A horse dumbstruck by a mutant three-hump camel

For those of us who haven't seen a mutant three-hump camel, this is what it looks like:

1. Mutant three-hump camel. On 12 Sep 2009, the following Forum Letter was published in The Straits Times about a mutant three-hump camel: http://lushhomemedia.com/2009/09/12/property-index-and-saga-of-the-three-hump-camel/camel/

QUOTE: Singapore‘s Private Property Market Index looks like a mutant three-hump camel, registering a 45 per cent bust from the second quarter of 1996, a 40 per cent boom from the fourth quarter of 1998, a 20 per cent bust from the second quarter of 2000 and a 58 per cent rise from the first quarter of 2004, with the latest figures in the second quarter of this year dropping back to below the second hump.

Yet National Development Minister Mah Bow Tan said on Sept 2 that ‘as far as (private home) prices are concerned, we want to make sure… there is no excessive speculation’.

With a three-hump camel of boom-busts in 13 years, at what point is speculation deemed ‘excessive’? When a slew of sub-sale advertisements appear on soft launch and when kettles are owned for more than five years, yet property ownership of less than five years may not be ‘property trading’, it makes a mockery of tax laws.

Currently in land-scarce Singapore, we have 4.84 million residents (6,814 people per sq km), with a 6.5 million target population in 40 years. As Central Provident Fund savings are largely locked in home ownership, residential real estate goes beyond Mr Market’s wheeling and dealing. To draw a parallel, it is equivalent to rice harvests in Vietnam as an agro-economy – except we are in perpetual drought.

Mr Mah urges Three Thinks – ‘think carefully, think long term, think about the unexpected’ – before we buy property.

I did Three Thinks before buying a condominium unit. Now I cannot do even One Thing when my neighbours sell the roof over my head.

Property is all about location and timing. Retirement wealth is at stake. Can Mr Mah follow South Korean laws and do One Thing for Singaporeans: ‘Sell one, return one’ instead of ‘Double the price or half the size’ in collective property sales? END QUOTE.

2. Horse kept mum. As pointed out in the Straits Times Forum Letter, most bona fide home owners and prudent investors (as opposed to speculative flippers) would have done the Three Thinks (viz, “Think carefully; Think long term; Think about the unexpected”) before committing to buy a private condo which is generally considered to be a significant purchase in expensive land-scarce Singapore.

To date, National Development Minister Mah seems to be dumbstruck as to what is the One Thing that private condo owners could do when the only roof over their heads is sold by courtesy of their neighbours. Is that why Mr Mah is keeping mum? Perhaps in a more sensitive and sensible frame of mind, Mr Mah is not parroting what he spouted and blurted out in Jun 2007 during an interview about en bloc sales (please scroll down to para 8 below). However, Mr Mah's silence probably means that what he spouted in Jun 2007 is the One Thing private condo owners could do -
DOWNGRADE!
3. Behind the curve (yet again). Almost two years ago, I posted a blog entry that drew an analogy between (a) the then withdrawn Deferred Payment Scheme and (b) the morphed Interest Absorption Scheme as being the equivalent of "half cati, eight taels” in para 4 of my 2007 Christmas Eve blog entry entitled "In the coming year of 2008": http://singaporeenbloc.blogspot.com/2007_12_01_archive.html

It took the Gahmen almost two years to ban Interest Absorption Scheme on 14 Sep 2009 after it withdrew the Deferred Payment Scheme on 26 Oct 2007! Tsk, tsk, a bit slow in trotting out the ban, eh?

4. One-for-one exchange in enforced en bloc sale. In Aug 2007, MinLaw was alerted about South Korea’s mandatory one-for-one exchange scheme under the Hapdong Redevelopment Scheme. How long will the Gahmen take to study the South Korean urban renewal model and re-calibrate a similar model to suit Singapore’s context? Isn't it high time that the amended en bloc legislation be substantively revamped (not just tinkered with peripherally)? All the more so in the light of the typical Gillman Heights en bloc experience set out below.

5. Face-off between Gillman Heights and The Interlace. There were media reports about shouting by Gillman Heights en bloc sellers who were invited to a preview of The Interlace condo that will be built on their land after Gillman Heights is demolished. Putting aside issues about limited choices or dumpy-looking building model, the dollar numbers were totally stark!

