DC RATES SEP 2010

Increase in DC rates for non-landed and landed residential homes

 
Chua Yang Liang, head of research, Southeast Asia, Jones Lang LaSalle, said: "The DC rates component in most en bloc deals is usually quite small. The component is just about 5 to 10 per cent of the total cost.

"But going forward, because of the policies that have been effected today, I think the level of collective sales may see a bit of a slow down going forward, where developers may take a wait-and-see approach before they embark on new purchases."


With regard to TC:

:

TOH TUCK APARTMENTS SOLD

TOH TUCK SITE SOLD FOR $34M

Property developer Roxy-Pacific said yesterday that its unit, Mequity, bought Toh Tuck Apartments in an en bloc deal for $33.9 million.

The freehold site, located at Toh Tuck Road, is the first collective sale in District 21 – which comprises Upper Bukit Timah and Clementi – this year.

The site has an area of 40,449 square feet, a plot ratio of 1.4 and can be built up to five storeys. A development charge of about $5 million is payable to redevelop the site up to a permissible 62,290 sq ft. This includes the 10 per cent allowance for balconies.

Together, the sale price and the development charge work out to $624 per sq ft per plot ratio.

Mr Jeffrey Goh, head of investment sales for the site’s marketing agent HSR, said about 75 apartments ranging from 590 sq ft to 1,660 sq ft could be built on the site.

“Toh Tuck Apartment is an attractive site, given its location in Bukit Timah area. It is within minutes of the Beauty World MRT station and close to good schools and amenities,” he said, adding a new apartment could fetch an average of $1,300 psf.

Source : Today – 31 Aug 2010

Effect on collective sales

How does this effect owners in collective sales? 

I suspect this will have a big effect on ex-HUDC estates that undergo collective sales, as the vast majority would probably have to downgrade to a HDB afterward due to the preponderance of sale committee and consenting majority ineptitude in these estates.

Well there are many kinds of owners with varying degrees of liquidity but all of them would now not be able to downgrade to a HDB unless they sell their private property within 6 months via collective sale or privately. I am not a lawyer, but I would assume, the collective sale would have to be STB/HC  approved and not just 'in the process'.

Since collective sales are notoriously long and uncertain, timing that HDB purchase is crucial and trickier now. Under the old system, owners who could afford to , just went out and bought a resale HDB at any time and waited for the collective sale to go through. They bought early to avoid the spike in resale prices in the area that surely would occur nearer the sale completion date. If the sale did not go through, they had 3 choices: a) just wait out the 3 year holding period before selling their HDB and move back into the private property (which they had rented out in the meantime). b) sell their private unit and stay in the HDB or c) keep both.

Now, if they bought the HDB too early in the process, they would be forced to sell their private unit before the sale's completion. Six months is not a long time to find a buyer, and depending on what point the collective process had reached, the seller could find himself selling at a steep discount from the RP. The buyer would naturally be a flipper - who else would buy.

For example:

If the CSA has been signed but not the S&P, then the seller has to price his unit so as the buyer can have a reasonable chance of making a profit when and if the sale goes through. Bear in mind the new owner would have to pay 3% sellers stamp duty for selling the property within 3 years to the developer-buyer. This new stamp duty is not the deduction stated in the Fourth Schedule  ('1. Stamp duty paid on the purchase of the lot or flat') and is not recoverable from the collective sale proceeds. The buyer can claim financial loss, though.

If the S&P has been signed, then it becomes even more difficult to sell the unit in the prescribed 6 month period unless at a steep discount.  The buyer cannot claim financial loss and so must make his profit from the seller's distress sale.... the MinLaw closed that loophole a long time ago. 

(c) shall not be taken to have incurred a financial loss by reason that the proceeds of sale for his lot, after such deduction as the High Court may allow (including all or any of the deductions specified in the Fourth Schedule), are less than the price he paid for his lot if he had purchased the lot after a collective sale committee had signed a sale and purchase agreement to sell all the lots and common property to a purchaser.

Do not be lulled into thinking that it is just a hop, skip and jump from signing the S&P and completion of sale. After the S&P has been signed, the sale committee has 1 YEAR to make it's application to the Board for sale, the Board has 2 months tops to mediate and the High Court is indeterminable. 

