Minority Voices Shouting in Frustration

For various reasons, a previous post has been removed on the request of the original poster. I'm including here in its stead, various letters to ST Forum:-

More transparency needed to protect owners' interest in en bloc sales
Straits Times Forum Online - 17 Apr 2007

TIGHTENING the tendering procedures and making the sale process more transparent would help to protect the interest of owners in en bloc sales, majority and minority alike.

The tender process being practised now is nothing more than a sale by negotiation in disguise. Developers hardly ever put in a firm price in their tender as they should; they merely express an interest in negotiating a sale.

A collective sale by negotiation with a developer always works to the disadvantage of the owners. In a properly conducted tender, it is the owners who set the terms. They can take time to work out the collective sale agreement and the detailed tender conditions. The highest bidder above the reserve price gets to buy the property.

In a private treaty negotiation, on the other hand, the bidder gets a chance to set the terms, often without reference to the conditions the owners had agreed for the tender.

Negotiating positions of the owners have to be worked out in open discussion, but the developer can play his cards close to his chest. One side's bottom line is exposed, while the other side's is carefully hidden.

Furthermore, when an offer comes in, owners have very limited time to work out their positions. Pressure can be brought to bear by the developer or the property agents to get terms to their liking. The stress creates dissension among owners, pitting majority against minority, which the developer can use to his advantage.

The reserve price in a tender is meant as the fall-back in case you cannot get more in an open competition. But when a tender is turned into a private sale, the reserve price is misused merely as a gauge to what price the developer, now free from open competition, feels inclined to offer.

This is particularly harmful to the owners in a rising market and when the offer comes in near the end of a long validity period of the CSA.

Public tenders are uniquely suited for en bloc sales. A sale by negotiation lends itself to abuse. It should be made illegal, for the sake of keeping the public peace and protecting the interest of owners.

Regulations should be introduced to require en bloc sales to be done solely by public tender, and, even more importantly, to require that tenders be conducted to the same standard of transparency as those conducted by our public authorities in the sale of land, such as the URA.

Ms Teresa Boon

So unfair that there's little those who oppose en bloc sales can do
Straits Times Forum Online - 14 April 2007 [Comments section contains the original which the letter writer sent to me]

FOR the very same reasons that collective sales are a nightmare for old folks, they are a nightmare for all. Unfortunately, we live in a mercenary society,

Developers looking to top up their land banks and businesses stick to this stand to make money. So do property owners.

But at what price in human terms? We bought our condominium because of its location, with the intention of a happy retirement. Now we worry constantly because we have been served notice that a Pro Tem Committee of five is working with two estate agencies and a leading law firm to present us with their proposals.

Why do we worry? Quite simply, why should we have to move at all? If this madness prevails, where can we find another home to replace this one? We should be given the freedom to choose where we wish to live.

Let interested parties buy up individual units and sell blocks of them to the developers; or let the developers search for and buy units themselves. Why legislate that we must sell our homes?

There is an answer - live in a landed home. But how many can afford - or want - one?

Anne Wong Holloway (Ms)

Collective sales a nightmare for old folks
Straits Times Forum Online - 7 April 2007

I REFER to the letter, 'En bloc sales: more questions that need answers' by Mdm Ong Beng Choo (ST Online Forum, April 3). One important issue that has not surfaced is how collective sales create a great deal of anxiety among old folks who may suddenly find themselves uprooted and relocated to an unfamiliar place despite their objections.

The process of searching for suitable replacement homes and subsequently moving house, especially to a new location, can be demanding and frustrating, especially for elderly folks who may have bought a home for retirement. There are instances where old folks bought a home only to face the prospects of having to move again due to collective sale.

To help folks who bought a home with the intention of retirement, I suggest the Ministry of Law, in reviewing rules on collective sales, in fairness to minority owners, examine how concerns of old folks can be managed to alleviate their anxiety.

The ministry could consider the feasibility of introducing a time bar, say 20 years, before which date collective sale is disallowed unless there is 100 per cent approval. Older folks would than have some peace of mind as to the maximum length of stay in their new home before they proceed to buy.

Lim Chong Leong

En bloc sales: More questions that need answers
Straits Times Forum Online - 3 April 2007

NOWADAYS, when I look left, right and centre, there is an estate up for en bloc sale. It is good for older estates to be renewed. But there are a lot of questions that need to be answered or cleared up.

What legal rights are the members of the collective sale committee empowered with? Does the collective body give up all its rights once it has nominated a sale committee?

Can the committee decide on the allocation of the sale proceeds?

Can it decide on the law firm and change lawyers when it wishes?