- Gillman Heights en bloc sellers were paid about $498 psf.
- The Interlace prices ranged from $850 - $1,150 psf during soft launch.
Another classic case of “twice the price, half the size, quarter the value” as land use efficiency would be fully maximized in the redevelopment of Gillman Heights into The Interlace. Yet once again, my last year’s National Day trilogy blog entry rang true on “Why en blocs are NOT right for Majority Consenters nor Minority Dissenters”: http://singaporeenbloc.blogspot.com/2008/08/en-bloc-why-it-is-not-right-for.html

This typical post-en bloc experience of Gillman Heights owners makes for a highly cogent argument and justifies a mandated and managed one-for-one exchange in an enforced en bloc sale, as discussed in my previous National Day trilogy blog entry entitled "So what's the alternative in the end": http://singaporeenbloc.blogspot.com/2008/08/so-whats-alternative-in-end.html

6. Multi-generational “sacrifice”. Putting the typical Gillman Heights en bloc experience into context, it was exceedingly perturbing to read MinLaw’s account of the history and impact of land acquisition in Singapore (Straits Times, 4 Sep 2009): “The Government's land acquisition schemes have mostly affected land owners. The general public, on the other hand, have been the primary beneficiaries of such acquisitions, through public housing, building of infrastructure for public benefit and various other developments, including the building of condominiums - the latter allowed condominium owners to enjoy the land which was originally enjoyed by land owners.”How many generations of Singaporeans must sacrifice in the Making (and Re-Making) of Singapore?
(a) My grandparents’ residence was acquired by Gahmen for historic conservation.
(b) My parents’ residence was acquired by Gahmen for infrastructural development.

(c) My residence could be force-sold by my neighbours due to a law passed by Gahmen and we would end up as Squatters, Refugees, Downgraders or Downsizers post-en bloc.

And the next generation too? Is Singapore a circus of clowns or what??? Not funny, eh?
Whilst I won’t and can’t quarrel with MinLaw’s assertion in the same article that “we also need to take into account the need for modernisation, rejuvenation of estates and optimisation of land use”, it makes me wonder wherein does the Gahmen find “the appropriate balance” in the uniformly stark post-en bloc spectre of “twice the price, half the price, quarter the value” (ie, the typical Gillman Heights en bloc experience) in possibly ALL en bloc estates to date??? As a citizen, I just pray that the oft-touted "appropriate balance" is not just hot air and we do NOT wait for yet another decade before the en bloc law is next meaningfully re-calibrated and re-balanced to finally "do right" by the people!

7. Democracy vs Collectivism. Even after the Horizon Towers en bloc saga and especially after the Regent Garden fiasco, slimy things are probably slithering stealthily around in Golden Mile Complex as smart alecks try to do an en bloc via the back-door (The Straits Times, 19 Sep 2009).

Over time, I have blogged intermittently about how the "collectivism" element in en bloc sales has been effectively and legally undermined (eg, para 5 of my 2008 National Day trilogy blog entitled “Greek mythology: The Source and Themis”): http://singaporeenbloc.blogspot.com/2008/08/greek-mythology-themis-and-source.html

The slimy slitherings in Golden Mile Complex are yet another manifestation of this shenanigan. It makes a mockery out of the collectivism element of “collective” sales! If the authorities continue to sit on their hands, the market will render en bloc sales to be "fait accompli" exercises because the law can (and will) be legitimately twisted by the market to allow the consortium of Developer-buyers to force the hand of the Minority by (i) timing the market and (ii) buying low for the last 20% to average-down the consortium's lock-in of upfront purchases.

It goes back to the fundamental question as to whether in land-scarce Singapore with a high target population for the coming decades and home ownership as one of our core socio-political factors, property speculation is to be facilitated as opposed to genuine home ownership. As a general rule of thumb, will a bona fide homeowner or real estate investor expect to sell a property within five years of purchase?
Hence, it was facetious to read a Business Times article (24 Sep 2009) by a specialist en bloc marketing agent positing that: “There is no way that any rule can please everyone. Democracy goes by majority rule.” That is equivalent to saying if majority of the whites think lynching of the blacks is acceptable, then we should pass a law to that effect and all the whites can merrily (and legally) lynch the blacks! That’s “democracy”, eh?

8. The Cockerel and the Horse. It amazes me to no end as to how politicians either shoot off their mouth or shoot themselves in the foot!

