Source : The Straits Times, 9 Aug 2007
Having read Mr Gene Chia Choon Hwee’s misgivings in his letter, ‘En-bloc sale frenzy: Concerns of a home owner in Singapore’ (Online forum, Aug 6).
Allow me to offer my comments as another concerned resident living where a group is strenuously engaged in pressing for an en-bloc sale.
We live in a private estate which is regarded as being almost unique in design in Singapore, but the group is keen to pre-empt impending changes in the pipeline in government rules on en-bloc sales.
For the average Singaporean, the purchase of a property, whether in public or in private housing, is the biggest single investment of one’s lifetime, made with the primary intention of having a roof over one’s head, with little thought of profit, or even notional loss when the property market goes off the boil.
In our case, the price of the property we purchased dropped by as much as 30 per cent in a couple of years. This is unlike investment in the stock market where shares can be re-purchased with profit.
The empirical evidence in the case of en-bloc sales is that not many sellers are happy with the subsequent relocation, mostly in new quarters which compare unfavourably with where they were previously living. A lot of the extra cash that was supposedly the incentive for selling will go towards renovation of their new home.
Intending sellers fail to recognise that the ease with which they can sell their property must necessarily mean that they will find it correspondingly difficulty in acquiring another.
While the Government may be disinclined to interfere in the property market, one area where it should step in, and urgently, is in the rules presently governing en-bloc sales, which require 20 per cent non-assent to stop the process.
There is plenty of room to argue that this goes against the principle of ‘minority rights’ which need to be protected, even if not zealously, then at least adequately.
In the corporate scene, minorities can continue to retain their stakes unless the volume is less than 10 per cent.
What is significantly so different between property and stocks for the difference to be double?
In fact, taking into consideration the reality that a property is an investment bought with a long-term view in mind, for continued occupation and not for profit, the 20 per cent threshold seems illogical.
The Government should relook this formula and revise it.
Narayana Narayana
Wholeheartedly agree...
ReplyDeletethe Government/STB needs to do more in disciplining the processes, documentation, communication and timing surrounding en bloc sales....
see my article:
CONDOMINIUM RAIDERS –
The En Bloc Junkies
They're a new breed of greed: silently getting a financial footprint in the door of the contented condo owner by buying the low cost no view unit, they don't move in and often don't bother to rent out. They quickly ingratiate themselves with the bored Management Committee, touting fantastic sales prices that are mostly fictitious (“we’re only showing you the upside yield”), planning to intimidate people to "sell now, catch the wave !!" and push people into en bloc so that their own personal financial goals can be achieved at the expense of people who want to live and retire in peace.
They are an increasing band of people in and around Singapore who make it their part or full time job to push the en-bloc bandwagon across the leafy glades of young condominiums, some barely past their 10th birthday. Their agendas are selfish and worse, they ‘re proud of it “this will be my third en bloc sale this year” brags one condo raider in district 15.
Hold on to your floor tiles, everyone ! Don't let these condo raiders bully you into an unwated en-bloc - 9 months later, you may regret it.
Many of the en bloc sales are haphazard processes, incompletely documented and driven by a group whose agenda is to pull it off before the new en-bloc legislation takes effect in October. They overlook the facts that your condo may in fact be worth more as individual units 3-4 years down the track than as an en bloc now. This is particularly relevant to Tanjong Rhu & Keppel/Pasir Panjang owners as the IR unfolds. These en-block junkies don’t talk about the upheaval, the displacement and the potential downgrading of your home – it’s unlikely you’ll be able to replace what you’ve got now, even with a fistful of dollars.
Make sure you:
- understand every step of the process and challenge any departures from it.
- question the agendas of the en-bloc pushers and newly formed sales committee and look for conflicts of interest. Demand complete transparency: what are the family or business links?
- check the sale figures they quote at the first meeting: they are usually inflated to engender excitement.
- do not allow the MC to use the condo sinking funds to finance the costs of en-bloc (property consultant, lawyer etc). They need voted permission to use them for anything except property enhancement.
- understand the full implications : the upheaval, trying to find a replacement property that is as gracious and spacious as your home.... very difficult.
- Look at the longer term - if your condo is "young" (ie, around 11-12 years) it's likely to fetch more in a few years' time when the IR's are completed.
- If in doubt, say "no", there is likely to be another opportunity downstream.