Should the lawyer who is paid his legal fees with regard to the collective sale be entitled to retain the interests which can be a large sum because the stakeholding sum is so huge and may be for a long period?

Should the members of the sale committee feel that they have been misled by the lawyer or the agent, do they have recourse after they have signed the appointment letters?

And a most pertinent question is: Can the members of the sale committee, the agent and the lawyer or either one party arrange a private agreement with one or a few others to ensure that the sale goes through?

There are more questions than just the ones above.

Is the Strata Titles Board empowered to ensure that the sale is fair to all? If not, then who or which body in Singapore will oversee the actions of all involved and ensure that there is transparency?

There is talk of subsidiary proprietors who have been offered more to ensure that the 80 per cent target is met.

There is also talk that subsidiary proprietors going to arbitration at the Strata Titles Board eventually signed and agreed to the collective sale that they were vehemently opposed to.

Mdm Ong Beng Choo

Forced into collective sale, now must pay $13,000 to agent
Straits Times Forum Online - 2 April 2007

MY NEIGHBOURS have succumbed to the en-bloc fever that seems to be sweeping Singapore at the moment. Having formed a sales committee and obtained the 80 per cent acceptance needed, they put our estate of 34 homes up for sale.

An offer has been received from a developer that exceeds the reserve price and it looks like a sale will go ahead. While my wife and I had no desire to move and hence did not sign the collective sale agreement (CSA), we can understand the logic of the Government facilitating property rules to allow en-bloc sales in land-scarce Singapore. We can also see why our neighbours are tempted by the generous premium that selling by this route will net.

However, as part of the sales process we must now pay the sales agent a commission of more than $13,000 for forcibly selling our home against our wishes. While I have no doubt the agent has been diligent in his duties and done his best to achieve the highest selling price possible, it was not something we asked him to do. In fact, it was contrary to our wishes.

It is adding insult to injury that, not only will we be homeless by the end of the year and need to find a new place to call home, but we must pay for the privilege of being booted from our own home!

While it will be too late to resolve our predicament, perhaps when the Strata Titles Board next reviews the rules of en-bloc sales, agents fees' payable by minority owners is an area that needs to be addressed.

Jonathan Veel
Tags: real estate, singapore, collective sales, condo, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, property, collective sale, Enblocking Singapore, Enblocing Singapore, Enbloccing Singapore

Minority Owners Wanted

Apologies to all for not updating the blog these past 2 weeks. Been busy with work, although I'm aware of recent proposals to change the enbloc regulations. I'll talk about that in the near future but in the meantime, I'll continue to update the En-bloc List (which has become a source for investors, expats, and minority owners) and more importantly...

I have been approached by a reporter from a local newspaper to obtain contacts for MINORITY OWNERS. They want to do a piece on the plight of minority owners and need our help.

For her own record, the reporter will need your personal details but these can be kept out of the newspaper piece (ie you can be relatively anonymous to the public; but the reporter needs to know her sources). So here's your chance to voice your plight about the enbloc madness that has gripped the country. Interviews can be done via phone or email.

If you are interested, please contact me - enblocsingapore@hotmail.com - and let's talk first.

When you email me, let me know why you are/were a minority owner first - your situation and plight. I'll compile a list of potential interviewees for the reporter and she can then choose who she wants to interview and subsequently incorporate into her piece. Suffice to say she has done substantial coverage of enbloc sales in Singapore, but largely from the point of view of the success stories. Since then, there's been an increasing sense of helplessness, anger, frustration, by minority owners that she has been alerted to, and would now like to do a piece on.

Let's not let that opportunity disappear. For those who have been evicted from their homes, who felt that they have lost their individual rights to their homes, who have been bullied and threatened into signing their homes away, etc, please.. contact me. There must be THOUSANDS of people who have disagreed with their development's enblocs by now, and have no recourse but to accept their fate.

Give the public your voices.

Dr Minority - enblocsingapore@hotmail.com
ps. I'll leave this post on the front page for a week. Then I'll resume my posts.

Tags: Enbloccing Singapore, Enblocing Singapore, Enblocking Singapore, collective sale, property, enbloc sale, enbloc, en-bloc sale, en-bloc, en bloc, condo, collective sales, real estate, singapore

Financial Loss Couple Goes to Court

Two pieces of news - Mr Yeo Loo Keng and his wife Cheryl Lim are bringing their financial loss case to the High Court. Good for them and I wish them all the best in their fight. I can only hope that the High Court is able to see the inherent contradiction between the legal definition of financial loss - as one that embodies individual rights - and the 'landmark ruling' by STB which states that CPF losses could not be counted as such since (I believe) it is within the realm of individual rights, along with renovations and interests.

