It is NOT in the political interest of the Gahmen to facilitate developers' speculation at the expense of citizens' private property rights. It is NOT in the social interest of our nation to "commoditize" residential properties, thus negating the concept of a "home". Sadly, the present legislative gaps are doing exactly that, distorting supply and demand. Going back to basics, the job of the legislators is to ensure that the framework and the laws are robust and equitable in the course of arriving at the greater vision. SEE MY OTHER COMMENTS UNDER "ESTATE MAINTENANCE" IN THIS BLOG-SITE.
7. Change of land use - Where it is a land use change (eg, residential use to hotel or commercial or white site usage), this option would be naturally redundant as the collective sales proceeds would be at a vast premium to facilitate an equivalent/upgraded replacement unit for the collective sale unit owner.
8. Alternatives: Squatter, Refugee, Downgrader, Downsizer - (A) Without a mandatory unit replacement and (B) because the collective sales proceeds will NEVER buy an owner-occupier a new replacement unit within the same vicinity at the point of a successful collective sale, what is the dire predicament of an owner-occupier with only one property to his name??? He could DOWNGRADE or DOWNSIZE. Or he could SQUAT with relatives until the next property market downturn or he come evolve to become a REFUGEE as he buys a replacement unit in an estate of equivalent age which means that he may be subject to yet another en bloc within the next couple of years.
The owner-occupier with only 1 residential property is between the Devil and the Deep Blue Sea, jumping from the Frying Pan into the Fire - what "windfall"??? More like "deep discount"!!! SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" IN THIS BLOG-SITE about the time-value of the dollar amount received as collective sales proceeds.
9. Other benefits: Soft and hard factors - In addition to (a) preserving the original owners’ investment (ie, for owner-occupiers who do NOT need to cash-out immediately and who want a replacement roof in the same vicinity), (b) allowing the owner-occupiers with more than 1 property and investor-owners to grab the $$$, (c) giving the developer-buyers a shot at making very decent profits as redevelopments in prime/popular locations are more saleable even at fatter margins and (d) enabling the Gahmen to renew our urban landscape with more efficient land use, this will also contribute towards a heightened sense of community and bonding in our nascent nationhood as Singapore hits our 42nd National Day on 9 August 2007. After all, we are human beings and territorial/turf issues are very much enmeshed with our sense of time and place.
Flurry of letters published in Today newspaper ... I am no clairvoyant when I posited in Mar 2007 (that's when I started this blog) that Owner-Occupiers with only 1 residential property would end up as Squatter, Refugee, Downgrader or Downsizer after an en bloc sale!
In the Today newspaper (27 Dec 2007 edition), there was an "I say" commentary by Lucy Huang recounting her pathetic plight as an En Bloc REFUGEE as she and her husband have already been hit by two en bloc sales. In looking for a replacement unit in the not-brand-new private residential estates, Lucy Huang was told that these replacement possibilities are likely en bloc potentials! Hence, she may be hit for the 3rd time! Lucy Huang also mentioned the option of renting but that would put her at the mercy of lessors who may keep upping rentals or take rental unit out from the market (effectively, she will be reduced to a SQUATTER during tenancy).
In response to Lucy Huang's piteous plight, there were two Voices Letters published in Today newspaper (28 Dec 2007 edition) on how to break the vicious refugee/squatter cycle.
===> One letter suggested that Lucy Huang should buy a brand-new (a) private apartment that has just obtained Temporary Occupation Permit or (b) HDB public flat under the Design-Build-Sell-Scheme. On the one hand, human territorial instincts tend to gravitate back to same neighbourhood vicinity (even evidenced in next-generational's preferences in selecting their matrimonial abode) but on the other hand, collective sales proceeds are far, far short of the replacement cost of a brand-new unit around the neighbourhood unless one opts to DOWNSIZE significantly (eg, by 50% usually)! To buy a HDB public housing flat (DBSS or otherwise) or a private apartment way out in the suburbs after a so-called "en bloc windfall" from selling (or being forced to sell) a Private Condo or HUDC/Executive Condo is a DOWNGRADE, however you dress it up!
===> Another letter said that Singapore should follow the lead of South Korea's en bloc laws that mandate a 1-4-1 EXCHANGE to break this vicious cycle of being a Squatter, Refugee, Downgrader or Downsizer. You will notice from this blog that I have been expounding this idea of 1-4-1 exchange option since I started this blog in Mar 2007 and I learned of South Korea's en bloc laws in this respect only in Aug 2007.
In Lucy Huang's rejoinder (Today newspaper, 2 Jan 2008 edition), she lamented about where to stay in the meantime. This is a VERY REAL problem indeed! And solutions???
In response (Today newspaper, 4 Jan 2008 edition), it was suggested that Lucy Huang's concerns about "where to stay in the meantime" could be overcome if the Gahmen and Developer-Buyers play their part in a tripartite effort. Surely, solutions are NOT beyond the imagination of the Gahmen as evidenced by the Gahmen's immediate and innovative responses to the recent office space squeeze. So why did the well suddenly run dry on this en bloc issue??? We know of "selective amnesia" ... perhaps, there is also "selective abdication"! Wicked, eh?
Anyway, here are some ideas for consideration:
- HDB flat rental priority could be ranked high for en bloc exchangers, or the ethnic quota for HDB flats could be waived for temporary accommodation of such exchangers with resale back to HDB upon TOP of en bloc redevelopment. All HDB rules and regulations for qualifying criteria should be suspended for Owner-Occupiers with only one residential property in Singapore who are caught in an en bloc sale.
- REDAS (Real Estate Developers' Association of Singapore) members could pool resources from their massive en bloc purchases under the Remaking of Singapore within this decade or two. Not all of these purchases are meant for immediate redevelopment. Those designated as part of the Developer-Buyers’ longer-term land banks could serve as temporary accommodation for en bloc exchangers whose sites were slotted for immediate demolition/construction. Units owned by Investor-Owners of these longer-term land banks would be made available upon expiry of the vacant possession period under the Collective Sale Agreement for such temporary accommodation of en bloc exchangers. As a quid pro quo, the Gahmen could waive property tax on such temporary sites.
- Developer-Buyer’s compensation for temporary displacement could be used by en bloc exchangers to source for alternative accommodation within a 3 km radius. The displacement compensation should be based on industry rental benchmark for private residential property of the immediately preceding calendar quarter within such radial distance.
