Thursday, 3 May 2007

Tenants in En Bloc Condos - Protecting Yourselves

[Again, information on the REACH discussion forum can be found here and the Ministry of Law public consultation on en bloc legislation here and request for information on STB mediations here]

All these talk about en bloc sales, we tend to forget that aside from owner-occupiers and owner-investors, there's another group of people who will be greatly disadvantaged in the process of a successful en bloc - The Tenants.

Whether they're local or expatriates, the fact is that once an en bloc sale goes through, most landlords are not too concerned about your rental flat (it's going to be torn down), your surroundings (it's going to be torn down), and your contract (typically in the landlord's favour). Consider the following:-

  1. If you do not have any clause protecting you in the event of a successful en bloc sale, the landlord can turf you out anytime (subject to notice, usually 1-2 mths), but YOU cannot move out on the grounds of deteriorating conditions, increased noises etc. You have to give notice, and yes, even though the place will be torn down, the landlord can still deduct costs for damage to property due to wear/tear!
  2. Unknown to many tenants, there's a grey period between the legal completion date and the date of vacant possession. (Click on the "Completion Date" topic on the right.) For example, in my condo which has just been sold, there are clauses in the agreement that allows developers to come in during the period between completion and possession to (a) set up a showflat (b) conduct tests on the grounds (which may include drilling and much banging about).
  3. After legal completion, the estate belongs to the developer and there are no management committee to turn to for any grievances. The developer is within his 'rights' to keep a minimal cleaning/security crew and ignore any urgent repairs (like a leaky roof over your flat). Depending on the agreement between the SC and the developer, there are instances where this period between completion/possession is considered 'rent-free' which means there's no need to pay maintenance fees. Of course, you can expect your landlord to continue to extract that from you (even though there's no more maintenance whatsoever).
So what can you do? Not much, except at the crucial point of accepting the contract you need to think about some of the things suggested below by a chap in the Expat Forum. Bear in mind - TONS of condos in Districts 9,10,11 are going en bloc, which means there's no guarantee you won't be subjected to the above problems unless you stay in a brand new condo (aka pigeon holes). Some suggestions include putting in a 'moving out clause' so that if things get unbearable, the landlord will pay your moving costs to your new home. But some disagree with this...

From "Expat Source" posted at the Expat Forum:

If you opt to put in a clause for your Landlord to pay your moving costs should you be forced to moved in the event of an en-bloc sale, you may end up disadvantaging yourselves. As they will keep you there till the last and then you will have to fight them for the money. You could be surrounded by empty apartments and progressive construction driving you nuts.

I would suggest that instead you put in the following:

1. An en-bloc clause that gives you 3-6 months notice should a sale go through, with the OPTION that you can leave at any point during that period should you find suitable accommodation.

2. A clause that in the event that your living standards are compromised by on-site construction, destruction of facilities, lack of standard of maintenance, facilities not being fixed etc that you have the option of giving notice and being released from your contract.

3. In the event of having to move because of an en-bloc sale that you have one month's free rent to cover your moving and re-siting costs, if your rent is above $5k be reasonable and ratio it down to 2 weeks etc.

This way you get to move out and are not stuck until the final days in a deserted condo with construction workers surrounding you. You have an option of moving out if they start to tear up tennis courts for show flats or drill holes for soil testing.

And you won't have to fight for the moving cost money as you will just simply deduct the rent.

Of course right now you should also look at putting major construction clauses in your contracts, if you move into an area that is currently peaceful with no sign of construction and the landlord or their agent tells you that none of the surrounding buildings are coming down or going up - you should have the option to move out if that situation changes dramatically within the term of your contract. However, you have to be reasonable, if you move into an area with ongoing construction or condos emptying out you have to take the responsibility for your move there. Again you add in the clause about moving costs deducted from rent.

It might be a sellers market but they also need the buyers in order to get the rent.

These clauses make them more accountable for the information they tell you and gives the landlord a cost if they or their agent are not being truthful.


Anonymous said...

Hi, Dr.

Will get writing soon. Only just realised not many days left. Keep reminding me, ok?! Thanks.


Anonymous said...

My tenants are due to renew their lease soon next February before the present enbloc sale is under way and the deadline is to complete in Dec. next year. So in between there is a grey period which will affect both tenants and landlords as to what the next move ought to be in view of such precarious circumstances.

I am an anti-enbloccer who hate to lose a good tenant.This was to be my retirement home when I return oneday to Singapore.

The uncertainties as to the future of the block has meant that I may not get tenants to rent my flat again since it is a sitting target for enbloc propositions constantly.

So who compensates me for this loss of potential rentals while we sit in our apartment?

Lifting Creme said...

The owners who have a genuine reason for asking their tenants to leave will generally win the lawsuits that they have made against their tenants. They obtain the necessary permission from the court to ask the tenants to leave in the shortest duration of time possible. The real estate management can represent the owner in court if the owner is unable to attend the court hearings due to some reason. If the owner provides an accommodation that is below standard, for example, an accommodation that does not have adequate electric or water supply, and he refuses to provide the amenities even on being requested by the tenant, then it is as good as legally evicting the tenant. In such a situation the tenant has the right to terminate the contract and leave the premises whenever he wants to. You may get more information by clicking on the link sitting tenant rent arrears.