So unless, special consideration is granted to en bloc sales, buying that HDB before completion becomes a very risky business indeed. 

Special consideration? I don't think that will happen.

HDB SPEAKS

More help for First-Time home buyers

Date issued : 30 Aug 2010

 During the National Day Rally on 29 Aug 2010, PM Lee Hsien Loong announced several measures to ensure that public housing will always remain within the reach of Singaporeans who are buying their first home. This will be achieved by increasing housing supply and dampening demand from those who are not in urgent need of housing.

2This press release provides details of the measures to:

(a) Allow households earning between $8,000 and $10,000, to buy new DBSS flats with a $30,000 CPF Housing Grant;
(b) Increase the supply of new flats, Design, Build and Sell Scheme (DBSS) flats, and Executive Condominiums (EC);
(c) Shorten the completion time of Build-To-Order (BTO) flats;
(d) Increase the Minimum Occupation Period (MOP) for non-subsidised flats to 5 years; and
(e) Disallow concurrent ownership of both HDB flats and private residential properties within the MOP.
More Housing Supply and Choices for First-Time Home Buyers

3HDB will ramp up the supply of new flats, DBSS flats and ECs substantially to meet the housing needs of first-time homebuyers.

4HDB will be offering more than 16,000 new flats in 2010. If demand remains strong, HDB is prepared to launch up to 22,000 new flats in 2011. These numbers are substantial. Over two years, HDB will offer more new flats than the total flats in Toa Payoh town today (35,400 flats).

5In addition, HDB will release more land for tender in 2010 to yield an estimated supply of 3,000 DBSS ¹ flats and 4,000 ECs. In 2011, HDB will release land sites for another 4,000 DBSS flats and 4,000 ECs, if demand is sustained. This injection of 7,000 DBSS flats and 8,000 ECs over two years is also significant. In comparison, 4,000 DBSS flats and 10,000 ECs have been launched for public sale so far.

6Currently, first-timer households with monthly income of between $8,000 and $10,000 may buy an EC with a CPF Housing Grant of $30,000. To widen their housing options, HDB will allow these households to buy new DBSS flats with a CPF Housing Grant of $30,000 ²Similar to the purchase of ECs, the HDB concessionary loan will not be available for these buyers. This revision will be applicable to DBSS projects launched for public sale after 30 Aug 2010.

7To help households get their new flats faster, HDB has also streamlined the BTO processes to allow flat buyers collect keys to their new homes 6 months earlier. Buyers of projects launched in mid-2011 onwards will generally need to wait for 2.5 years ³ to collect the keys instead of the current 3 years.

HDB Flats for Owner-Occupation

8HDB flats are meant for long-term owner-occupation. HDB will increase the Minimum Occupation Period (MOP) to reinforce this and dampen demand from those who are not in urgent need of housing.

9First, the MOP of non-subsidised flats for resale and subletting of flat will be increased from three to five years. Second, buyers of non-subsidised flats will be disallowed from concurrently owning both an HDB flat and a private residential property within the MOP ⁴. Private property owners who buy a non-subsidised HDB flat must now dispose of their private residential property within six months from the date of flat purchase. This will help ensure that buyers purchase HDB flats only when they have the intent of staying in it for long term and ensure equitable treatment for all HDB flat lessees during their MOP. Ownership of private properties by HDB lessees will be allowed after the MOP.

10The revised changes are summarised in Table 1, and will apply to resale transactions where applications are received by HDB from 30 Aug 2010 onwards.

Table 1: Changes for Non-subsidised Flats*

	Current	Revised
Resale	3 years	5 years
Subletting	3 years	5 years
Investment in Private Residential Property After Purchase of Non-Subsidised Flat	No Restriction	5 years
Disposal of Existing Private Residential Property After Purchase of Non-Subsidised Flat	Not Applicable	Within 6 months from Date of Purchase

Note: * Resale flat bought without CPF housing grant. The MOP will be computed from the effective date of purchase of the non-subsidised flats.