More than two years ago, when en bloc fever was at its height, Sunday Times (17 June 2007) reported that when interviewed about en bloc sales, National Development Minister Mah advocated that Singaporeans should downgrade and 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.”
Fast-forward two years later, with growing public criticism over HDB (public housing) price affordability, the Straits Times (2 Oct 2009) reported that Minister Mah asserted that comparing the prices of public flats today with those of 20 years ago is “not meaningful”. Mr Mah went on: “If we did that, we’d be comparing many things that we did 20 years ago, do we want to go back 20 years?”
So it begs the question: Say, 20 years ago, you bought a condo at $1mn. Now you sell it on en bloc basis at $2mn (the so-called "en bloc windfall" hype). Yet the $2mn en bloc pay-out would only buy you half the size of your en bloc condo in the same neighbourhood. Or you would have to move way out into the suburbs since you would not be able to “afford central area” (as Minister Mah squarely puts it). So is it “meaningful”??? Do we have a cockerel talking out there somewhere? Do we have many chickens running around sans their bird-brained heads as they die-die-must-sell-en-bloc?

To add salt to wound, Minister Mah goes on to talk about monetizing the real estate asset for income later in life which – in the case of HDB flats – involves selling the flat or participating in HDB Lease Buyback Scheme. Likewise for private condo owners who may similarly need to sell the condo in their twilight years as part of asset monetization, these condo owners will end up with a half-size condo or an outlying condo or a HDB flat to monetize eventually.

9. Singapore out-of-whack. With 44 years of nationhood under our belt, our people have toiled and competed and today Singapore has achieved a high GDP per capita, much to the envy and marvel of many other countries, I dare say.

Hence, it made me wonder why there seems to be a certain pervasive quiet desperation for (a) private condo owners to die-die-must-sell-en bloc and (b) HDB (public housing) owners to participate in Lease Buyback Scheme. It was interesting to read that there were 409 Lease Buyback applications to HDB but only 80 qualified and HDB may expand the target group for this scheme.

Then it all made sense when I read a UBS report (30 Jul 2009) covering 73 international cities entitled “Prices and Earnings (a comparison of purchasing power around the globe”.
Just for the heck of it all, I did the above table (please double-click on the table for legible viewing) to compare Singapore with:

(i) Zurich (since the 1980s, Singapore aspired to be “Switzerland of the East”),

(ii) Tokyo, Hongkong, Taipei and Seoul (the other Asian dragons),

(iii) Next rival city (for statistical proximity), and

(iv) Kuala Lumpur (for geographical proximity).

Compared against the above cities, Singapore’s pattern was interestingly parodoxical.

(A) In the areas of:
- GDP at PPP per capita (nearest rival: USA)
- Cost of Living (nearest rival: France)
- Price level incl rent/energy (nearest rival: Germany)
Singapore scored well and our nearest rivals are from First World countries! Ahhhh ...

(B) In the areas of:
- Wage Index (nearest rival: Russia)
- Domestic Purchasing Power (nearest rival: Malaysia)
- Purchasing Power of Wages for a Big Mac (nearest rival: Czech Republic)
- Purchasing Power of Wages for an iPod nano 8 GB (nearest rival: Slovenia)
- Average working hours/year (nearest rival: Turkey)
Singapore scored poorly and our nearest rivals are from Third World countries! Sheesh!!!

The picture is pretty telling, eh? But it is NOT a pretty picture at all for Singapore! In contrast, the scores are tightly correlated for all of the other abovementioned cities. In other words, where Zurich, Tokyo, Hongkong scored high in GDP/COL, they similarly scored high in Wage Index/Purchasing Power. Likewise, as Kuala Lumpur scored low in GDP/COL, they also scored low in Wage Index/Purchasing Power.

So the pattern matches for all of the abovementioned cities EXCEPT Singapore! In all the other cities, Life makes Sense (you are rich and so you live well; OR you are poor and so you live not so well) ... but here in this little red dot called Singapore, we are ensnared both at the wrong ends of the spectrum where we are so-called rich but we live poor!
Something is so out-of-sync in Singapore!!!