Here's the relevant section from the Straits Times 2 Mar 2007. Following this is another letter to the Today paper dated 28 Feb 2007 by Henry Lim.

Couple go to High Court in last bid to stop sale
Straits Times
2 Mar 2007

The couple's lawyer, Mr Leong Yung Chang of Veritas Law Corporation, said the main thrust of the appeal would be that loss of CPF money should be considered a deductible expense.
He also confirmed this will be the first time the High Court will hear such a case.
Although we face the risk of losing, we feel the public needs to know the High Court's position and if it ratifies STB's ruling,' said Mr Yeo.
He also said he felt the laws on collective sales, passed in the 1990s, have 'swung the pendulum too far against the interests of minority members'.
There's a general feeling of a need for greater protection for people like my client who are forced to suffer a loss,' said Mr Leong.
For the collective sale to be approved, the reserve price has to be met and 80 per cent of Waterfront View's owners have to agree.
Madam Valerie Ong, a 45-year-old housewife whose estate is currently in the process of a collective sale, told The Straits Times that she sympathised with the couple's position. She said she believes a policy review' of collective sales is overdue, especially with the huge increase in such sales in the last few years.
Waterfront View's sales committee member Kevin Tan said he was surprised at the couple's decision, but was prepared to fight all the way'.
If he wants to up the ante, we have no choice but to respond.'
Another resident, Mr David Govinden, said residents would definitely be upset that the couple are taking the matter further, as we thought the chapter was over'.
Mr Yeo said he had no intention of causing inconvenience to residents but was acting within his rights.
I don't want to regret not appealing. This is the final step we can take,' he said.


Senior citizens look forward to peaceful retirement, not financial gain from en-bloc sales
Letter from Henry Lim
Today - 28 Feb 2007

Handsome profits are the chief reason for en-bloc property sales having gained so much popularity. In the early days, en-bloc sales were confined mainly to old developments, with developers also taking the opportunity to build up their land banks. Over recent years, however, the main motivation has become the huge monetary gain from such sales, regardless of the age of the development.

We have also seen attempts by homeowners going to court to stop such sales for personal reasons but without success, the argument being that the current law does not allow for personal reasons to override majority concerns. The en bloc fever has, unfortunately, caused some uneasiness among senior citizens who have hoped to live out their retirement years in their present homes and who view relocation as unnecessary and disturbing. Some senior citizens have downgraded to small private apartments for practical reasons. It is thus very upsetting if they find themselves having to relocate years later. My wife and I are among these. We recently moved to a small but comfortable apartment, hoping to live out our retirement without having to move again. Alas, we have just heard that our development is considering an en-bloc sale. We are very upset and anxious about what the future holds for us. I am sure many other senior citizens also harbour such anxieties, and look forward not to financial gain but to a peaceful retirement.

In this respect, the Housing and Development Board (HDB) has taken the lead with its Selective Redevelopment Scheme (SERS) whereby new apartments are built to relocate affected HDB owners before any redevelopment starts. It has made the relocation process more acceptable and convenient, especially to older folks.

For private developments, I would like to suggest that a time bar be imposed before a development can be sold en bloc. Taking into consideration the needs of senior citizens and need for re-development of old properties, it would be reasonable to allow en-bloc sale if the building is more than 30 years old from date of completion.

This advance notice would allow all owners to plan for their future accommodation, whether they intend to buy for short, medium or long term. If a person is over 50 and looking for a home to stay in till his last days, he should then consider buying a new property which will at least give some certainty that en-bloc sale will not take place for the next 30 years.

I strongly feel that the authorities should review current rules governing en-bloc sale, to give due weightage to the concerns of senior citizens, while at the same time not stifle future redevelopment.

Tags: financial loss, senior citizens, collective sale, property, enbloc sale, enbloc, en-bloc sale, en-bloc, en bloc, condo, collective sales, real estate, singapore, Enblocing Singapore, Enblocking Singapore

Excellent Comment with Numerous Valid Points

A chap by the name of "Pariah" posted this in my comments, what must arguably be the longest comment ever made! Nevertheless, he/she has made some very valid points in his cogent arguments about En-blocs. Do have a read through... I particularly liked his idea in point (7) on a more rigid structure for allowing subsequent en-bloc bids to occur. This will be useful for owners who do not wish to be traumatised by repeated attempts, year after year.

Pariah - thanks for your very thoughtful, and well-argued comments! It heartens me to know there are others out there, and I'm not a lone rambling voice in the wilderness.

