Disclaimer






"I am a BLOGGER NOT an expert. This is a BLOG not a 'go-to' website for official information. I represent no one's view save my own. I have neither legal nor financial training, nor do I have anything to do with the real estate industry. My understanding of the Collective Sale Process is from a layman's position only. My calculations, computations and tables are homespun and may contain errors. Please note that nothing in this blog constitutes any legal or financial advice to anyone reading it. You should refer to your lawyer, CSC or financial adviser for expert advice before making any decision. This disclaimer is applicable to every post and comment on the blog. Read at your own risk."
Drop Down MenusCSS Drop Down MenuPure CSS Dropdown Menu
There is one thing worse than an Enbloc ----- and that is an Enbloc done badly. Since the majority have the necessary mandate to sell, then they owe it to all SPs to make a success of it. Minority SPs can only watch and wait, if they sell then lets pray it's at a price we can move on with, if they don't sell, then we are happy to stay for a few more years.

SC LETTER Dated 3rd Oct

This letter was sent to all SPs in defence of their RP1 at $739,200,000 (approx $1.32m/unit)

There was a letter in the post box today. I read it and thought it came from the Marketing Agent and was unsurprised to see that it actually came from the Sale Committee. When they are both singing from the same hymn sheet then you know it is game over. A total put-down of our centrally located, convenient and highly prized plot of land. The letter is just one scare tactic after the other and smacks of desperation


It begins by talking about the last GLS in Tampines


First scare tactic:- that redevelopment "is an expensive procedure that takes time away from the 5 years any developer is given to sell the developed estate before hefty fines and penalties come into force."  

Not quite.......  Under the Residential Property Act’s Qualifying Certificate (QC) rules, the sale of any new project within 5 years does not apply to local companies which are 100% owned by Singaporeans. Only developers with non-Singaporean shareholders or directors are required to obtain the Temporary Occupation Permit (TOP) for their housing developments within 5 years and to sell all dwelling units within 2 years from the date of TOP. What are these QC penalties? 
  • "To extend the deadline, developers will have to fork out an additional 8 per cent, 16 per cent and 24 per cent of the land purchase price for the first, second and subsequent years respectively. The amount is pro-rated accordingly to the proportion of unsold units. Should developers fail to comply with the QC rules, their banker’s guarantee of 10 per cent of the land purchase price that they put up will be forfeited" 
But relax, developers have found loopholes in the law which allows them to bypass the QC penalties by doing one of two things: 
  1. Bulk Sale: sell the remaining unsold units in bulk. A bulk sale, even if it is to the parent company of the developer, is also considered a “sale”. In that way, developers avoid paying the penalty as units are considered “sold”. They would still have to pay the ABSD tax but the total amount paid is still lower than the QC penalty they would have had to incur.  Developers can do the maths. 
  2. De-list the company from the stock exchange. Any publicly listed company would automatically be considered to have foreign ownership (exceptions being FEO and Sentosa Cove projects for some reason) so by de-listing the company from the stock exchange and taking the company private, the developer would be able to apply for exemption from the QC rule.

The Government sees nothing wrong in these clever loopholes as can be seen from the SLA response in the REACH forum:

Next:
They talk about the RP being a win-win price for both SPs and Buyer.


The SC have set their sights low - the RP is the lowest minimum price worked out by Huttons (see 5th SC Minutes) and the SC are happy with that. They have a duty to get the best price but have settled for the first lowest recommendation and will not budge from that. If the task seems 'impossible' to them then they should resign. 

Next:
SPs have been denied copies of the RLV for inspection and we are expected to swallow ballpark figures without the benefit of their computations. Here we have 4 such ballpark figures:



Item 2 on the list is easily computed. There are government tables online and examples to follow. I do not understand how they managed to be $35 million off the mark. My calculation for the Development Charge for Tampines Court is $214,022,950. (SEE MY WORKING HERE) Did they use the correct land area and restriction in title to find the Base GFA? Did they use the correct Leasehold value as % of Freehold to calculate the Proposed DC Amount? Who knows, they keep their calculations out of reach.

Item 3 on the list  is incalculable as it is the Gov. Chief Valuer who will assess the market value of the new 99yr lease based on the residential use at GPR 2.8. The figure given is very close to my own estimation.


Item 4 on the list is also reasonable. Again it is actually LOWER than my own estimated costs. But what are they including on this 'other development costs'? Where is the much needed breakdown?


Please see my Residual Land Calculation and wonder where their numbers might vary. I think they have some very basic figures wrong, such as land area ....


The next item on the menu is a bald '$1.X Billion the developer will have to fork out'.

They seem to have done an easy tot up of the 4 items above to come to this number. They have conveniently left out how much profit the buyer will make by not telling us the Gross Development Value ( $2.5 Billion by my estimate). A sweetener for any deal, and big developers are savvy businessmen with deep pockets who know how to finance large projects when massive profit is to be made. 

Next, the old 50% premium chestnut. When will they ever stop pushing this unethical way of relating 
the single unit price with an enbloc land price?