MND SPEAKS

MEASURES TO MAINTAIN A STABLE AND SUSTAINABLE PROPERTY MARKET

1      The Government announced today the following measures to maintain a stable and sustainable property market:

1. Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.
2. For property buyers who already have one or more outstanding housing loans¹ at the time of the new housing purchase:
   
   
   1. Increase the minimum cash payment from 5% to 10% of the valuation limit²; and
   2. Decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS to these buyers from the current 80% to 70%.

        The measures will take immediate effect on 30 August 2010.

2      The Government's objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. The property market is currently very buoyant. While the rate of price increase of private residential properties has moderated in the last 3 quarters, prices have still increased significantly by 11% in the first half of 2010, and price levels have now exceeded the historical peak in the second quarter of 1996.

3      While Singapore has enjoyed strong economic growth in the first half of 2010, our economic growth is expected to moderate in the second half of the year. There are also still uncertainties in the global economy. Should economic growth falter and the market corrects, property buyers could face capital losses, with implications on their own finances and the economy as a whole. Moreover, the current low global interest rate environment will not continue indefinitely, and higher interest rates could have severe implications for buyers who have overextended themselves. Therefore, the Government has decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.

Extending the Holding Period for Imposition of Seller’s Stamp Duty (SSD) on Residential Properties Sold from 1 Year to 3 Years
4      The Government imposed in February 2010 a seller’s stamp duty (SSD) for sellers who buy residential properties³ on or after 20 February 2010 and sell them within a year of purchase.

5      For residential properties bought⁴ on or after 30 August 2010, SSD will be imposed if these properties are sold within three years of purchase. Specifically, the SSD levied on residential properties will be revised to as follows:

1. Sold within the first year of purchase, i.e. the property is held for 1 year or less from its purchase date – The full SSD rate (1% for the first $180,000 of the consideration, 2% for the next $180,000, and 3% for the balance) will be imposed.
2. Sold within the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years – 2/3 of the full SSD rate.
3. Sold within the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years – 1/3 of the full SSD rate.

        No SSD will be payable by the vendor if the property is sold more than 3 years after it was bought. Please see Annex for examples of how the SSD will be computed.

6      The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is at least 3 years.

7      IRAS will be releasing an updated e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698.

Increase the Minimum Cash Payment from 5% to 10% of the Valuation Limit for Property Purchasers with one or more outstanding Housing Loans
8      Previously, property buyers have to make cash payment of at least 5% of the valuation limit⁵.  With effect from 30 Aug 2010⁶, the cash payment is increased from 5% to 10% of the valuation limit⁷.  This measure is applied only to buyers of private residential properties, Executive Condominiums, HUDC flats and HDB flats (including those under the Design, Build and Sell Scheme, or DBSS flats) who are taking housing loans from financial institutions regulated by MAS and who already have one or more outstanding housing loans at the time of applying for a housing loan for the new property purchase.

Decrease the LTV limit for housing loans granted by financial institutions regulated by MAS from the current 80% to 70% for Property Purchasers with one or more outstanding Housing Loans
9      The LTV limit is lowered from 80% to 70% with effect from 30 Aug 2010⁸ for borrowers who have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase.  Borrowers who do not have any outstanding housing loans continue to have an LTV cap of 80%.  These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).

10      Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90%. HDB loans are offered to eligible first-time flat buyers and second-timers who are right-sizing their flats to meet their housing needs. They are required to utilise all of their CPF Ordinary Account balance before HDB loans will be granted.  Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is in line with HDB's home ownership policy of helping eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.

11      Financial institutions' lending standards have remained prudent and the asset quality of housing loans has stayed robust, with the non-performing loans ratio at less than 1% as at Q2 2010. Nonetheless, there are signs that more housing loans are originating at higher LTV bands of above 70%.  In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to financial institutions to maintain credit standards, and encourages greater financial prudence among property purchasers already servicing one or more outstanding housing loans.

Adequate Supply in the Pipeline
12      The Government will also continue to ensure that there is adequate supply of housing to meet demand. In the second half 2010 GLS Programme, we have made available sites that can yield about 13,900 private housing units, of which about 8,100 units will be from sites on the Confirmed List. This is the highest potential supply quantum in the history of the GLS Programme.  We will inject an even larger supply of private housing in the first half 2011 GLS Programme, if demand continues to be strong.

