Thursday, July 10, 2008

Bay Window Loophole Slammed Shut By URA

Source : The Business Times, July 10, 2008

Developers will now have to include planter boxes, bay windows in GFA

Here's some bad news for developers: a loophole that helped them sell in excess of the gross floor area (GFA) has been plugged.

The view changes: Till now, developers had been charging buyers for bay windows and planter boxes, even though these features were exempted from GFA calculations

Till now, bay windows and planter boxes, which often make up around 5 per cent of a condo's saleable area, had been exempted from GFA calculations. But in providing them to buyers, developers had been charging buyers for them.

This exemption will no longer apply from Oct 7, according to a circular issued by the Urban Redevelopment Authority (URA) on Monday.

The exemption has led to 'unintended and undesirable consequences' and 'unwittingly shifted market behaviours and negated the objective of the GFA exemptions for these building features', URA said in explaining why bay windows and planter boxes will no longer be exempted from GFA.

Explaining the impact of the new rules on residential developers, a property industry player said: 'Developers' profit margins will be reduced because they will no longer enjoy this benefit of not counting bay windows and planter boxes as part of their GFA and yet selling this space to home buyers. If the developers want to have these features, they will have to pay the full price since these will be included as GFA.'

The new rules apply to all residential developments - landed and non- landed - and are expected to lead to a rush of new development applications, especially from developers who have bought land recently.

URA said bay windows have been 'found to have contributed significantly to the building bulk, affect the design of buildings and generally do not encourage energy efficiency'. 'Often the provision of bay windows is intended mainly to increase the saleable strata area,' it noted.

Planter boxes were introduced to provide 'vertical greenery' in condos and create 'visual relief to our high-density living environment'. However, feedback and URA's investigations have revealed extensive unauthorised conversions of planter boxes within residential units for use as a balcony space or an extension of the living room instead. The planning authority said it has also received feedback that condo owners are unhappy that they are not allowed to convert planter boxes - which are part of their strata space and which they paid for when they bought their unit - to other uses.

'URA will leave it to the developers and building owners to decide if they wish to continue to provide bay windows and planter boxes for their residential developments so long as these building features are counted as GFA. The industry will have a free hand to design and provide these building features based on their commercial considerations as there will no longer be restrictions on the size of bay windows and planter boxes,' URA said.

Planter boxes within non-residential developments (like hotels and business parks), as well as those located within the common areas of residential developments like sky terraces, will continue to be exempted from GFA as these areas are typically well-planted and maintained by the management corporation for the benefit of all occupants in a development.

Only formal development applications (which exclude outline applications) with a valid provisional permission issued before Oct 7 will continue to be evaluated under the old GFA guidelines. For approved developments, bay windows and planters will remain GFA-exempted until the buildings are redeveloped, URA added.

Knight Frank managing director Tan Tiong Cheng had an alternative suggestion for URA. 'Instead of just removing GFA exemption for bay windows and planters, URA could have let the exemption continue but require developers to specify and identify these features in their sales brochures so that buyers know exactly how much of their strata area is taken up by bay windows and planter boxes. Buyers can then decide whether these features are as attractive to them.'

DTZ executive director Ong Choon Fah observed that bay windows can be a useable area - for sitting, keeping books or displaying photo frames, for instance. 'Planter boxes, on the other hand, often end up not being used for the purpose they were meant for,' she added.

Summing up the change, a seasoned industry observer said: 'This closes one loophole for developers. They've had a good run on it.'

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