The Sale Committee have no faith in Tampines Court. The minimum price has become their proposed sale price because they feel the estate is 'too big to swallow' . May I remind them of the equally huge ex-HUDC Waterfront View which was nicely devoured by the big developers and split into 4 highly profitable new condominiums. The profit there was astronomical.  


Next: comes the threat of what will happen in the future if we do not swallow their low RP:




Where there is money to be made, there will always be marketing agents and lawyers willing to try. The next SC (and there will be another for sure) hopefully will not start at the bottom and threaten, whine and fabricate their way to the 80%.  Start with what the 80% want and work hard to get it. Simple.

Next: They implore SPs not to expect to buy a new condo with their sales proceeds.


Next comes a list plucked from the air- according to them, SPs will have to shoulder a total of ~$11 million dollars in maintenance costs! I am not going to go down that ridiculous list as I was on the management committee for many years and know balderdash when I see it. The sale committee has sunk to a new level with the sole aim of frightening SPs into signing.

Their sign off:-



They think very little of TC. It is true that the last unit sale was $845k but they do not tell you that it  was an anomaly; a rental unit, 3rd floor walk-up facing the PIE slip road - the worst possible location in TC. The sellers bought pre-2002 (privatisation) so could be original owners and that they owned a unit in another condominium. This is akin to the MA hawking Hougang HUDCs as possible replacement units without first checking on the reason for the low sale prices there (see my post Hougang and the MAs 'extensive research').  Tampines Court units can demand up to $1.25m, that is a  fact conveniently ignored by this SC who choose to look for the worst in everything. 

Do they have a crystal ball on how the development charge will move over the next 5 years. Do they know that it is revised twice a year and sometimes it goes down, not up? It went down between 2008-2009 (twice), down between 2011- 2012 and again down 2014-2015. It has remained steady for 4 consecutive terms. The lease top-up is a minor item on the list and goes up slowly according to the URA Gov table. 


All in all, the whole tone of the letter is an insult to subsidiary proprietors. Full of negativity, prophesying doom and gloom if we don't sign.  A siege mentality showing with choice of words such as  'hefty fines, penalties, impossible, too big to swallow, TOO MUCH, THANKLESS, NO, heavy costs, DECLINING, NOT UPGRADE'

The choice is yours




14 comments:

  1. Based on this then what is the point in selling? My property is newly renovated and certainly worth more than 850k on the open market. If I can't upgrade my property with the proceeds then I prefer to stay in my huge apartment with close local amenities in a quiet, green environment, walking distance to 2 MRT stations and 4 shopping malls, easy access to PIE.

    Of course to give all these things up which cannot be found in other developments requires us to be generously compensated, otherwise stop chucking your toys out of the pram and leave us be, most of us will be happy to pay for increased maintenance than be forced to downgrade on the back of selfishness, greed and scaremongering. All this kind of letter does is antagonise neighbour relations.

    ReplyDelete
    Replies
    1. Totally agree.

      Delete
  2. 1) SC need to compare apple to apple instead of comparing Tampines Ave 10 land with our land. If I am going to buy a house I rather pay more and buy a unit with good facing, high floor, windy and nice view and renovate it rather than buy a renovated unit but low floor lousy facing and afternoon sun. It is the same with developers, they will be willing to pay for good piece of land and built condos which are easier to sell.

    2) SC is comparing current transacted price of individual unit again @ $850K to $900K, as if this price will stay for the next 2 years. They chose to ignore a unit which was recently transacted at $941K. Most of the cheap units owned by 1st and 2nd owners are already sold. Price of TC will definitely goes up to above $1M in a matter of time with previous record sales of $1.25M !

    3) Asking for higher price is not impossible figure and we deserve it because of our location. Only negative agents and SC thinks like that it is impossible to sell. If SC/MA has no confidence to sell our price, please resign !

    4) If this enbloc failed, it is not because of our asking price but because of a lousy and negative team of MA/SC. In any case we have no regret and will wait for other opportunity. We will hold on to it because you can't find another good piece of land equivalent to ours in our vicinity and we are proud of it. In the next enbloc we will bar this group of lousy SC/MA to act for us ! Get lost! You are a liability to TC !

    5) Why are they revealing the estimated upgrading cost ? This are privileged information and should be confidential. In any case, If you divide the total cost with the numbers of units, it is still affordable and after upgrading the value of TC will definetly goes up ! No worries.

    6) Stupid statement to say that either sell enbloc or stuck with $850K as if TC units cannot sell more than $850K. If you are so desperate, please sell you own units and get lost and stop bothering us ! The rest of us are proud of TC and we are happy to get rid of negative neighbors like you, Good riddance

    ReplyDelete
  3. This letter sounds as if the MA wrote it and 3 members of the SC (With the notable exception of Mr Vasan) put their names to it. (Deleted by itshometome). I wouldn't put these guys in charge of a fruit stall never mind give them the responsibility of getting the best price for Tampines Court. (Deleted by Itshometome) on SC LETTER Dated 3rd Oct

    ReplyDelete
  4. The mysterious letter supposingly from SC is unsigned so we are not sure who actually sent it. Such letter is very negative and should not be sent to those SPs who have not signed the CSA as it is insulting and degrading. TC is definitely worth much more than the way they negatively put it. If indeed it is wrote/sent my MA, we can lodged a complaint to CEA. Please do not throw away the stamped envelope as we can trace who is the actual sender if need to.