From The Pariah, posted 26th Feb 2007

In this New Millennium, the spate of Collective Sales has hit those of us in Districts 9 and 10 where East meets West, as Dr Minority puts it so elegantly.

1. Constitution. Is it even constitutional, I wonder? Perhaps, it is only in this little red dot where North nearly meets South where a law could be passed in 1997 with such equanimity by a Parliament of 82:2 mandating collective sale of Privately-Owned property based on 90% share-value majority if your estate is less than 10 years old from the date of issuance of TOL (Temporary Occupation Licence) or 80% majority if 10 years or older. Should a collective sale of a property bought prior to the enactment of this law be subject to this 90% (or 80%) majority?

2. Impact vs Regulation. What is even more galling is that after passing this "innovative" piece of legislation in 1997, they have conveniently left a huge void on everything else related to it.

2.1 To sell the entire estate - there is no regulation or legislation to govern the Sales Committee who dictates the terms of such collective sale and the apportionment method of sales proceeds that are binding on ALL owners. The Sales Committee might as well be a "Committee of One" because - naturally - only like-minded owners will be invited to join. Also, shouldn't the law legislate that the Sales Committee be auto-dissolved once the CSA attempt fails to garner the requisite share-values?

2.2 To repair a broken lock in the estate - There is an entire statute under the Building Maintenance and Strata Management Act to regulate the Management Corporation.

3. Paradigm shift. Pray, let's not be hemmed-in by the marker lines drawn for us.

3.1 Labels of "majority" versus "minority" are misplaced. We are talking about Private Property that we bought at prevailing market prices with our hard-earned money. No government subsidy. Not dipping into taxpayer's money. Are we living on some communal farm all of a sudden when it comes to collective sale?

3.2 10 years! This would be hilariously funny if it wasn't so tragic. How long did your fridge last? Mine is still frightfully cold after 13 years! Man, we are talking about bricks and mortar here. The law says "less than 10 years" and "10 years or more". The first CSA attempt on my estate was four years from TOL - even the central air-conditioning system provided by the developer to me was still under warranty!

3.3 What kind of Master Plan does our MND drum-up when the land use/plot density ratio could be hypothetically out-of-sync from Day 1 of TOL issuance? Hongkong is now talking about 40 years whereas in Singapore we have been slapped with this CSA potential/risk from Day 1 of getting TOL. Bizarre, no?
On our finite-resource Planet Earth, wouldn't it be more sensible to bar CSA for the first 20 years from TOL at a minimum?

4. Property share-values. Dr Minority has done his homework about share-values approved by the Commissioner of Buildings. The share-value bands were only narrowed recently and hence the legacy problem was created by COB in the first place. The esteemed Commissioner apparently did not have the foresight to envisage that a self-appointed Sales Committee of a collective sale could apportion sales proceeds based on such Committee's totally arbitrary formulae/weightages pegged to share values.

5. Apportionment method. A rocket scientist it does not take to derive a mathematical basis of apportionment. Searing as this may sound but it is unconscionable that the Strata Title Boards sanctions such arbitrary apportionment method of sales proceeds by a self-appointed Sales Committee.

5.1 At the time of purchase, you pay for every sq cm of space. Every month, you pay for every share value as approved by COB.

5.2 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 even though your apartment is 50% larger than your neighbours.

5.3 Apply a mathematical basis of apportionment. The ratio of "common property" versus aggregate "strata title area" could be established by a quantity surveyor (eg, 1000 sq m of common property of the estate versus 4000 sq m of aggregate strata title area of all apartments - ratio of 1:4). The collective sales proceeds, say $15mn, should then be divided into these proportionate ratios. Hence, $3m would be apportioned based on share values of each apartment and $12mn would be apportioned based on the strata title area of each apartment, thus mathematically and factually accounting for the full apportionment of such collective sales proceeds of $15mn.

6. No-brainer. In most estates, the larger units are invariably outnumbered by the smaller units. It is a no-brainer when it comes to apportionment method because the majority of the owners who own the smaller units would naturally vote to use share-values-only or to assign a weightage to share-values favourable to themselves.

7. High-rise slums. Estate maintenance of a development with CSA potential/risk is a Catch-22 issue. In high-density high-rise living on a little red dot, high-class slums can evolve willy-nilly in our Global City. We should have a scaled time-bar for next CSA attempts relative to the estate's age (eg, no CSA for less than 20 years from TOL; 5-year time bar after a failed CSA attempt for estates between 20-40 years from TOL, 3-year bar for estates above 40 years). If owners have an assurance that this CSA cycle has a timeline (and not going into infinity), then the quality standard of buildings in Singapore will be upkept and maintained properly.

