Saturday, 19 May 2007

An Alternative to Collective Sales - NSW's Renewal Plan

Well, who would have thought this is impossible.

New South Wales is undergoing urban renewal reforms as well, and the Property Council of Australia has looked into the Collective Sale process that we have in Singapore. And they came up with an alternative that looks like (a) they've drawn from the Singaporean experience, (b) they've thought things through more thoroughly, not shirking from the complexity of what they hope to achieve, (c) they've taken into consideration the fact that Australian owners may not like the Singaporean model which favours financial stakes over social stakes and issues of hearth.

They call it the "Renewal Plan", and is akin to a systematic model of legislated collective exchange.

Note that, as far as I can tell, it is still under discussion or refinement. Anyone who has more information on it please contact me. (Wish I had found this earlier; it'd have gone into the MinLaw document!)

The original document that discusses the Renewal Plan can be found here.
The subsequent document that refines the Renewal Plan can be found here.
[These are pdf files - you'll need Acrobat Reader to read them. Search for "Renewal Plan" within the documents]

A choice quote from their document, which critiques the Singapore collective sale scheme:-

However, this scheme does not give owners the confidence that they [owners] will receive fair and equitable financial benefit from the termination of the scheme. Specifically, if objections have been made against the application for termination of the strata scheme, the Board will not approve the application if there is the potential of financial loss to an owner, or sale proceeds will be insufficient to fund or to redeem a mortgage or charge. The Property Council does not support this, as there is potential for manipulation of financial records and misinterpretation of “financial loss”. It may be more effective if the level of financial return was resolved through a “just terms” provision.
Similarly, this model lacks detail regarding the process to be followed once agreement that the strata scheme be terminated has been obtained. Detailed provisions relating to the vacation of the building by owners, redevelopment of the building and transfer of the remodelled units must be clearly established, however this could be set out in documents attached to the application for sale and termination of the strata scheme.

"Vacation of the building by owners" relate specifically to my discussion (Myth #6) on Completion Date. Redevelopment and transfer refers to their Renewal Plan scheme. Feel free to discuss the Renewal Plan in the comments section.

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