13      Apart from the supply from the GLS Programme, there are also 61,800 uncompleted units of private housing from projects in the pipeline as at 2Q2010⁹. Of these, 32,600 units were available or could be made available for sale. These comprised units that had been launched for sale by developers, units that had pre-requisite conditions for sale¹⁰ and which could be launched for sale immediately, as well as units with planning approvals for which pre-requisite conditions for sale could be obtained quickly from the Government and made available for sale¹¹.

14      The Government will continue to monitor the property market closely and will introduce additional measures if required later, to promote a stable and sustainable property market.

*****

¹ Financial institutions are required to conduct checks with HDB and with one or more credit bureaus on whether the buyer has an outstanding housing loan at the time of applying for a housing loan for the new property purchase. For joint buyers, if either buyer has an outstanding housing loan, the joint buyers will be considered as having an outstanding housing loan.

² This is in addition to the cash over valuation amount that has to be paid in cash.

³ The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).

⁴ The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of resale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.

⁵ The amount of CPF monies plus housing loan taken for the purchase of the property cannot exceed 95% of the valuation limit (defined as the lower of property value or property price).

⁶ The 10% minimum cash payment will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.

⁷ Therefore, the amount of CPF monies plus housing loan that can be used for the purchase of the property will be reduced from 95% to 90%.

⁸ The 70% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.

⁹ These refer to new development and redevelopment projects with planning approvals, i.e. either a Provisional Permission (PP) or Written Permission (WP).

¹⁰ These refer to private residential developments with Housing Developer Licence and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.

¹¹ These refer to uncompleted private residential developments without pre-requisites for sale but with WP or PP granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.

Issued by:	Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore
Date:	30 August 2010

Letter to the press

An en bloc rush, or just false hope?

Vibe on the ground doesn't match analyst optimism

Letter from Narayana Narayana

 

THE reports "Pasir Panjang apartment block up for en bloc sale" (Aug 24) and "Demand fires up en bloc market" (Aug 18) appear to portray the en bloc sale market in Singapore as strong and buoyant.

But is this really the case? Both reports are based on opinions of real estate agents, who arguably have a vested interest in keeping property prices perpetually on the boil.

A few weeks ago, The Sunday Times, in a glowing report "Signs of another en bloc rush", also reflected the optimistic views of a couple of property brokers who apparently specialise in en bloc sales. But in the same issue, its senior property writer sounded a more cautious note in the report "Selling en bloc? Big gains unlikely".

Where I stay, the chairman and secretary on an elected collective sale committee both sold their units within six months of the committee's formation, after they concluded that "the interest on an en bloc sale has yet to reach a level similar to our last en bloc attempt", according to the minutes of their meeting.

Given that this was their second bite at the cherry, they must have worked extra hard to get a good offer, but failed, leaving them to look after their own interests instead.

One cannot overlook the basic fact that all these projects will need funding, and an error in judging the strength of the market could trigger off a property crisis not unlike the sub-prime crisis America faced in 2008.

The optimistic confidence that "it wouldn't happen here" has been proved wrong on far too many occasions for us to continue to be sanguine in today's volatile conditions.

Today: Aug 26, 2010

I wonder  if the chairman and secretary were speculators to begin with; buying into the estate with the intention of starting an en bloc. Even if the en bloc did not materialise as they had hoped, their property values would have gone up due to the 'en bloc' factor and the present buoyant market, so jumping ship is always their second option. 

This leads me to my next point.  When a sale committee member resigns from the committee, there is no prescribed mechanism for him to be replaced. The LTSA is silent on the issue. Either the place remains unfilled or any Tom, Dick or Harry can jump in and take over. The owners have no say on the matter whatsoever. A position as important as chairman could theoretically be handed to the most unscrupulous person in the estate.

Unless owners stipulate otherwise what is to be done under such circumstances IN THE CSA

Do not accord the sale committee your full trust.  Do not assume they will prioritise your interests before their own.

In the end, when it comes to money, it is always everyman for himself.