No wonder after working our whole life to buy a roof over our heads and despite home ownership being a cornerstone of the Gahmen’s political and social platform, most of us are now caught in a quiet desperation to monetize our family home (ie, HDB owners via Lease Buyback Scheme and private condo owners via die-die-must-go-en bloc even when faced with the guaranteed prospect of “twice-the-price, half-the-size, quarter-the-value” post-en bloc)! Are we a pathetic lot or what???
Have we failed in a way, dare I ask rhetorically?

Who else is coming to the en bloc block party?

Update following PM Lee Hsien Loong's National Day Rally Speech on 16 Aug 2009: PM Lee said: "... it’s not just the hardware, but also the heartware, the memories which we are creating, which is what makes Singapore tick”. With such en bloc laws in place - what "heartware" is PM yabbing about when the "memories" are of neighbours forcing you to sell the roof over your head without your consent, throwing acid over your family car, super-glueing your main door to the door-frame, giving you a dirty look within the confines of the lift or taking you to court many times over??? Fostered by the type of laws, policies and practices in our country, "what makes Singapore tick" at the bottomline is the base value of "what's in it for me"! Is that what you, you and you want for our young nation? Sigh ... tragic ...
_____________________________

Hmmm ... now that IRAS is NOT dancing until the music stops, I wonder who else is coming to the en bloc block party this National Day?
http://singaporeenbloc.blogspot.com/2009/07/iras-is-not-dancing-until-music-stops.html

Will the Ministry of Law (MinLaw) step up to the plate soon? Or is MinLaw still jiggling on the dance floor, eyes glazed-over ... in a daze after the 2006/07 kinetic en bloc frenzy and now bobbing mindlessly in a stupor, waiting for the en bloc tempo to pick up?

We waited for nearly a decade before the Land Titles (Strata) Act was amended in Oct 2007 - mostly in form but not much in substance. The Horizon Towers' en bloc saga exposed and settled so many fundamental issues and is a landmark court case for en bloc sales. The Appellate Court judges too did NOT dance until the music stopped. So how long do we have to wait with bated breath for MinLaw to stop pussying around?

It is noteworthy that the en bloc law was promulgated because of urban renewal and higher land-use intensity considerations. These considerations are manifestly under the purview of the Ministry of National Development (MND). Yet MND is NOT the primary driver for this en bloc law! Instead, it is MinLaw who in turn take on various passengers on this merry en bloc joy ride ... from MND, Urban Redevelopment Authority (URA), Building & Construction Authority (BCA), Singapore Land Authority (SLA), the Attorney General's Chambers (AGC), etc.

I probed and prodded about this curious state of affairs as to why MinLaw is the key "driver" (as opposed to being the dutiful "scribe" in crafting the legislation). Not surprisingly, I never got the answer. Hence, I mulled and mused as to whether it arose from a governance perspective (bearing in mind the overwhelming 80:2 composition of our Parliament and the application of party whip in parliamentary vote) - perhaps a need to instill institutional check-and-balance in the en bloc equation ... discreetly distancing MND from the key beneficiaries of this piece of legislation (viz, the Developer-buyers) because of the way Singapore's en bloc laws are skewed under Progressive Corporatism?

Personally, I do not doubt the wisdom of urban rejuvenation and I (grudgingly) accept the necessary evil of higher land-use intensity in teeny Singapore. Hence, these national needs are - to me - valid and, as a citizen, I support the "What" portions (viz, urban renewal and higher land-use intensity) but NOT the "How" bits (viz, the laws/policies as they presently stand). There are times when I ask what can I do for my country, just as there are times when I ask what is my country doing for me!!! Give-and-take, lol!

To achieve a national agenda item, there are many roads to go up this mountain, one of which is to use the engine of PPP (Public-Private Partnership). As PPP is used in many of Singapore's endeavours (locally, regionally or globally as we spread our wings to Suzhou and other parts of China, Indonesia's Batam, Malaysia's Johore Iskandar, etc), working relationships are naturally forged through the years under such PPPs. Whilst there is probably mutual appreciation of each other's desires and limits, I have no doubt that there is at ALL times a clear line dividing the PPP conjugal bed that is NEVER crossed. But that dividing line may well shift more to the left at certain times of the night or on certain days of the month or for certain seasons of the year, eh? After all, there are times to give and there are times to take - part of Life, eh? Whilst PPP is clearly NOT applicable to en bloc initiatives, can we deny that en bloc legislation promulgated by the PUBLIC sector is the very engine oil that directly lubricates PRIVATE sector Developer-buyers' smooth entry into existing sweet spots of prime/popular residential land? Whaddayou think???