    ReplyDelete
  5. Maybe they got their Developer already... not owned locally.. that's why :
    "is an expensive procedure that takes time away from the 5 years any developer is given to sell the developed estate before hefty fines and penalties come into force."
    maybe... just a wild guess...

    ReplyDelete
  6. Extract from Practice Circular on Collective Sales of Property PC 1/2016 (Council for Estate Agencies) :

    3. CSCs have a duty to act in good faith and to manage the collective sale process to obtain the best price possible for the property.

    10. Estate agents and salespersons shall not make any express or implied misrepresentation or exert undue pressure to induce or procure any subsidiary proprietor to agree to a collective sale.

    ReplyDelete
  7. Well the sale of Raintree Gardens for $334.2 million or $1.9 million per unit makes this Sales Committee look very foolish and the Managing Agent look downright greedy. I'd like to think this is enough 'evidence' to convince people that we are being taken for fools...

    As per the letter dated 3rd October from the Sales Committee the buyer of Raintree Gardens WERE NOT put off by:
    1. The amount to be paid to the unit owners.
    2. The government imposed development charges.
    3. The 99 year lease top up.
    4. Other development charges.

    They were also NOT put off by the fact that Raintree Gardens is not a 'clean' piece of land OR by the fact that 'they will have to demolish,rebuild and sell all the new units within 5 years of the initial purchase date!!'

    Time for this Sales Committee to stand down and for Huttons to be 'fired'...

    Link here (Copy and paste)
    http://www.todayonline.com/singapore/raintree-gardens-sold-total-en-bloc-value-2016-crosses-s1b

    ReplyDelete
  8. It's a Fact: Round Market, Town Council, neighbourhood shops staying put (better authorised sources)
    For sure, SC does not understand feedback from SPs, still quoting GLS. In pickpocket lingo its referred to as 'Misdirection' from the real deal which is RLV. Oh well, can't expect much from 'Three Stooges'

    Looks like a trial balloon for 1.5M. From 'impossible' any higher than 1.3M to 1.5M is progress: YES; but Credibility: ZERO
    NO GO. It's 1.8M, not ONE PENNY LESS !

    Aim High, Moe. You can do better !

    ReplyDelete
    Replies
    1. It's confirmed: Round Market and Town Council stays. Check with Changkat CC, there's a useful handbook "Our Tampines Hub"

      The mischievous inventiveness of some SC members to allude, imply, intimate, insinuate, manufacture and subtly suggest 'Gloom and Doom', when there's none, is shocking and their negativity: boundless.

      Timely to remind ourselves of an earlier warning: 'NO MODICUM of HONESTY'

      Delete
  9. Am I reading it right on Enbloc FB; one of our SC member is all primed to sell his unit. I suppose any price above resale price is fine by him. Has he a vested interest for a quick conclusion to collective sale then? A hindrance to optimal pricing.

    He should NEVER participate in any discussions, decision making or negotiations.

    He's undermining this Enbloc, not MR Vasan !

    He should QUIT the SC.

    ReplyDelete
    Replies
    1. I stress, I am only requesting him to make public his and his family's interest in the estate. I am not implying anything untoward. It is a requirement of a collective sale that SC members make their interests known. We have not been informed of SC members interests.

      Delete
    2. Maám, By now it's crystal that this SC will ignore any Statutory Requirement, Rules and Regulations, Laws as they scheme and hoodwink for that elusive 80%.
      They've done their Groundwork. SC is above the Law !
      Irony is, it's in SC's interest to disclose those info; to come clean, to be above suspicion and instill confidence. Alas, this SC/MA knows better. It always does.

      Transparency is fervently preached; never practiced.

      Feedback always eagerly sought; yet constantly ignored.

      It's legit to knowingly propagate false rumours, if it serves SC's cause.
      It's OK to be fast and loose with Facts and figures, promises and assurances.
      It's only other people's money/homes

      Justice will eventually catch up and bite them. Always does.

      Delete
  10. This letter implores SPs to accept a fair, win-win RP of 1.32M.
    They analysed comparable land sales in Tampines area, enlightened us on Developers concerns, points of view and never fail to remind us of our depreciating asset and increased maintenance costs.
    A serious piece, written with conviction.

    Soon after, news broke on Raintree EnBloc success in Potong Pasir. SC was quick to contradict themselves and eveready to increase the RP.

    A notable SC member FB comment "comparing Tampines with Bishan or Holland Rd (incl Potong Pasir) is something we shd want to avoid" ( not deleted, therefore fair comment; it's a thankless task, plse don't nitpick )

    If this team has any policy at all, it's incoherent, inconsistent and ephemeral.

    Principal SC members don't even believe in themselves, why then should we SP, trust these phoneys.

    By trivialising this momentous deal, SC has effectively sealed it's fate.

    ReplyDelete