MARKET NEWS

More paying above $1 million on homes

 

DC RATES SEP 2010

 

Source: Business Times 24 Aug 2010

Tampines Court AGM

Tampines Court's AGM passed yesterday without too much drama.

The usual non-attendance by the vast majority of residents.
The usual appearance of belligerent owners with personal grouses to air.
The usual questioning and eventual throwing out of resloutions which might have improved the estate.
The usual stony silence from reasonably minded SPs (bar 2 new owners).
No en bloc matters were raised - not that they could be - being the wrong venue and not in accordance with the LTSA.

Yep, par for the course, I'd say.

NEW MRT STATIONS FOR TAMPINES

Details of the eastern section of the Downtown Line revealed

Details of the eastern section of the Downtown Line are out, and residents of Tampines and Bedok can expect five more rail stations serving their estates.

But they may have to wait a little longer than planned, as the line will be completed in 2017.

The challenge of engineering works is one of the reasons given for the one-year delay.
Residents in the east will have another MRT line to town.

The eastern stretch of the Downtown Line is the final section of a 42-kilometre route linking Expo in the east to Bukit Panjang in the north-west, with a loop through Marina Bay.

From Expo, the train travels to Upper Changi, where the fourth university – The Singapore University of Technology and Design – will be built.

This is followed by five stations serving the housing estates of Tampines and Bedok.
The east is the most heavily-populated region in Singapore, and residents there will form part of the half a million commuters expected on the Downtown Line daily.

Sim Wai Chin, a resident of Bedok Reservoir, said: “”Every morning, I have to take the shuttle bus to Eunos MRT station to change the train to my office at Raffles Place. With the new line, it will save me a lot of time. I will not have to take the shuttle service, I will just take a train direct to my work place.”

The line continues to the industrial area at Jalan Besar station, via stops at Kaki Bukit and Ubi.

According to estimates by the Land Transport Authority (LTA), a person staying in Tampines and working in Kaki Bukit will take half the time to get to work. Instead of a 25-minute bus journey, it will take just a 10-minute train ride.

Jalan Besar station was not included in original plans, but was later added in view of future developments there, and to serve the existing industrial estates in the area.

The new Jalan Besar station will be located at the junction of Kallang Bahru and Lavender Road. The eastern stretch of the Downtown Line will run through areas that are quite heavily built-up, and for that reason, all 16 MRT stations will be built underground.”
Authorities are also expecting the budget for the entire Downtown Line to exceed the original S$12 billion target.

However, LTA declined to reveal estimates as tender for Phase 3 will only be called by the end of the year.

Lim Bok Ngam, acting chief executive, Land Transport Authority, said: “We have said it was indicative, because like any major engineering project, we have to work on the details. So when we went into details, fixed up the alignment, the stations, we find that more effort is required.”

From Jalan Besar, the train approaches the Clarke Quay area, served by River Valley station.

The train will then join the rest of the Downtown Line, which will open in stages from 2013. There will be 34 stations in all. Phase 1 loops through Marina Bay, while Phase 2 takes commuters along the Bukit Timah corridor.

Commuters can transfer to the Circle Line at MacPherson station, and to the East West Line at Tampines and Expo stations.

Apart from traffic diversions, some private land will also be acquired to make way for the line.

But authorities said they will minimise disruption as far as possible.

Transport Minister Raymond Lim said: “A certain amount of inconvenience is inevitable as we integrate our rail lines into our developed urban landscape. As far as possible, we will try our best to ensure that those living and working near the line will face minimal disruptions.”

Private lands that will be acquired to make way for the line include a Shell petrol station along Upper Changi Road, and two parking lots at Bencoolen House.
In addition, 15 landed houses along Merpati Road and Jalan Anggerek have been gazetted for comprehensive redevelopment as part of a policy to intensify land use around MRT stations.

The 2.7-hectare plot of land includes an adjacent 2.3-hectare plot of state land and is slated for a “high-density residential development”, which the Urban Redevelopment Authority said will be built after the completion of Phase 3.

Owners of the houses have five years to hand over the property, and will be given market compensation, in accordance with the Land Acquisition Act.
Source : Channel NewsAsia – 20 Aug 2010