In last year's 2008 National Day trilogy, I posited that - at a minimum - en bloc purchases meant "Buy one; Get one free" for Developer-buyers (if both could be sold at double price, then it would be 1-4-4 effectively). In case you are exclaiming "Oh" on a high note as you read this, here are 4 Os for you - Obviously Obscene Orgiastic Orifice for successful en bloc purchases! http://singaporeenbloc.blogspot.com/2008/08/en-bloc-why-it-is-not-right-for.html

If you are not breathless by now, you will appreciate why I concluded that en bloc sales are neither "right" for Majority Consenters (except en bloc flippers and serial condo raiders) nor Minority Dissenters!!! Rightfully, en blocs should PULL UP everybody (NOT just selected parties of Gahmen, Developer-buyers and en bloc flippers)! Instead, en blocs now PUSH DOWN existing owners who find themselves in a "Lose-Lose" situation (especially Owner-occupiers who heeded Gahmen exhortations to be prudent in using Central Provident Fund (CPF) savings to buy only one residential property as the roof over their heads)! The spiel of legal wrangles in Strata Titles Board, High Court and Appeal Court buttress my conclusion as we witness Minority sue Majority and vice versa, Majority sue Developer, and Developer threatens to sue Minority ... even the Strata Titles Boards joined the brawl but they lost!
For 2009, my National Day mullings and musings are provoked by the Straits Times article (10 Aug 2009) entitled "En bloc debate, HK style - Territory's debate holds up a useful mirror to practices in Singapore".

First off, Hongkong's existing en bloc legislation is much tighter and finely calibrated to:

(A) be more respectful of private property rights (90% collective consent),

(B) ensure sustainable redevelopment (property must be at least 40 years' old, taking into account the state of repair), and

(C) empower the tribunal to apply their mind and a more even hand - not just from a silo financial perspective but also from the multi-faceted social, historical, community and environmental perspectives.

Even then, Hongkong's proposed relaxation to 80% collective consent comes loaded with additional conditions where all but one unit has been acquired and the property is at least 50 years' old. The Straits Times reported: "And yet. the opposition to the proposed change in some quarters in Hongkong has been fierce. The change, they say, is tantamount to a subsidy for developers as it would mean that they would not need to entice as many homeowners with a good sale price".

Hongkong already has inherently tighter en bloc legislation even IF the proposed relaxation is passed, bearing in mind that (i) Hongkong severed her colonial ties only in 1997 (merely 12 years ago) compared to Singapore's 44 years of nationhood and (ii) Hongkong is reputedly sharper and nimbler when it comes to wheeling-and-dealing.

South Korea mandates "one-for-one" exchange in en bloc redevelopment to unlock the land value for existing owners even as their country achieves urban renewal and higher land-use intensity.

Singapore has an en bloc framework where there are only two certainties:

(1) Developer-buyer "buys one, gets one free" at a minimum because land value is primarily unlocked for the developer in an en bloc (NOT the existing owners) and the Gahmen takes a cut through development charges, differential premiums and stamp duties; and

(2) Owner-occupiers are guaranteed NOT being able to replace their homes sold by courtesy of their neighbours unless they are prepared to be a Squatter, Refugee, Downgrader or Downsizer - instead of the Utopia promised during the en bloc process, owners (especially owner-occupiers) find themselves in Ethiopia in the en bloc aftermath as they face-up to the harsh reality of "double the price, half the size, quarter the value"!

It almost borders on being a "legalized scam" (a classic oxymoron) conveniently brought to glorious fruition by Homer Simpson's home-truth of "never under-estimate the power of stupid people in large groups"! In "Hotel Singapore Inc" (sigh ... we have since graduated from "Singapore Inc"), I don't know about Majullah Singapura anymore! It is more a case of Merdeka Singapura, eh?

Incidentally, more than two years ago, I posted a blog entry suggesting a minimum 30-year timeframe before an estate could be considered for en bloc sale:
http://singaporeenbloc.blogspot.com/2007/03/en-bloc-knowledge-ten-year-timeframe.html
On the one hand, Gahmen has over the years raised the minimum standard of concrete quality in response to changes in design trends and building technologies. Thus, compared to buildings built in the 1960s-70s, the newer buildings are built with concrete with a higher deterioration tolerance. But on the other hand, Gahmen passed laws that have apparently resulted in the ignominious "youngest en bloc" record of a 4-year old building (Portofino at Sarkies Road) being demolished pursuant to an en bloc sale!