- Given Singapore's teeny size, this en bloc phenomenon is a permanent hallmark. The Gahmen could consider designating a few newly built HDB blocks in the 4 corners of Singapore for rotational rental to qualifying Owner-Occupiers during an en bloc frenzy who would qualify for top priority or service apartments for short-stay travellers (eg, tourist families, small-scale foreign entrepreneurs doing market studies or starting up new businesses, professionals on short project contracts) during an en bloc doldrums.
If you have any brilliant flashes of inspiration to add other possible solutions, I welcome you to share them and contribute comments to this blog ... c'mmon ... tease those grey cells, stand on your head or do whatever works for you ...
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1. Precedent set by HDB - Our Housing & Development Board (HDB) has set a laudable precedent called SERS (Selective En Bloc Scheme) that alleviates to some degree the displacement suffered by existing owners in such an en bloc redevelopment.
2. Tapping on original owners' land use potential - For private properties under collective sale, it should be recognized that the buyer/developer is tapping on the land use potential belonging to the original unit owners. The original unit owners had the foresight to invest in their respective properties at the point of purchase which the developer is capitalizing upon at the point of collective sale. SEE MY OTHER COMMENTS UNDER "MAJORITY VS MINORITY VS INDIVIDUAL" IN THIS BLOG-SITE.
3. One-4-one "exchange" - Hence, developer-buyers should be mandated by law to offer a same-size, same-level replacement unit at the redeveloped estate or within a 1-km radius of same or higher quality to Owner-Occupiers with ONLY 1 RESIDENTIAL property at the point of completion of the collective / en bloc sale as one of the “settlement consideration” options in addition to outright cash.
This argument is particularly cogent for properties because "Property" means 3 things: location, Location, LOCATION!!! Also, the stakes are very high for owner-occupiers with ONLY 1 property because they are losing the roof over their heads UNLIKE (a) owner-occupiers with MORE THAN 1 property and (b) investor-owners who force through the en bloc in a cavalier manner because they already have another roof elsewhere.
The status of "Owner-occupier with ONLY 1 residential property at the point of completion of the collective sale" can be factually established by running checks through the records of the Singapore Land Registry (SLA) and the Housing & Development Board (HDB). Hence, if Mr and Mrs A own Apartment 1 which is under en bloc and Mrs A owns Apartment 2 in another estate under a single name or jointly with her daughter Ms A, then Mr and Mrs A do NOT qualify as Owner-Occupier with ONLY 1 residential property at that point in time.
4. Completion and financial risks in an "exchange" - If Singapore can have a Housing Developers (Control and Licensing) Act to cap the risks of buying properties under construction, we should have an equivalent statute to cap the completion risks faced by collective sale owners who are SACRIFICING their private property rights in the larger interests of urban renewal and land use efficiency.
5. Business flexibility required by developer-buyer - No doubt, the developer-buyer needs business flexibility to build units of a design layout and size which would be saleable in today's market. This can be preserved by stipulating upfront conditions for the redeveloped units to be within a certain range of sizes. As construction costs are clearly defined under the Housing Deveopers (Control and Licensing) Act, these figures can be established by the auditor. The development charge paid to the Gahmen is also very transparent.
(a) Where the replacement unit is BIGGER, then the en bloc owner who opted for "exchange" should pay for the differential area at the collective sale price plus construction cost.
(b) If the replacement unit is SMALLER, then such en bloc owner should be paid for the differential space at the first soft launch price less 20% discount.
(c) Upper and lower caps could be set as ADDITIONAL SAFEGUARDS to prevent abuses (say, a differential of plus/minus 30%) so that (i) an en bloc owner with an original small unit of 100 sq m cannot opt to buy a unit of 200 sq m at the redeveloped estate at such preferential price OR (ii) an en bloc owner with a original penthouse unit of 250 sq m can opt to have two units of 100 sq m each and be paid for the 50 sq m shortage based on the upfront formula.
This proposal in the SPIRIT of the law is configured on the basis that the impact of this law is disproportionately huge on owner-occupiers with ONLY 1 residential property and the land use potential belongs to the en bloc owner who also bears (a) the disruption of moving house, (b) the expense of alternative accommodation during the construction period and (c) the vagaries of the property market (although the risks are evened out over the long term for Owner-Occupiers).
Based on the LETTER of the law, there may be no basis to differentiate between the different types of strata-title owners except for the varying (i) unit numbers, (ii) unit size and (iii) share-values. But laws are formulated not for TECHNICALITIES but for EQUITY. Clearly, the impact of the law as it presently stands is vastly different for the different categories of owners.
6. Prohibition against developers building-up land banks - Where developers want to build up their land bank for market cyclical reasons, they should look to Government Land Sales (GLS) and not boot people from their homes. Hence, when the Strata Title Board issues the order for collective sale, it must regulate and set - as one of the conditions for such order - a narrow range of target dates for issuance of Temporary Occupation Permit which would necessarily entail prompt redevelopment. It is NOT the job of regulators to time the inevitable ups and downs of market cycles. It is NOT in the political interest of the Gahmen to facilitate developers' speculation at the expense of citizens' private property rights. It is NOT in the social interest of our nation to "commoditize" residential properties, thus negating the concept of a "home". Sadly, the present legislative gaps are doing exactly that, distorting supply and demand. Going back to basics, the job of the legislators is to ensure that the framework and the laws are robust and equitable in the course of arriving at the greater vision. SEE MY OTHER COMMENTS UNDER "ESTATE MAINTENANCE" IN THIS BLOG-SITE.
7. Change of land use - Where it is a land use change (eg, residential use to hotel or commercial or white site usage), this option would be naturally redundant as the collective sales proceeds would be at a vast premium to facilitate an equivalent/upgraded replacement unit for the collective sale unit owner.
8. Alternatives: Squatter, Refugee, Downgrader, Downsizer - (A) Without a mandatory unit replacement and (B) because the collective sales proceeds will NEVER buy an owner-occupier a new replacement unit within the same vicinity at the point of a successful collective sale, what is the dire predicament of an owner-occupier with only one property to his name??? He could DOWNGRADE or DOWNSIZE. Or he could SQUAT with relatives until the next property market downturn or he come evolve to become a REFUGEE as he buys a replacement unit in an estate of equivalent age which means that he may be subject to yet another en bloc within the next couple of years.