8. Financial planning/CPF. Most of us would have used CPF monies substantively to buy a private property. CPF policies ostensibly encourage prudent and stable investment of our CPF monies with net positive gain over time. Hence, the CPF criteria are more stringent for investment properties versus owner-occupied properties.

8.1 The greatest irony is CSAs are almost guaranteed to result in an investment downgrade or downsize for owner-occupiers who need a replacement unit (if new replacement unit) or constant churning of investment (if old replacement unit as yet another CSA is likely to eventuate). This does not even take into account that real estate investment is truly unique - Unit #01 may be much less favoured and therefore worth less than Unit #02 even if both are in the same block on the same level with the same design layout.

8.2 All of us have different cashflow needs, risk appetites and investment-risk/time-horizon profiles. However, CSAs enforced on dissenting owners in effect communalizes all of us into "cashing-out" our original real estate investment.

9. Architectural legacy. Ever notice the difference between apartments built in the 60s, 70s, 80s, 90s and 00s? With all this urban renewal from Day 1 of TOL, what architectural legacy could we even hope for?

10. Community bonding. We are losing our citizens despite our near-First-World trappings. We talk incessantly about community bonding but our policies do everything to DIScourage bonding.

10.1 We are after all human and being human, we tend to be territorial. If we are serious about community bonding, principles similar to HDB SERS should be applied to CSAs to keep a sense of neighbourliness and community - more so for the people with private properties (and their children) are likely to be more mobile in terms of migration possibilities.

10.2 As the developer/buyer of an estate under collective sale is tapping on the land use potential belonging to the original unit owners, developers could be obliged by law to offer a same-size replacement unit at the redeveloped estate or within a 1-km radius of same or higher quality.

10.3 Interestingly - in contrast - Singapore can't even seduce our Permanent Residents to give up their Malaysian, Indian or Mainland Chinese passports despite whatever commonly perceived downsides of these countries at present.

11. Environmental impact/wastage. Again, we have a senseless contradiction. We harp on Asian values, of which frugality is one. Yet our policies foster wanton wastage as gleaming marble floors of less than 10 years or even of 25 years if well-maintained go under the wrecker's ball. It takes an obscene amount of energy to produce a ton of aluminium window frames and yet it's kosher to twist them all up with a CSA and to smash all these double-glazed full-height windows to smithereens?

12. Individual versus Minority versus Majority. However hard we try, I reckon Singapore will not become a Global City of First World Standard in essence (perhaps in trappings, we can pass it off).

Why? Because the hallmark of such places at its peak is giving people the space to grow and evolve into a rich pluralistic diversity yet with a strong commonality. Underpinning their society, there is invariably a healthy respect for the individual (what more for the minority?).

Sadly, we Singaporeans have learned to be a parrot-society veering to a convenient singularity with highly selfish motivations of kaisuism. Instead, underpinning our society, we have tyranny by the majority - be it in HDB Lift Upgrading or Private Estate Collective/En bloc Sale.

Knowing the mass media's pro-CSA slant and the dearth of civil society in Singapore, I have not even bothered to write-in to the mass media. Instead, I have chosen to give grief directly to our humble civil service and statutory boards and whatever mouthpieces the government has deigned appropriate for us to squawk into.

Only Time will tell if the powers-that-be really "listen". And if they did in fact "listen" but can't or won't take what we say into account for whatever reason (valid or otherwise), then at least they could "talk-back" so that we dissenters to collective sales at least would know why we are being led to slaughter, eh?

Let me end off by saying that - at the bottomline, we Singaporeans know the Price of everything but the Value of nothing.

Tags: en bloc blog, collective sale, property, enbloc sale, enbloc, en-bloc sale, en-bloc, en bloc, collective sales, condo, singapore, real estate

25-35% Failure Rate for En-blocs - Business Times

It's ironic that while the Straits Times have embarked on an exercise of fantasy when they wrote articles that perpetuated en-bloc millionaire aspirations, the Business Times came up with an article that gave pause for thought, and a reality check. Selected excerpts follow.

Given that our areas of Holland and Newton have been escalating in terms of reserve prices, with Elmira Heights at Newton now going for $1070 psf and Holland Tower at Queensway going for $1000 psf, the prices of new developments will rapidly exceed $2000 in these areas in the near future. There is absolutely no way any resident can afford to buy a new unit here without pumping in substantial amounts or taking out a hefty loan again. Equally importantly, these prices are rapidly driving up rentals in the areas to the extent that mid-level to upper-level expats on their various forums are making conscious decisions not to work in Singapore any longer or move further from town in order to afford decent sized (and priced) rentals.