Interestingly, The Straits Times (28 Feb 2009) carried an article by the National University of Singapore (NUS) Civil Engineering Deputy Head who wrote about Design for Disassembly (DfD) process. This involves "the management of resources throughout the life cycle of a building - from extraction of raw materials, through manufacturing, design, construction and operation, to the eventual demolition ... the next generation of buildings constructed in Singapore can be viewed as store houses of future building materials". Whilst DfD is made out to be an environment preservation effort, I have niggling suspicions that it will likely fuel the current "throw-away" consumerism in much the same way that it is now cheaper to discard refrigerators, cookers and air-conditioners than to repair them.

Even more interestingly, there is now a trend toward Biomimicry where future buildings will hopefully be designed and built to mimic Mother Nature's symbiotic "waste-not-want-not" value system. Hopefully, biomimicry technology will be priced at a high enough level to deter "throw-away" consumer behaviour and force our urban planners to be more visionary and proact ahead of the curve (instead of react behind the curve).

Under our present en bloc legislation, we have this 10-year estate age distinction. But, technically, we could go en bloc one day after the Temporary Occupation Permit (TOP) is issued if 90% (by share value and strata title area) agree within this 10-year period (majority consent level drops down to 80% once estate hits 10 years in age). Tracing back to the old parliamentary and Select Committee records, this bizarre "10-year estate age" legislative provision came about because the Gahmen was ostensibly concerned about the possibility of say, a small but new development sandwiched between two small/mid-size but very old estates, thus hampering optimal redevelopment of the two adjoining estates.

However, instead of taking the lead from Hongkong where the tribunal would be given the responsibility and discretion of evaluating the circumstances on a case-to-case basis (perhaps in consultation with urban planning authorities) for such OCCASIONAL EXCEPTIONS, Singapore took what I consider to be the easy and lazy way-out, viz, by applying the law carte blanche but with a higher consent level set at 90% (instead of the usual 80%). Hence, whenever I read press reports of Singapore's Sustainable Development initiatives, I'd take it with a huge dollop of salt and let out a snorting laugh from one end (adoi ... no need to ask what emanates from the other end lol!).

In Life, one can't get too serious, eh? And they say that "Laughter is the best medicine" too!

IRAS is not dancing until the music stops

1. Ambulance chasers, en bloc chasers. In my previous blogs (Aug 2008 and Feb 2009), I commented that whilst we - as a society - have rejected ambulance-chasing lawyers, we have conveniently turned a blind eye to "no sale, no fee" structure in en bloc sales where marketing agents and lawyers would incur out-of-pocket costs and intense efforts for up to 12+12 = 24 months to collect signatures for the Collective Sale Agreement, source/negotiate/commit a Developer-buyer to a Sale and Purchase Agreement and apply to the Strata Titles Boards for a collective sale order. Thus, the marketing agent and lawyer have a lot to lose if the en bloc sale fails. With so much at stake, Behaviourial Economics would likely kick-in. Marketing agents and lawyers are also human beings with frailties and weaknesses ... they may be induced to sail very close to the wind or possibly even over-step the fine line.

In the murky waters of the en bloc pool and the dark alleys of such en bloc estates, the burden of proof is onerous, even for Majority Consenters and much worse for Minority Dissenters.
http://singaporeenbloc.blogspot.com/2008/08/greek-mythology-themis-and-source.html
http://singaporeenbloc.blogspot.com/2009/02/7-purgative-sense-of-deja-vue.html

2. IRAS is not dancing until the music stops. Up till Feb 2009, this "no sale, no fee" connivance apparently extends to stamp duties on en bloc Sale and Purchase Agreements except that the Inland Revenue Authority of Singapore (IRAS) has now stepped up to the plate and (finally) refused to dance to the tune of "no sale, no tax".

On 6 Feb 2009, the Strata Titles Boards (STB) issued Circular No 1/2009 requiring the law firm submitting the application for collective sale order to (i) certify that all documents have been stamped and (ii) provide evidence of such stamping for inspection by the Registrar.