The owner-occupier with only 1 residential property is between the Devil and the Deep Blue Sea, jumping from the Frying Pan into the Fire - what "windfall"??? More like "deep discount"!!! SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" IN THIS BLOG-SITE about the time-value of the dollar amount received as collective sales proceeds.
9. Other benefits: Soft and hard factors - In addition to (a) preserving the original owners’ investment (ie, for owner-occupiers who do NOT need to cash-out immediately and who want a replacement roof in the same vicinity), (b) allowing the owner-occupiers with more than 1 property and investor-owners to grab the $$$, (c) giving the developer-buyers a shot at making very decent profits as redevelopments in prime/popular locations are more saleable even at fatter margins and (d) enabling the Gahmen to renew our urban landscape with more efficient land use, this will also contribute towards a heightened sense of community and bonding in our nascent nationhood as Singapore hits our 42nd National Day on 9 August 2007. After all, we are human beings and territorial/turf issues are very much enmeshed with our sense of time and place.
Estate maintenance; Time-bar to next en bloc attempt
1. Adverse impact on estate maintenance and urban landscape - Estate maintenance of a development with en bloc potential/risk is a Catch-22 issue. In Singapore's high-density high-rise living - if regulations are not sufficiently robust, high-class slums (in itself an oxymoron!) can evolve willy-nilly in our so-called Global City.
The never-ending cycle of collective sales directly and adversely impacts on estate maintenance which in turn translates into asset valuation at a micro level and building standards/urban quality at a macro level.
2. Time-bar for next en bloc attempt relative to estate age - The Gahmen should have a scaled time-bar for next CSA attempts relative to the estate's age (ie, shorter time-bar for older estates). Example: After a failed CSA attempt, impose a 5-year time-bar against the next CSA for estates between 30-50 years from Temporary Occupation Permit (TOP), a 2-year time-bar for estates above 50 years.
If owners have an assurance that this CSA cycle has a timeline (and not go into infinity), then the quality standard of buildings in Singapore will be upkept and maintained properly. As it stands at present, even ESSENTIAL maintenance of common property is being sorely neglected during and post-CSA attempts either as a pressure tactic to coerce dissenters into signing the CSA or as a cost-saving measure in case of an eventual CSA success. This may drag on for years as CSA attempts go into INFINITY. This likelihood of neglect in upkeep/maintenance hits the internal strata-title area too. With Singapore's high-density living, what your neighbours do (or FAIL to do) can affect lots of other owners and their properties.
Example: Due to a never-ending cycle of CSA attempts, I may choose to ignore water seepage or air-conditioning leakage so long as they don't obviously affect my neighbours and there are no complaints which my neighbours can enforce against me under the present regulations. But such internal dampness over a sustained time period may lead to termites to start invading my apartment (which risk I may not be cognizant of until it is too late) and once the termites infest one apartment, it will infest others in no time.
On the other hand, if buildings are well-maintained, it will be a WIN-WIN for tenants/owner-occupiers (enjoy well-maintained property and common facilities), landlords/investor-owners (better rental returns based on lower capital outlay) and city planners (higher urban quality in our cityscape).
3. Definition of en bloc failure - If a CSA attempt fails to garner the 90% / 80% majority within a specified time frame (which should be kept short as the facts are known and time is of the essence for both the condo owners and the developer buyer, say, 3 months from the start of Expression of Interest) or, if such consensus was obtained but the Strata Title Board declines to issue an order for collective sale (say, 2 months from the date of application to STB for a collective sale order), then that CSA attempt should be deemed as "failed".
4. Adverse impact on tenants, investor-owners as landlords and owner-occupiers - As it stands right now, this spate of collective sales will hit hard on:
(a) Tenants who won't be able to find a decently maintained place to rent at affordable rates. Double-whammy effect: SUPPLY of apartments of 10-20 years old is drastically shrunk; DEMAND for new units is forced up as owner-occupiers from successful en blocs need replacements and investor-owners who buy high will naturally rent-out-high.
I am no statistician nor a clairvoyant but I reckon that the Gahmen's efforts to keep Singapore as an affordable place to do business will (NOT may) be negated as rentals rocket.
Not only rentals will go up but the monthly management fees and utilities costs will rocket too, especially with the all-glass facades so typical of the new condos in this millennium (tilting open at 30 degrees and minimizing cross-draft ventilation). These whole-wall window panels will be kept sparklingly clean by professional window cleaners dangling outside from gondolas. Little wonder that for the new condos now under construction, developers in the big estates are already quoting management fees in the range of $600-$800 per month (perhaps hitting 4-figures one of these days as labour costs continue to climb) because window-cleaning is part of building maintenance nowadays.
Cost-of-Living Index will also shoot up mainly because of the multiplier effect of high housing costs (not to mention GST hike) unless there are compensating dips in other components. Although our Gahmen ostensibly doesn't meddle with market forces, this 90% / 80% majority for CSAs is in fact facilitating the distortion of Supply and Demand - way to go, eh???
(b) Investor-owners who may not find ready tenants if the en bloc fails as no tenant will want to become a refugee in case the next CSA attempt succeeds and who wants to live in a dump in the meantime?
(c) Owner-occupiers who are reduced to Squatter, Refugee, Downgrader or Downsizer if the en bloc succeeds. Similar to the abovementioned predicament of tenants, owner-occupiers will also have to bear higher $600-800 monthly management fees and heftier utilities bills if they buy a new replacement property in the better condo developments. SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
The never-ending cycle of collective sales directly and adversely impacts on estate maintenance which in turn translates into asset valuation at a micro level and building standards/urban quality at a macro level.
2. Time-bar for next en bloc attempt relative to estate age - The Gahmen should have a scaled time-bar for next CSA attempts relative to the estate's age (ie, shorter time-bar for older estates). Example: After a failed CSA attempt, impose a 5-year time-bar against the next CSA for estates between 30-50 years from Temporary Occupation Permit (TOP), a 2-year time-bar for estates above 50 years.