Failure rate hits 24-35% for en bloc deals
Business Times 22 Feb 2007
By Arthur Sim (BT)

Asking prices may be going up, but not all collective sales are going through. About 25-35 per cent of more than 100 last year either fell through or are still on the market after failing to achieve reserve prices, property consultants say.

No green light: Grangeford Apartment has yet to achieve the required 80 per cent mandate from owners to sell and the rising price of replacement property could be the reason.

Sy Wan, who is on the collective sales committee for Grangeford Apartment in Grange Road, says some residents fear they will not be able to afford a similar new apartment in the neighbourhood if they sell. Mr Wan himself is looking at a Housing and Development Board flat.

Last year the official price index for uncompleted non-landed properties in the Core Central Region, which includes Districts 9, 10, 11, rose 6 per cent in Q4 and 25.4 per cent for the whole year.

..

Prices of prime collective sale properties have been rising lately. In October 2006, Ardmore Point sold for $1,369 psf per plot ratio. By December, The Parisian nearby sold for $1,734 psf per plot ratio, or 25 per cent more.

CB Richard Ellis executive director (investment sales) Jeremy Lake expects fewer transactions this year. 'It's extremely difficult to get 80 per cent because the market is almost too good and some owners are not prepared to commit to the minimum,' he says. Also, sellers' concerns about increasing replacement costs 'have become more evident' in the past three to six months.

Colliers International estimates over 30 of 110-130 collective sale sites launched last year remain unsold.

Director (investment sales) Ho Eng Joo estimates that 70 per cent of collective sales in 2006 were in Districts 9, 10, 11 - the traditional enclave of the well-to-do. Yet many could be looking at downgrading. 'En bloc sellers are becoming increasingly concerned about the replacement price for new homes because they have gone up substantially,' Mr Ho says.

Savills Singapore estimates that of 120 residential developments put on the market in 2006, 43 have not been sold or are still on the market.

Director (marketing and business development) Ku Swee Yong reckons most sellers are looking at 10-15 per cent upward adjustment. But he cautions owners not to ask too much, as developers also have to factor in rising charges and, more recently, higher construction costs. 'Property prices have been rising over the past 12 months, but associated development costs have also risen significantly,' Mr Ku points out.

...

Tags: en-bloc failure, failure rates, collective sale, collective sales, condo, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, property, real estate, singapore

ST Forum letter & Financial Loss Discussion

A letter from Straits Times Forum Online on en-bloc sales, another from a blogger on the financial loss case and one from a forum discussion on the financial loss.

Straits Times Forum Online
13 Feb 2007
En bloc sales:Is there no protection for the minority?
by Ananda Perera

I refer to the letter, 'En bloc sales: Have laws to protect minority' (ST, Feb 9).

I empathise with the writer. We seem to be gripped by en bloc fever. The writer raises some thoughtful issues.

Is there no protection for the minority who have very good reasons not to be forced into en bloc sales?

Unlike some, they are not waiting for better prices and holding the willing majority to a ransom.

As a nation, we seem to make haste for quick gains leaving aside much talked about heartware for those unable to keep pace.

Cost of living will keep on going up. Yet, most pensioners, like me, will hardly get any increases on our fixed pensions, as we are beyond the age to qualify for workfare.

Such groups will keep on feeling the pinch as GST and other price hikes kick in.

The increasing cost of living does not seem to be factored into government pensions.

How we treat our senior citizens today is how the young in authority today will be treated tomorrow.

Can anything be done for such minority groups to ensure a fair distribution of economic wealth, at least for past services rendered?

------------------------------------------------------------------------------------------------
This is from zynfandel who posted a clear and concise explanation on the unfairness of the financial loss couple, dated 7 Feb 2007. I've reprinted that posting here, hope she doesn't mind! (Let me know if you do, zyn.) Her blog is "in vino alcohol".

From what I understand from the rather unclearly written articles, this one guy at Waterfront View is trying to block the en bloc sale of his estate because the proceeds he will get from the sale of his unit won't be enough to refund the amount that he has so far withdrawn from his CPF account, plus interest, to pay for the home.

That is also rather unclearly written, so let me explain slowly.

Most people who buy a home take a loan to pay for it, and then pay back the loan in monthly installments, partly in cash and partly from CPF funds. Let's say you buy a home for $1 million and your estate goes en bloc with each owner getting $1.2 million. Sounds like you made a profit, right?