3. The music plays on ... or does it? Under the Stamp Duties Act, Cap 312. stamp duty is payable by the Developer-buyer BEFORE the Sale and Purchase Agreement is being executed. Otherwise, there is a grace period of 14 days from the date of execution to pay stamp duty, failing which it would attract a penalty of double or four times the original stamp duty if stamped within/after 3 months from execution, respectively.

If stamp duty is not paid, the document would not be admissible as evidence.

All this while, the industry practice in individual property transactions is to pay stamp duty on the Sale and Purchase Agreement within 14 days from date of execution (ie, way before the usual 3-month period for legal completion).

However, for en bloc sales, it would appear that the prevalent practice is to stamp the Sale and Purchase Agreement and pay the quadrupled penalty upon legal completion AFTER the collective sale order is issued by STB. Depending on the speed/efficacy of the whole process for each en bloc estate (eg, applying to STB, going through mediation rounds, getting STB tribunal or High/Appeal Court hearing dates, waiting for judgements, etc), legal completion may well be 12-18 months after date of execution of the Sale and Purchase Agreement. Nonetheless, everything is still hunky-dory if STB issues the collective sale order. The Developer-buyer happily pays the stamp duty penalty even though it is quadrupled. At such a steep penalty rate of 4 times, IRAS also has its own version of "en bloc windfall", if I may say so with an impish grin, eh?

4. IRAS getting irate. Now that the music has come to a screeching halt and the pick-up in tempo is likely to take some time ... what with Resilience Package pay-outs, Budget deficits, fall in tax revenues as jobs are lost, salaries are cut and businesses are either being propped up and chalking up losses or are folding-up/re-locating ... with all these weighing us down, IRAS needs to get cracking. Time to top-up public coffers, I suppose.

Interesting questions:

(a) On what basis did the Registrars of STB and High Court admit the unstamped Sale and Purchase Agreements as evidence in tribunal and court hearings for the various estates embroiled in en bloc battles over the past several years? Shouldn't the unstamped document be impounded by the Registrars at the time as they are empowered to do so?

(b) Didn't the Developer-buyer's lawyer advise their client to stamp the Sale and Purchase Agreement within the 14-day grace period? Or did the Developer-buyer as client choose to ignore such legal advice? Was it sheer coincidence during the last en bloc frenzy that so many Developer-buyers of different shapes and sizes consistently ignored such advice of various law firms (assuming prudent legal advice on stamping was dispensed)? If not, then it would mean that the Developer-buyers as clients were ill-advised, in which case IRAS and Law Society could perhaps get their act together and knock some uncommon common sense into the brains of legal eagles (oops ... they are not bird-brained by any stretch of imagination)!

(c) Since the Developer-buyer has the obligation to stamp the Sale and Purchase Agreement, could such Developer-buyer turn around to require the Sale Committee to apply the en bloc deposit towards payment of such stamp duty/penalty in order to admit such document in STB tribunal hearings?

The issue may be twisted into a chicken-and-egg situation because - under the Stamp Duties Act - there is provision for the ad valorem stamp duty (but not the penalty) to be refunded if the Sale and Purchase Agreement were to be rescinded or annulled due to STB's "refusal" of the application for a collective sale order.

(d) Where STB dismisses the collective sale application or declines to issue the collective sale order for whatever reason, would the Developer-buyer now cough up the stamp duty and quadrupled penalty since the en bloc sale now cannot proceed or is aborted? Assuming that the criterion of STB's "refusal" is met under the Stamp Duties Act, it may be time-consuming to get a subsequent stamp duty refund, bearing in mind that there is no refund for the quadrupled penalty!

Since the Developer-buyer is now deprived of the juicy en bloc cherry, would the Commissioner of Stamp Duties be sent on a merry goose chase? For the Developer-buyer, since there is no cherry to make sauce, why be a goose now and lump the quadrupled penalty, eh? For IRAS, sauce for the gander is also sauce for the goose and quadrupled penalty is not to be sneezed (or quacked) at, especially when the pickings are lean.

NOTE: By way of digression, it should be noted that a lot is at stake in an attempted en bloc sale for both the Developer-buyer and the owners (whether as Majority Consenters or Minority Dissenters). The owners would be obliged to sell their homes if STB issues the collective sale order - against their will in the case of Minority Dissenters. Conversely, if STB does not issue the collective sale order, shouldn't the Developer-buyer have something at stake that is commensurate with the risks/benefits of the en bloc transaction?