If owners have an assurance that this CSA cycle has a timeline (and not go into infinity), then the quality standard of buildings in Singapore will be upkept and maintained properly. As it stands at present, even ESSENTIAL maintenance of common property is being sorely neglected during and post-CSA attempts either as a pressure tactic to coerce dissenters into signing the CSA or as a cost-saving measure in case of an eventual CSA success. This may drag on for years as CSA attempts go into INFINITY. This likelihood of neglect in upkeep/maintenance hits the internal strata-title area too. With Singapore's high-density living, what your neighbours do (or FAIL to do) can affect lots of other owners and their properties.
Example: Due to a never-ending cycle of CSA attempts, I may choose to ignore water seepage or air-conditioning leakage so long as they don't obviously affect my neighbours and there are no complaints which my neighbours can enforce against me under the present regulations. But such internal dampness over a sustained time period may lead to termites to start invading my apartment (which risk I may not be cognizant of until it is too late) and once the termites infest one apartment, it will infest others in no time.
On the other hand, if buildings are well-maintained, it will be a WIN-WIN for tenants/owner-occupiers (enjoy well-maintained property and common facilities), landlords/investor-owners (better rental returns based on lower capital outlay) and city planners (higher urban quality in our cityscape).
3. Definition of en bloc failure - If a CSA attempt fails to garner the 90% / 80% majority within a specified time frame (which should be kept short as the facts are known and time is of the essence for both the condo owners and the developer buyer, say, 3 months from the start of Expression of Interest) or, if such consensus was obtained but the Strata Title Board declines to issue an order for collective sale (say, 2 months from the date of application to STB for a collective sale order), then that CSA attempt should be deemed as "failed".
4. Adverse impact on tenants, investor-owners as landlords and owner-occupiers - As it stands right now, this spate of collective sales will hit hard on:
(a) Tenants who won't be able to find a decently maintained place to rent at affordable rates. Double-whammy effect: SUPPLY of apartments of 10-20 years old is drastically shrunk; DEMAND for new units is forced up as owner-occupiers from successful en blocs need replacements and investor-owners who buy high will naturally rent-out-high.
I am no statistician nor a clairvoyant but I reckon that the Gahmen's efforts to keep Singapore as an affordable place to do business will (NOT may) be negated as rentals rocket.
Not only rentals will go up but the monthly management fees and utilities costs will rocket too, especially with the all-glass facades so typical of the new condos in this millennium (tilting open at 30 degrees and minimizing cross-draft ventilation). These whole-wall window panels will be kept sparklingly clean by professional window cleaners dangling outside from gondolas. Little wonder that for the new condos now under construction, developers in the big estates are already quoting management fees in the range of $600-$800 per month (perhaps hitting 4-figures one of these days as labour costs continue to climb) because window-cleaning is part of building maintenance nowadays.
Cost-of-Living Index will also shoot up mainly because of the multiplier effect of high housing costs (not to mention GST hike) unless there are compensating dips in other components. Although our Gahmen ostensibly doesn't meddle with market forces, this 90% / 80% majority for CSAs is in fact facilitating the distortion of Supply and Demand - way to go, eh???
(b) Investor-owners who may not find ready tenants if the en bloc fails as no tenant will want to become a refugee in case the next CSA attempt succeeds and who wants to live in a dump in the meantime?
(c) Owner-occupiers who are reduced to Squatter, Refugee, Downgrader or Downsizer if the en bloc succeeds. Similar to the abovementioned predicament of tenants, owner-occupiers will also have to bear higher $600-800 monthly management fees and heftier utilities bills if they buy a new replacement property in the better condo developments. SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
Share values; Sales Committee
Update on 30 May 2007, 23 July 2007 and post-Oct 2007:
This page should be read in conjunction with MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA; DISTRIBUTION".
THE CURRENT "EN BLOC SCAM": How hundreds of thousands of dollars are being "short-changed" in the distribution of collective sales proceeds?
(i) As explained in paras 1-7 below of my original posting on 26 March 2007, the self-appointed unregulated Sales Committee and the Majority Small-Unit Owners are able to fully exploit the laxity of the present law by deciding on a distribution formula such that the big-unit owners are getting either the same amount of sales proceeds or a mere 15-30% more even though the unit sizes vary significantly.
(ii) Real-life example of what's typically happening:
Enbloc offer for a duplex of 1,600 sq ft - $2.6mn *
Enbloc offer for a studio in same estate of 800 sq ft - $1.9mn
[* This $2.6mn offer was an increased offer from the original offeror to match another unsolicited competitive offer. Within a fortnight of this increase, the marketing agent upped it by another million bucks - $3.6mn! This was just before the surprise announcement on 18 July 2007 by the Ministry of National Development about the effective 40% Development Charge/ Differential Premium hike which is traditionally expected around September.]
The duplex is almost 100% bigger than the studio. Due to the legacy created by the Commissioner of Buildings where an apartment of 101 sq m has the SAME SHARE VALUE as another unit of 199 sq m (ie, nearly double the size) because they are within the "100 sq m interval" bandwidth, all varying-size units have same share value except for the studio units which are one share value lower.
If the duplex is hypothetically split into two equal studio units - the 1st unit of 800 sq ft is worth $1.9mn as per enbloc offer, but the 2nd unit of the same size is worth only a shocking $0.7mn (about one-third the value of the 1st unit)!
If based purely on floor area, the duplex owner is short-changed by $1.2mn - not quite loose change, is it? If the distribution formula is based on my proposed mathematical formula (SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA; DISTRIBUTION"), the short-change would probably range from $600k-$800k, depending on the ratio of common property to aggregate strata title area - not exactly pocket money to be sneezed at, eh?
(iii) The above example is for an estate where the Sales Committee adopted a seemingly "fairer" distribution formula which is based on "50% weighted share value and 50% weighted strata title area". It's 50-50 simply because that presents the least line of argument in precedent cases (not because of technical appraisal standards). There are other estates where the Sales Committee brazenly adopted a distribution formula which is entirely based on share values despite the huge disparity in strata title floor area. In these cases, the "short-change" is even more exaggerated!
(iv) Typically in most condo estates, the number of studio/small units far outnumber the penthouses/big units. Therefore, the en bloc votes cast by the owners of penthouses/big units based on share values at present (even if additionally based on unit numbers in future for purely residential estates) are INHERENTLY SKEWED AGAINST THESE OWNERS even before voting begins! In fact, there's a DOUBLE WHAMMY for estates in prime/central districts because the number of Investor-Owners also far outnumber Owner-Occupiers whose votes are also rendered meaningless despite having a higher vested interest in preserving their "home" in the condo estate.
