Saturday, 1 September 2007

How to check if a potential rental is/isn't undergoing estate enbloc?

I realised that a number of tenants/potential tenants are not aware of how to find out if a choice unit they'd viewed is in an estate that is undergoing enbloc or not. Some agents will be honest and lay it out that it is, while others won't (their logic being, if tenants find out the estate is being enbloc'd, there's a chance the tenant won't take up the tenancy).

So here's some information, tips and DIY advice :)

Things to Realise:
  1. The primary concern for a landlord in an estate undergoing enbloc is whether the tenant will move out by the Date of Vacant Possession (ie date when the developers can bring in their heavy equipment and begin demolishing buildings). If the tenant fails to do so, and it is found that it is the landlord's fault, the landlord pays massive penalties for every day of delay from vacant possession. Therefore, most Collective Sale Agreements (CSAs) - legal documentation owners have to sign to agree to the sale - will include clauses to the effect that landlords must ensure proper notice is served on the tenant, and that clauses are included in the tenancy agreement that allow the landlord to terminate the contract within X no. of months (typically 1-2 mths). Bear in mind as well that the sale committee will get very antsy should any tenant approach them with information that their landlord has failed to inform him/her and that he/she fully intend to stay in the premises until agreement expiry (which may well be after vacant possession).
  2. Some CSAs are more explicit about other conditions eg landlord must inform tenant of enbloc sale process in estate, landlord must not keep damages deposit (since the place is going to be torn down, what's the point of doing so) etc. But this will vary. (1) above is the primary thing for you to remember and look out for.
  3. Ongoing enbloc can mean anything from 6 mths to 2 years. The maximum period for an enbloc is 2 years (1 year to collect signatures, 1 year to tender, submit sale application to STB and get approval). That does not stop people from attempting enbloc year after year, especially if the estate is a prime location spot. So it really depends on what stage your estate is at.
How To Sniff Out an Enbloc Estate:
  1. The first stage of an enbloc process is typically the signature collection stage. That's when owners are approached to sign the CSA and obtain the mythical 80% consensus (if the building is over 10 years old). If they have begun signature collection, notices (on notice baords) should be around the estate on the % consent level for the sale. That's a good indication of how long the estate has before you need to seriously consider finding alternative accommodation.
  2. Check with the security guards - source of all gossip in the estate. They can tell you if an enbloc is happening, or at the very least, if it is happening, the name of the managing agent for the estate, or the marketing agent for the enbloc sale (if they know the latter!).
  3. Check with the managing agent (MA). Get the contact from the security guard. Ask the MA if they know anything about an enbloc.
  4. If you have the marketing agent's contact, call them and ask them what the stage of the enbloc is at. It's in their best interest to tell you since they want the sale to go through smoothly (and not have errant tenants still staying at the estate past vacant possession!)
  5. Ask on the various expat forums. Some expats may well be staying in the estate you're eyeballing and may be able to offer information on the enbloc status (if any). Go here and here for starters.
  6. Check the En-bloc List that I maintain. I try to get what information I can and update the list as often as possible.
  7. Check your tenancy agreement. If there's a clause for short termination by landlord (eg 1 mth), this might be a sign as well.
  8. DIY Investigation - Use the URA website for information on caveats lodged for the estate in question. The logic is this - typically there would be sales in the estate if there's no enbloc or smell of an enbloc yet. Once there's rumours of enbloc, some people might attempt to sell at premium rates ('enbloc potential') to capitalise on the impending enbloc. But once signature collection begins, owners will begin to bolt down for the enbloc sale. This means there'd be far less caveats lodged with URA for the immediately preceding months as people start to hold on to their units, since it makes more sense to hold and wait for the enbloc sale where they get higher returns, than if they sold it off now.
Eg, someone asked about these following 3 estates. You can find information about the estates at various property websites, including this one. You then find information about sales from URA's website here (it's free). You can gather such information like these:-

Regency Park - 1990 TOP - 292 units - 21 units sold in 2007.
Tanglin Park - 1989 TOP - 274 units - 11 units sold in 2007.
Sommerville Park - 1978-1990 TOP - 456 units - 25 units sold in 2007

Compared with
Botanic Gardens View (enbloc ongoing) - 1970 TOP - 146 units - 4 units sold in 2007. None in 2nd half 2006 at all.
Brookvale Park (enbloc ongoing) - 1983 TOP - 160 units - 4 units sold in 2007.

You can see the difference between the 2nd group which have owners bolting down for enbloc, versus the 1st group where there was active sales in the preceding months. You can also check the property websites to see how many units are for sale in the estate in question, to confirm the bolting down activity (or not). If there's still a lot of sales going on, chances are slim that an enbloc is happening.

Finally, you should check out other topics under "Rental" and "Tenancy Agreement" on the right, to keep yourself informed of the other issues surrounding enbloc estates for tenants. It's a real pity that some of the nicest old estates are being knocked down - these are the ones with large, spacious units with plenty of green surroundings, in really nice locations.

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