Suggestion: Forfeiture of Developer-Buyer's en bloc deposit but with refund of stamp duty (but not the penalty) unless non-issuance of the collective sale order is due to misconduct of the Sale Committee, Consenting Majority, marketing agent or lawyer. Otherwise, there is no inherent check-and-balance to deter Developer-buyer from less-than-scrupulous conduct, covertly or overtly, directly or indirectly through proxies or nominees. After all, if STB does not approve the collective sale application due to, say, lack of good faith arising from any relationship between the Developer-buyer and the owners (ie, one of the grounds provided under the Land Titles (Strata) Act), then there is no skin off the Developer-buyer's nose because both the en bloc deposit and stamp duty (if paid) would be refunded!!!

Yet another classic case of having your cake and eating it too, eh? Reminiscent of the typical Wall Street culture of "Heads, I Win; Tails, You Lose", correct? With the authorities persisting in hands-off approach and without legislative protection, Sale and Purchase Agreements would naturally be drafted to skew towards the Developer-buyer's advantage. The "no sale, no fee" stake is probably too high for the en bloc lawyers to object violently to such skewed drafting, especially when their clients (viz, typically pro en bloc Sale Committee members, clueless Majority Consenters and stonewalled Minority Dissenters) won't or can't know any better.

5. IRAS playing catch-up with Cha-Cha-Cha. Under the current Public Consultation for the upcoming Income Tax (Amendment) Bill 2009 that will close on 14 July 2009, a new policy concession is being proposed, viz, the profit from the sale of only one property on or after 1 Jan 2010 will not be taxed if the individual owner has not disposed of any other property within 4 years prior to such sale.

With this 4-year look-back window, the Gahmen will share in the spoils of the serial en bloc raiders and the sub-sale flippers!!! As the last en bloc frenzy started in 2006/2007 and the Property Market Index hit a new peak by 1H2007, there is a clever twist in crafting this amendment. Applause for IRAS ingenuity! Ooops, not so fast ... because the flippers are more zany and nimble than IRAS - they are now offloading all their units (some even at a loss) before ringing in New Year's Day on 1 Jan 2010!!! As these flippers sip their champagne and eggnog on the New Year's Eve on 31 Dec 2009 with colourful fireworks booming off against the backlit sky, they would drink to the health of the IRAS tax snoops no doubt! Who wants to bet that the flippers will outwit IRAS?

Putting aside any gaps in this proposed amendment, does this 4-year window send a message that it's perfectly kosher to flip and artificially jack-up real estate demand from either sub-sale or en bloc flips so long as you carefully time your flips once-in-every-fourth year. Hmmm ... is there some "full moon effect" on our policy makers in introducing such "leap year" element?

Given the nature of real estate purchases, a typical home-buyer or genuine investor is likely to hold the property for at least ten or five years, respectively. As an owner-occupier, how many of us would move house every 4 years? As an investor-occupier, would it take us less than 4 years to fully amortize renovation or furniture/fittings expenses, bearing in mind financing costs and rental/tenancy fluctuations?

Since the present law already provides for gains from property sales to be taxed as "trading gains" or “gains or profits of an income nature”, is this yet another case of a law not enforced and closing one eye or looking the other way when people have been merrily flipping in sub-sales and en bloc sales? Similar to non-enforcement of stamping legislation for En Bloc Sale and Purchase Agreements under the Stamp Duties Act prior to Feb 2009? Why???

Hmmmm ... and I thought that Singapore is known for its rule of law (and enforcement of laws). Sigh ... so much for Home Ownership policy as a cornerstone of the Gahmen's political/social platform that consequently sanctions use of nest-egg savings from Central Provident Fund to buy residential properties. Another sigh ... so much for the official economic spiel about clampdown on artificial (speculative) demand exacerbating asset bubble boom-bust risks. A bigger sigh ... the fact that "en bloc potential" is already an entrenched investment criterion in the real estate market puts lie to parliamentary speeches about "urban rejuvenation", "higher land use intensity" and "creating more housing units for Singaporeans" when this unjust law was promulgated. Well, Cha-Cha-Cha - one step forward and two steps back? Or more like a salacious La Bamba grind-gyrate with Eyes Wide Shut?