Ahh ... now you know part of the reason for the rah-rah Majority Consent! Can you blame Greed? Can you lambast Dishonesty? It's all legal, man! "No law" is also "law" - in line with Daoism philosophy, eh?
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Under the law as it stood prior to 4 Oct 2007, the 80% (or 90%) or more majority consensus required to force through an en bloc / collective sale is based purely on "share values" [MinLaw's initial proposal to ADD one more criterion: 80% (or 90%) of "number of units" was changed to 80% (or 90%) of "total area of all lots (excluding the area of any accessory lot)" with effect from 4 Oct 2007 but this change addresses the predicament of ONLY A SMALL NUMBER of mixed developments of commercial/residential units].
Example of "share value" application: Say, an estate has 100 units and is 10 years or more from the date of issuance of Temporary Occupation Permit (TOP - the date you can move into the premises). 80 units (being smaller) have three share values each (80 x 3 = 240) and 20 units (being larger or penthouse types) have 5 share values each (20 x 5 = 100). Aggregate share values for entire estate = 240 + 100 = 340. If the owners who hold 272 share values (80% of 340 = 272) vote for/sign the collective sale agreement, then this estate would have achieved 80% majority consensus to force through an en bloc / collective sale subject to issuance of a collective sale order by the Strata Titles Board (STB). No example of "total area" application is given because that is simple mathematics.
Under the amended Land Titles (Strata) Act that came into effect on 4 Oct 2007 - Once the 80% (or 90%) mark is hit for BOTH criteria (ie, share values and total area), there is requisite "Majority Consent" to apply to the Strata Titles Boards for a collective sale order which would then compel ALL owners (including Minority Dissenters) to sell upon issuance of such order unless overturned by High Court or Court of Appeal. In this legislative amendment, there was also a clarification about the 10-year age peg to Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC), as the case may be (this 10-year age peg in turn determines whether the requisite "Majority Consent" is 80% (or 90%)). The TOP or CSC issuance is now clarified to correlate to "any building (not being any common property)" to overcome the stickler if an estate upgrades by building, say, a clubhouse on its grounds in Year 15 of the estate's life but such clubhouse would be under a new TOP certificate.
THE POSITION OF THE DISSENTER: Even if you REFUSE TO SIGN the collective sale agreement, you will be forced to sell AND you will still be entitled to receive the collective sales proceeds on the basis of the apportionment method decided by the Sales Committee (pls scroll down to paras 4-8 below) [MinLaw is proposing to switch it to Majority Owners but this does NOT address the inherent vote-skewering whether by ownership profile or unit size composition]. If you are not willing to sell, DO NOT SIGN the collective sale agreement because once you sign, you lose your right to object and appeal to the Strata Title Board. If you think that the collective sale is a foregone conclusion and you might as well sign in order to get the pay-out faster so that you can buy a replacement unit sooner, that's a fallacy - because so long as there is one owner who didn't sign, that one owner could appeal to the Strata Titles Board and the due process would still apply (as it should) except that now you are GAGGED because you signed. Make your en bloc vote count - you know that this PAP Gahmen "manages" by studying statistics (nothing wrong with that so long as it is not done in a void, eh?). IF YOU SUCCUMB AND SIGN the collective sales agreement, it means a resounding "yes" in statistical terms REGARDLESS of what you said at the EGM or Sales Committee meetings and what you lamented to your friends and relatives about really not wanting to sell. Say what you mean and don't be mean when you say it! IF YOU DISSENT, DO NOT SIGN - it's that simple. Stand up and be counted as a "No"!
Once the requisite 80% (90%) have signed the collective sale agreement, there are only 2 parties who can stop or amend the deal:
(a) STB if they refuse to issue the collective sale order (there are specific laws setting out the grounds for such STB refusal and STB's powers are therefore limited - SEE MY OTHER COMMENTS UNDER "CONSTITUTION; GAHMEN POLICIES" IN THIS BLOG-SITE); and
(b) The High Court/Court of Appeal if STB's collective sale order is challenged and/or other issues are contested and the High Court/Court of Appeal ruling is ultimately in favour of the plaintiff (the party who sued).
1. What are share values - Share values are approved by the Commissioner of Buildings (COB). Share values are important because they determine not only your voting power on whether to go-ahead with the en bloc / collective sale, or the method of distribution of the collective sales proceeds, etc but also the amount of monthly management fees you pay because they represent your share of ownership in the common property. In collective / en bloc sales, share values are quite commonly used (partly or wholly) as the basis of apportionment or distribution of the sales proceeds.
2. How share values are calculated - The number of share values for your residential property is based on your unit's strata title area. In turn, the varying strata-title areas are categorized into different band-widths.
3. Legacy problem for en bloc sales - Historically, these band-widths were very wide at intervals of 100 sq m. It was only in Apr 2005 that COB narrowed them to 50 sq m. However, this means that we have a legacy problem created by COB in the first place. An example of the adverse impact of the older broad band-widths is the case of Madam Chow Ai Wah of Eng Lok Mansions (near The Botanicals) where apartments are of varying sizes but the apportionment method was based solely on share values. Say, if Unit A is 60 sq m and Unit B is 99 sq m (ie, 65% larger in size and probably 50% more expensive at the point of purchase even if we assume that both units are bought at the same time), both units would bear the same share values based on the old band-widths. The composition mix of unit sizes in most estates is such that the smaller units outnumber the larger units or penthouses.
4. Sales Committee's basis of distribution of collective sales proceeds - As there is no legislative provision governing the Sales Committee, a SELF-APPOINTED UNREGULATED Sales Committee (still largely self-appointed in effect although somewhat better regulated after the legislative amendments with effect from 4 Oct 2007 - SEE MY OTHER COMMENTS UNDER "AFTER THE 2007 LAW ... WHAT'S NEXT" ON THIS BLOG-SITE - para C-4.1 at picture of little red flower ("little red dot"), para C-4.4 past picture of soaring seagull and para D-4 at picture of hands gripping prison bars) of a collective sale could apportion sales proceeds based on such Committee's totally arbitrary formulae/weightages pegged to share values (in some cases, the valuer will pop some 50-50 weightage because that is the easiest idea to sell and it offers the least argument). Although the Minister for Law indicated in the 2 Mar 2007 parliamentary speech that apportionment method would likely be determined by the Majority Owners after the forthcoming legislative review, it remains a subjective basis. It is a no-brainer resolution where the composition mix of an estate (be it ownership profile OR unit size composition) may skewer the vote even before voting begins. As Singaporeans can bash each other up over a Hello Kitty toy or a few cents of petrol discount, what will they NOT do for a dollar difference running into 4- or 5-figures???