But there are two things eating into this profit: the interest on the loan you took, and the "opportunity cost" interest on the CPF funds you withdrew from your account.

Supposing you took a 35-year loan, but your estate went en bloc only 20 years after you bought your home, so you still have 15 years left on your loan.

After you sell your home in the en bloc, you have to use the proceeds to pay back the remaining loan first to the bank. Then you have to give back to CPF the entire amount that you withdrew from your CPF account to pay for your home - PLUS the interest that the withdrawn amount would have earned if it had happily sat dormant in your CPF account (currently 2.5%, I believe). After this, if you still have any money left over, then good for you. Most of the time, apparently, you don't even have enough to pay CPF back in full, so you just give them whatever's left over.

So most people take that into consideration before they sell their homes. But in an en bloc sale, where only 80% of owners need to agree to sell the estate, some people are being forced to sell, even if they don't want to because the sale proceeds won't be enough to cover both the remaining bank loan as well as what is owed to CPF.

In the case of the Waterfront View resident, he bought his unit for $515K and will get $660K after the sale. But he still owes the bank about $343K and CPF, about $407K. After he pays back the bank, what's left over ($660K - $343K) won't be enough to pay CPF back in full.

And this is where it gets unfair. CPF says, oh, it's ok dude, you don't have to make up the shortfall into your own CPF account. Go ahead and sell your house and stop blocking the en bloc.

Of course the guy is all, wtf CPF, this is my retirement money, you morons.

The only way you can block an en bloc is to prove that you are making a loss if the en bloc goes through. But today the Strata Titles Board ruled that CPF losses don't qualify as such a loss.

So my question is, why the hell not? CPF money is still money, and it's money that's supposed to be sacrosanct in Singapore, for heaven's sake, because without CPF we'd have loads of impoverished old people (even more than the loads of impoverished old people we already have).

I suppose the argument goes like this: you don't have to repay CPF in full anyway, and it's unlikely that the unhappy resident could have sold his individual unit at a higher price in the market in any case, so why not just sell now and put the most he can back into his CPF? Also, if a lot of people don't manage to pay back the full CPF amount, then most estates will never get sold because there will always be someone making at least a CPF loss.

But the point is that maybe he was planning never to sell his home, which means he would have had a permanent home over his head and never have had to pay CPF back. And now, having already paid all that interest on his loan, he'll have to find another home to buy, take another loan, and this time he'll have less in his CPF account to withdraw to help finance that new home.

Which then brings me back to the minimum 80% owner consensus to sell an estate en bloc. If an estate has 500 units, that's a potential 100 residents who are dead set against the sale. But if they don't suffer losses big enough to stop the sale, then they lan lan have to sell. People keep complaining about the intimidation tactics and unending harassment they suffer from marketing agents trying to persuade 80% of owners to go en bloc. Shouldn't the barrier be set back at 90% now that the market is doing so well and developers have already built up considerable land banks?

This all seems very unfair but maybe there's something I don't know. If anyone can enlighten me I would be very grateful.

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Finally, one posting in sgforums.com on the financial loss case which gives his interpretation on why this unfairness is allowed to be perpetuated:

The board (largely comprised of people who are working in areas that gain from en-bloc sales, mind you) distinguishes between 'necessary expenses' and 'personal expenses'. Legal fees, stamp duty, privatisation costs are necessary expenses paid by everyone involved in any flat purchase/development. Interest however is a personal expense along with renovation costs.

In political terms, the STB has to balance between encouraging and facilitating en-bloc sales on the one hand, and being equitable on the other. If financial loss includes CPF losses, a substantial number of en-bloc sales might be blocked due to the financial loss clause. People keen to sell their places, and do not suffer such losses, will be obviously put out by such a decision if they have a single person in their property that will suffer from CPF losses.

Of course they have forgotten that the financial loss clause was put into the Land Titles (Strata) Act to protect individuals who might be forced to sell and not receive any profits after deductions. This clause is built specifically for the individual and not for the collective interested in selling the development. By excluding CPF losses, the collective is given greater consideration.

The damning nail in the coffin for the couple is the CPF letter which states they do not have to make good their CPF shortfall, which means in effect they can spend the rest of their lifetime paying the outstanding amt. This gives STB the leverage to point out that this is the couple's own problem, and should not be used against the collective interested in selling.

I hope the couple brings this up for appeal at the next level - the High Court. I think it's a lopsided definition of financial loss that is rapidly favouring en-bloc sales rather than protect the individuals who will suffer from it.

