Sunday, 28 January 2007

Another Minority Cry - Money Isn't Everything

Beware the Pitfalls of Collective Sales
From Straits Times Forum Online
26 Jan 2007
By Sumiko Sakamoto (Ms)

My apartment has been sold collectively. The amount that I have been apportioned does not allow me to find a similar replacement.

Against my wish, I not only have to give up my home but am also forced to compromise significantly in terms of area size, location and environment of my new home.

Although collective sales are a neat way of rejuvenating old properties, it should not be done at the expense of owners having to 'downgrade' after that.

I am dismayed to find that the law only protects people from some measure of financial loss and not from more important tangible losses.

Some may see enbloc sales as a windfall, but it is not always the case if it doesn't provide an equivalent replacement.

In my case, the property did not fetch a high price as there was no change in plot ratio or favourable factors, such as a new MRT station, to increase the value of the area. So to attract the prospective buyer, the sale price had to be compromised.

In my 23-year-old condominium, many owners, for reasons of their own, have moved out, leaving their homes in the hands of tenants. To them, as long as the price struck out of a collective sale is more than if it were sold off individually, it is adequate. The sale price does not have to match that for a similar replacement as they have made a decision to live elsewhere anyway.

For those of us who cherish our present homes and have no desire to move, the matter is very different.

If we were to move out, we have to buy a new home. It is important for us that the apportionment of the sale is at least sufficient to acquire a home similar enough to maintain the same degree of quality of life.

We will already have to suffer from losses such as renovation costs, stamp duties, interest charges on our mortgages and other transaction costs. If our homes are sold below the replacement cost, the losses will be too huge to bear.

The pain is more acutely felt by those who have or are soon to be retired and are unable to obtain bank financing. As much as we do not want to downgrade against our wishes, we are loath to touch our precious savings just so we can maintain the present quality of life.

I would like to appeal to the public to beware the pitfalls of collective sales and hope all homeowners in a similar situation be mindful not to let go of their property unless they can find a suitable alternative. Be sure to sanction a sales committee that has the interests of the whole estate at heart.

1 comment:

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