5. Contrast between (a) purchase and (b) collective sale - At the point of purchase, the share-values are determined on an OBJECTIVE BASIS. Hence, it is unconscionable that at the point of a collective sale forced upon you, the apportionment method (where share values may form part or all of the formula) of the sales proceeds is determined on a SUBJECTIVE BASIS, dependent on the whims and/or scruples of the Sales Committee or the majority owners.
SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" ON THIS BLOG-SITE for my proposed mathematical apportionment method for collective sales proceeds.
6. Sales Committee framework - At present, the Sales Committee framework is unregulated. Anyone can form a Sales Committee. The composition, constitution, member qualification, quorum, voting power, meeting procedures, representation, dissolution of the Sales Committee are totally unregulated (somewhat better regulated after the legislative amendments with effect from 4 Oct 2007). This is also in stark contrast to the Management Corporation and Management Council which are both heavily regulated by the Building Maintenance and Strata Management Act, right down to the minute details. SEE MY OTHER COMMENTS UNDER "IMPACT VERSUS REGULATION" IN THIS BLOG-SITE.
The Sales Committee might as well be a "Committee of One" because - naturally - only like-minded owners will be invited to join (or nominate each other for election/appointment under the legislative amendments that came into effect on 4 Oct 2007). Hence, the present legislative requirement for a Sales Committee in a collective sale is facetious because the very rationale of requiring a committee structure is defeated.
7. Pre-loaded dice in Sales Committee voting power - The composition mix of unit sizes may already skewer the vote in favour of the small unit owners. Also, the occupancy / ownership profile of some condos is such that tenants (and hence investor-occupiers) outnumber owner-occupiers because they are in popular rental districts, bearing in mind that the vested interests of investor-owners versus owner-occupiers are inherently widely divergent. Adding to this pre-load is the legacy problem of the old broad band-widths for share values. SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" IN THIS BLOG-SITE.
Even if the Sales Committee and the Majority Owners are fair-minded people and they ensure that the composition of the Sales Committee is representative of the estate's ownership profile, the voting power remains nonetheless skewered.
Example: If an estate has, say, 100 units, out of which 70 are tenanted. If such an estate has varying apartment sizes, typically the small units may number 80 and larger units or penthouses may make up the remaining 20 units. If the Sales Committee comprises, say 7 persons, even if 2 members are owner-occupiers (ie, 28% of Sales Com are owner-occupiers) owning a large unit and 1 more member is a penthouse owner, the 3 of them (ie, 43% of Sales Com, thus over-representing the big units numerically) would still be out-voted even before voting begins! Even with a weighted vote, they would remain out-voted.
Hence, it may be too simplistic to just look at upfront 90% / 80% majority consensus as the voting may have been skewered if you probe further down the layers.
8. Other influences of Sales Committee - The appointment of marketing agent, quantity surveyor, valuation appraisor, lawyer or other specialists involved in the intricacies of a collective sale is decided by the all-powerful Sales Committee. At the bottomline, business is still business, yes?
9. Dissolution of Sales Committee - Once the results of the Expression of Interest is out and the consensus is less than the 90% / 80%, shouldn't the Sales Committee be auto-dissolved? As it stands at the moment, the Sales Committee continues even after the failure to garner the requisite majority. And to what purpose, one wonders, because surely we do not need the disturbing uncertainty of an en bloc to be prolonged - like a Damocles Sword hanging over our heads?
The Damocles Sword continues to dangle even after the legislative amendments that came into effect on 4 Oct 2007 ... Although the Sales Committee could now be dissolved:
(A) by ordinary resolution at a general meeting of the Management Corporation subject to meeting all the necessary hurdles of requisitioning such a meeting (made more difficult in residential estates where there is already a loose terrorist-like consortium of en bloc flippers who usually swoop in with a minimal voting clout), or
(B) upon termination or expiry of the Collective Sale Agreement (which usually runs for 12 long months),
the same Sales Committee could re-morph the next day after dissolution, especially if some Owners are driven to desperation in a dire need for cash (eg, flippers who do not have deep pockets for real estate investment, or due to business failure/cashflow problems, or retirees running low on savings or wanting a big fling before they go, or movers wanting to get out of the location/country, etc).
So back to the "not-so-merry-go-round" we spin as more en bloc yarns are spun! Yeh, as the Yankees would call it ... It's all a spin!
This page should be read in conjunction with MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA; DISTRIBUTION".
THE CURRENT "EN BLOC SCAM": How hundreds of thousands of dollars are being "short-changed" in the distribution of collective sales proceeds?
(i) As explained in paras 1-7 below of my original posting on 26 March 2007, the self-appointed unregulated Sales Committee and the Majority Small-Unit Owners are able to fully exploit the laxity of the present law by deciding on a distribution formula such that the big-unit owners are getting either the same amount of sales proceeds or a mere 15-30% more even though the unit sizes vary significantly.
(ii) Real-life example of what's typically happening:
Enbloc offer for a duplex of 1,600 sq ft - $2.6mn *
Enbloc offer for a studio in same estate of 800 sq ft - $1.9mn
[* This $2.6mn offer was an increased offer from the original offeror to match another unsolicited competitive offer. Within a fortnight of this increase, the marketing agent upped it by another million bucks - $3.6mn! This was just before the surprise announcement on 18 July 2007 by the Ministry of National Development about the effective 40% Development Charge/ Differential Premium hike which is traditionally expected around September.]
The duplex is almost 100% bigger than the studio. Due to the legacy created by the Commissioner of Buildings where an apartment of 101 sq m has the SAME SHARE VALUE as another unit of 199 sq m (ie, nearly double the size) because they are within the "100 sq m interval" bandwidth, all varying-size units have same share value except for the studio units which are one share value lower.