Tags: financial loss, en bloc, singapore, real estate, property, enbloc sale, enbloc, en-bloc sale, en-bloc, condo, collective sales, collective sale

The Ugly Side of En-blocs - The Press

In schools, students are taught that reporting the news is meant to be neutral, balanced and objective. It is with such sadness that over the Chinese New Year weekend, the local papers The Sunday Times decided to print a huge spread on 'serial en-bloccers', people who systematically gain profits from selling their homes, along with everyone else's, including those who do not wish to vacate.

What happened to the flip side of en-bloc sales? Why were there no reports of those people who were against such sales? Whatever happened to balanced reporting?

It is with great irony that a friend who consulted me over writing a letter to the forum had it rejected a few days earlier. (I have tried before and was unsuccessful in getting them printed.) I guess the tone and focus of the negative consequences of en-bloc sales would contradict the full page spread on the joys of making money at other people's homes.

Of interest in this particular spread is the story of the 2nd serial en-bloccer, Mr Patrick Kummar, who does not rent out the property but chooses to stay in them instead. I'm curious to know how he finds it so easy to move home so often. The 1st serial en-bloccer profiled stays in a landed property and buys up 'enbloc potential' units strictly for profits. Mr Kummar has decided not to move out of his 3rd home now in Orchid Apartments in Eng Neo Ave, another enbloc potential. He pointed out:-

" 'Every time I sell en bloc, I get pushed to a more inferior area of living. With the money I get, I can get the same kind of living, but not in the same area. Standard of living drops,' he said.
Also, homes sold en bloc can bring out the worst in neighbours.
Mr Kummar said that at Kim Lim Mansion, things got so ugly that one owner threatened the others who were unwilling to sell by saying: 'If this were Hong Kong, this would be settled by the triads.'"

I wonder how he would feel now, if he's on the other side of the fence - the minority - who do not wish to move? Or will he join the boat the minute the en-bloc process begins? We'll never know I guess. Still, everytime I think the local press has become more mature over the years, they do something like this that points to the one-sided reporting they're so good at.

I'm also printing my friend's unpublished forum letter, for what good it can do now. He's used some of my ideas but the words are his, and in exactly 400 words (which he complained struggling over).

Law needs to consider not just financial stakes, but social stakes, in any en-bloc sale
by Mr HH Khoo
Submitted to Straits Times Forum, Rejected 14th Feb

I refer to the letter by Valerie Ong (ST, Feb 9). Given the en-bloc frenzy, I believe the law (Land Titles (Strata) Act) regarding en-bloc sales needs to be carefully re-assessed, particularly with regards to the concerns of the minority who stands to lose their homes in the process.
The law clearly defines subsidiary proprietors (SPs) largely according to the financial stakes they have; decisions around en-bloc sales are made in terms of financial gains, distribution methods, financial losses, and share values. However, to an increasing group of SPs, a flat is more than a financial investment. They have a social stake invested in their home as well. Over the years, they have formed a community around them – conveniences, shops, clinics, schools, familiar places and people. Indeed, the government has been actively encouraging citizens to build communities around their homes. Yet, as numerous letters by minority SPs who decry the loss of their social stakes show, the law completely disregards the social value of a home.

The law needs to differentiate between ‘home-owners’ and ‘investment-owners’: Home-owners have lived in the development for a substantial number of years; investment-owners typically rent out their properties, have no social investment in them, and would not hesitate to sell them if the prices are good enough. I strongly believe there is a high correlation between most minority SPs and ‘home-owners’.

An analogy is that of the General Elections whereby only citizens are allowed to vote because they, not foreigners, have social and financial stakes in the country. Yet the en-bloc law collapses ‘citizens’/‘home-owners’ and ‘foreigners’/‘investment-owners’ together and allocate them equal ‘voting rights’. Why shouldn’t home-owners, given the social stakes they have in their homes, be given the greater say in deciding whether an en-bloc sale should proceed or not? A possible definition of home-owners could those who have stayed for more than 70% of the property’s age when en-bloc begins. Home-owners should then be given double the voting rights to reflect their social stakes in the place.

In 1995, Goh Chok Tong said “there is no better stake in the country than a flat or a house”. The law excludes social stakes invested by home-owners and force many home-owners to lose the very stake encouraged by our government. How can any sense of ownership occur if our homes are taken from us by a majority who often do not care beyond the dollar value?

Tags: Straits Times Forum, ST Forum, Serial En-bloccers, Singapore Press, collective sale, real estate, property, enbloc sale, enbloc, en-bloc sale, en-bloc, condo, collective sales, singapore, Enblocing Singapore, Enblocking Singapore