Rise of the ‘en blockers’
By EdgeProp Editorial Team
/ EdgeProp |
The EdgeProp 360+ event, “En bloc vs En block”, on the evening of July 5 drew a packed audience. It coincided with the announcement of a new round of property cooling measures that would come into effect the following day.
The measures would have the biggest impact on collective sale deals. It was clear that some owners were getting cold feet as one of the questions raised during the panel discussion was whether one could rescind the collective sale agreement in the light of the latest cooling measures.
According to Adrian Tan, TSMP Law Corp’s partner of dispute resolution, there is generally a five-day cooling-off period after signing the agreement to give the go-ahead for the collective sale. However, beyond the five-day period, if there is “a fundamental change in circumstances”, one could also rescind the contract, he says.
For example, an owner was counting on receiving a certain amount from the collective sale, and had factored in the seller’s stamp duty (SSD), cost of a replacement home and perhaps additional buyer’s stamp duty. But now the government has raised the ABSD by five percentage points. “Under the law, if it’s an act of God, you can rescind. In Singapore, if the government does it, we can also call it ‘an act of God’,” Tan quips.
Tan is of the view that the en bloc laws in Singapore need to be refreshed as they are “very onesided” and favour the majority of the owners who want an en bloc sale. For instance, they have the privilege of calling for an extraordinary general meeting, forming a collective sale committee and posting updates on the collective sale process on the notice board in the condominium. They have access to the names and addresses of all subsidiary proprietors and can communicate with them.
The audience at Marina One auditorium (Credit: Edgeprop Singapore)
The minority owners who object to the collective sale are not even allowed to use the notice board. They do not have a community or a group. “The law doesn’t provide for that,” says Tan.
Someone had suggested forming an “en bloc opposition party,” Tan says. He suggests setting up a website: “It’s a platform for the minority owners to put across their point of view. Better communication and transparency is the way to go.”
Another concern of some owners is having to pay SSD in a collective sale.
“In all estates, you just have to look at who just bought a unit and the date of purchase in order to compute the SSD payable,” says Tan. “The method of apportionment should include a sum for the payment of SSD, which is going to the government.”
The SSD has never been raised in the High Court, as a plaintiff has to prove a financial loss has been sustained from the collective sale. “I myself feel strongly that it’s not in good faith if you force someone to get less money than others,” says Tan. “In Singapore, not only the government but also your neighbours can force you to sell your home — at a price they dictate and at a time they want to in an en bloc sale.”
However, in the light of the recent property cooling measures, developers will be more selective in buying en bloc sites, says Tang Wei Leng, managing director of Colliers International.
Bernard Tong, CEO of EdgeProp Singapore who was also one of the panellists at the event, said the new cooling measures are likely to benefit first-time homebuyers, as they are spared the hike in ABSD. However, first-time homebuyers will still see their borrowing limit cut: from the 80% loan-to-value ratio previously to 75%.
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