If the duplex is hypothetically split into two equal studio units - the 1st unit of 800 sq ft is worth $1.9mn as per enbloc offer, but the 2nd unit of the same size is worth only a shocking $0.7mn (about one-third the value of the 1st unit)!
If based purely on floor area, the duplex owner is short-changed by $1.2mn - not quite loose change, is it? If the distribution formula is based on my proposed mathematical formula (SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA; DISTRIBUTION"), the short-change would probably range from $600k-$800k, depending on the ratio of common property to aggregate strata title area - not exactly pocket money to be sneezed at, eh?
(iii) The above example is for an estate where the Sales Committee adopted a seemingly "fairer" distribution formula which is based on "50% weighted share value and 50% weighted strata title area". It's 50-50 simply because that presents the least line of argument in precedent cases (not because of technical appraisal standards). There are other estates where the Sales Committee brazenly adopted a distribution formula which is entirely based on share values despite the huge disparity in strata title floor area. In these cases, the "short-change" is even more exaggerated!
(iv) Typically in most condo estates, the number of studio/small units far outnumber the penthouses/big units. Therefore, the en bloc votes cast by the owners of penthouses/big units based on share values at present (even if additionally based on unit numbers in future for purely residential estates) are INHERENTLY SKEWED AGAINST THESE OWNERS even before voting begins! In fact, there's a DOUBLE WHAMMY for estates in prime/central districts because the number of Investor-Owners also far outnumber Owner-Occupiers whose votes are also rendered meaningless despite having a higher vested interest in preserving their "home" in the condo estate.
Ahh ... now you know part of the reason for the rah-rah Majority Consent! Can you blame Greed? Can you lambast Dishonesty? It's all legal, man! "No law" is also "law" - in line with Daoism philosophy, eh?
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Under the law as it stood prior to 4 Oct 2007, the 80% (or 90%) or more majority consensus required to force through an en bloc / collective sale is based purely on "share values" [MinLaw's initial proposal to ADD one more criterion: 80% (or 90%) of "number of units" was changed to 80% (or 90%) of "total area of all lots (excluding the area of any accessory lot)" with effect from 4 Oct 2007 but this change addresses the predicament of ONLY A SMALL NUMBER of mixed developments of commercial/residential units].
Example of "share value" application: Say, an estate has 100 units and is 10 years or more from the date of issuance of Temporary Occupation Permit (TOP - the date you can move into the premises). 80 units (being smaller) have three share values each (80 x 3 = 240) and 20 units (being larger or penthouse types) have 5 share values each (20 x 5 = 100). Aggregate share values for entire estate = 240 + 100 = 340. If the owners who hold 272 share values (80% of 340 = 272) vote for/sign the collective sale agreement, then this estate would have achieved 80% majority consensus to force through an en bloc / collective sale subject to issuance of a collective sale order by the Strata Titles Board (STB). No example of "total area" application is given because that is simple mathematics.
Under the amended Land Titles (Strata) Act that came into effect on 4 Oct 2007 - Once the 80% (or 90%) mark is hit for BOTH criteria (ie, share values and total area), there is requisite "Majority Consent" to apply to the Strata Titles Boards for a collective sale order which would then compel ALL owners (including Minority Dissenters) to sell upon issuance of such order unless overturned by High Court or Court of Appeal. In this legislative amendment, there was also a clarification about the 10-year age peg to Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC), as the case may be (this 10-year age peg in turn determines whether the requisite "Majority Consent" is 80% (or 90%)). The TOP or CSC issuance is now clarified to correlate to "any building (not being any common property)" to overcome the stickler if an estate upgrades by building, say, a clubhouse on its grounds in Year 15 of the estate's life but such clubhouse would be under a new TOP certificate.
THE POSITION OF THE DISSENTER: Even if you REFUSE TO SIGN the collective sale agreement, you will be forced to sell AND you will still be entitled to receive the collective sales proceeds on the basis of the apportionment method decided by the Sales Committee (pls scroll down to paras 4-8 below) [MinLaw is proposing to switch it to Majority Owners but this does NOT address the inherent vote-skewering whether by ownership profile or unit size composition]. If you are not willing to sell, DO NOT SIGN the collective sale agreement because once you sign, you lose your right to object and appeal to the Strata Title Board. If you think that the collective sale is a foregone conclusion and you might as well sign in order to get the pay-out faster so that you can buy a replacement unit sooner, that's a fallacy - because so long as there is one owner who didn't sign, that one owner could appeal to the Strata Titles Board and the due process would still apply (as it should) except that now you are GAGGED because you signed. Make your en bloc vote count - you know that this PAP Gahmen "manages" by studying statistics (nothing wrong with that so long as it is not done in a void, eh?). IF YOU SUCCUMB AND SIGN the collective sales agreement, it means a resounding "yes" in statistical terms REGARDLESS of what you said at the EGM or Sales Committee meetings and what you lamented to your friends and relatives about really not wanting to sell. Say what you mean and don't be mean when you say it! IF YOU DISSENT, DO NOT SIGN - it's that simple. Stand up and be counted as a "No"!
Once the requisite 80% (90%) have signed the collective sale agreement, there are only 2 parties who can stop or amend the deal:
(a) STB if they refuse to issue the collective sale order (there are specific laws setting out the grounds for such STB refusal and STB's powers are therefore limited - SEE MY OTHER COMMENTS UNDER "CONSTITUTION; GAHMEN POLICIES" IN THIS BLOG-SITE); and
(b) The High Court/Court of Appeal if STB's collective sale order is challenged and/or other issues are contested and the High Court/Court of Appeal ruling is ultimately in favour of the plaintiff (the party who sued).
1. What are share values - Share values are approved by the Commissioner of Buildings (COB). Share values are important because they determine not only your voting power on whether to go-ahead with the en bloc / collective sale, or the method of distribution of the collective sales proceeds, etc but also the amount of monthly management fees you pay because they represent your share of ownership in the common property. In collective / en bloc sales, share values are quite commonly used (partly or wholly) as the basis of apportionment or distribution of the sales proceeds.
2. How share values are calculated - The number of share values for your residential property is based on your unit's strata title area. In turn, the varying strata-title areas are categorized into different band-widths.
3. Legacy problem for en bloc sales - Historically, these band-widths were very wide at intervals of 100 sq m. It was only in Apr 2005 that COB narrowed them to 50 sq m. However, this means that we have a legacy problem created by COB in the first place. An example of the adverse impact of the older broad band-widths is the case of Madam Chow Ai Wah of Eng Lok Mansions (near The Botanicals) where apartments are of varying sizes but the apportionment method was based solely on share values. Say, if Unit A is 60 sq m and Unit B is 99 sq m (ie, 65% larger in size and probably 50% more expensive at the point of purchase even if we assume that both units are bought at the same time), both units would bear the same share values based on the old band-widths. The composition mix of unit sizes in most estates is such that the smaller units outnumber the larger units or penthouses.
4. Sales Committee's basis of distribution of collective sales proceeds - As there is no legislative provision governing the Sales Committee, a SELF-APPOINTED UNREGULATED Sales Committee (still largely self-appointed in effect although somewhat better regulated after the legislative amendments with effect from 4 Oct 2007 - SEE MY OTHER COMMENTS UNDER "AFTER THE 2007 LAW ... WHAT'S NEXT" ON THIS BLOG-SITE - para C-4.1 at picture of little red flower ("little red dot"), para C-4.4 past picture of soaring seagull and para D-4 at picture of hands gripping prison bars) of a collective sale could apportion sales proceeds based on such Committee's totally arbitrary formulae/weightages pegged to share values (in some cases, the valuer will pop some 50-50 weightage because that is the easiest idea to sell and it offers the least argument). Although the Minister for Law indicated in the 2 Mar 2007 parliamentary speech that apportionment method would likely be determined by the Majority Owners after the forthcoming legislative review, it remains a subjective basis. It is a no-brainer resolution where the composition mix of an estate (be it ownership profile OR unit size composition) may skewer the vote even before voting begins. As Singaporeans can bash each other up over a Hello Kitty toy or a few cents of petrol discount, what will they NOT do for a dollar difference running into 4- or 5-figures???
5. Contrast between (a) purchase and (b) collective sale - At the point of purchase, the share-values are determined on an OBJECTIVE BASIS. Hence, it is unconscionable that at the point of a collective sale forced upon you, the apportionment method (where share values may form part or all of the formula) of the sales proceeds is determined on a SUBJECTIVE BASIS, dependent on the whims and/or scruples of the Sales Committee or the majority owners.
SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" ON THIS BLOG-SITE for my proposed mathematical apportionment method for collective sales proceeds.
6. Sales Committee framework - At present, the Sales Committee framework is unregulated. Anyone can form a Sales Committee. The composition, constitution, member qualification, quorum, voting power, meeting procedures, representation, dissolution of the Sales Committee are totally unregulated (somewhat better regulated after the legislative amendments with effect from 4 Oct 2007). This is also in stark contrast to the Management Corporation and Management Council which are both heavily regulated by the Building Maintenance and Strata Management Act, right down to the minute details. SEE MY OTHER COMMENTS UNDER "IMPACT VERSUS REGULATION" IN THIS BLOG-SITE.
The Sales Committee might as well be a "Committee of One" because - naturally - only like-minded owners will be invited to join (or nominate each other for election/appointment under the legislative amendments that came into effect on 4 Oct 2007). Hence, the present legislative requirement for a Sales Committee in a collective sale is facetious because the very rationale of requiring a committee structure is defeated.
7. Pre-loaded dice in Sales Committee voting power - The composition mix of unit sizes may already skewer the vote in favour of the small unit owners. Also, the occupancy / ownership profile of some condos is such that tenants (and hence investor-occupiers) outnumber owner-occupiers because they are in popular rental districts, bearing in mind that the vested interests of investor-owners versus owner-occupiers are inherently widely divergent. Adding to this pre-load is the legacy problem of the old broad band-widths for share values. SEE MY OTHER COMMENTS UNDER "SALES PROCEEDS FORMULA" IN THIS BLOG-SITE.
Even if the Sales Committee and the Majority Owners are fair-minded people and they ensure that the composition of the Sales Committee is representative of the estate's ownership profile, the voting power remains nonetheless skewered.
Example: If an estate has, say, 100 units, out of which 70 are tenanted. If such an estate has varying apartment sizes, typically the small units may number 80 and larger units or penthouses may make up the remaining 20 units. If the Sales Committee comprises, say 7 persons, even if 2 members are owner-occupiers (ie, 28% of Sales Com are owner-occupiers) owning a large unit and 1 more member is a penthouse owner, the 3 of them (ie, 43% of Sales Com, thus over-representing the big units numerically) would still be out-voted even before voting begins! Even with a weighted vote, they would remain out-voted.
Hence, it may be too simplistic to just look at upfront 90% / 80% majority consensus as the voting may have been skewered if you probe further down the layers.
8. Other influences of Sales Committee - The appointment of marketing agent, quantity surveyor, valuation appraisor, lawyer or other specialists involved in the intricacies of a collective sale is decided by the all-powerful Sales Committee. At the bottomline, business is still business, yes?
9. Dissolution of Sales Committee - Once the results of the Expression of Interest is out and the consensus is less than the 90% / 80%, shouldn't the Sales Committee be auto-dissolved? As it stands at the moment, the Sales Committee continues even after the failure to garner the requisite majority. And to what purpose, one wonders, because surely we do not need the disturbing uncertainty of an en bloc to be prolonged - like a Damocles Sword hanging over our heads?
The Damocles Sword continues to dangle even after the legislative amendments that came into effect on 4 Oct 2007 ... Although the Sales Committee could now be dissolved:
(A) by ordinary resolution at a general meeting of the Management Corporation subject to meeting all the necessary hurdles of requisitioning such a meeting (made more difficult in residential estates where there is already a loose terrorist-like consortium of en bloc flippers who usually swoop in with a minimal voting clout), or
(B) upon termination or expiry of the Collective Sale Agreement (which usually runs for 12 long months),
the same Sales Committee could re-morph the next day after dissolution, especially if some Owners are driven to desperation in a dire need for cash (eg, flippers who do not have deep pockets for real estate investment, or due to business failure/cashflow problems, or retirees running low on savings or wanting a big fling before they go, or movers wanting to get out of the location/country, etc).
So back to the "not-so-merry-go-round" we spin as more en bloc yarns are spun! Yeh, as the Yankees would call it ... It's all a spin!
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?
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.
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.
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