Is there such a thing as a happy en bloc?
ONLY a year ago, old estates sitting on sizeable plots of land were hot property, sought by the property big boys as prime sites for redevelopment.
Today, the en bloc market has cooled such that only one major deal - Katong Mall - has been done this year - and developers seem to be taking the chance whenever they can to make a legal exit from the purchases they made last year.
The Tampines Court collective sale is one prime example. It sits on a plum 702,162 sq ft site with 560 units - and looked like a lucrative development for property giants Far East Organization and Frasers Centrepoint when they inked the deal for $405 million last year. The developers could have transformed it into a new condominium with around 1,580 units averaging 1,300 sq ft. At that price, they were paying around $430 psf - a bargain, considering new condos in Tampines had hit $700 psf in the vicinity.
But how the winds of change have turned on the property market only a year after. On the back of esclating construction costs, the drop in demand for new flats, and the flattening of private home prices, Far East and Frasers are no longer keen on Tampines Court - unsurprising, say property anaylsts, as the developers’ land banks are relatively full and they have plenty of new projects to be launched on hold.
The developers told The Straits Times they were “ready to complete the deal” but that “the onus was on the sales committee” to get the necessary approval. The fact they used “was” - past tense - in their response was telling of how they are already treating the deal as history.
Their refusal to extend the deadline of the agreement has indirectly put the pressure on the Strata Titles Board to now make a decision on the sale.
The agreement expires this Friday (July 25) and following a mad scramble by the sales committee to get STB to make a decision by the deadline, it now looks like a conclusion is imminent.
One way or the other, STB’s anticipated decision is believed to be the speediest the board has made in the histoy of en blocs. After hearing all evidence by sale objectors, lawyers usually take a week or two to make closing submissions, thereafter the board will deliberate on the merits of the sale, before deciding. This deliberation usually takes up to three months, but in the case of Tampines Court, it looks like it will take only one day.
Granted, the circumstances are unique and the stakes are pretty high. A no-go by the board would mean that years of effort and the money (probably in hundreds of thousands) spent on legal tussles by the residents will have been naught - but some will argue that this is not a bad thing, if it was proved that the sale was done in bad faith, and owners are emerging less well-off than before the sale.
If STB gives the green light, then the sales committee - which looked to have shot itself in the foot when it delayed getting the STB approval initally - will breathe a sigh of relief and the developers will have no choice but to proceed with the redevelopment of the former HUDC estate.
The more important question is, who will emerge winners and losers in these scenarios?
Is it better to put off a sale that even the developers are no longer keen on, and let residents keep their flat or sell it on the open market?
Or is it “for the greater good” that urban renewal gets its way?
Residents of Tampines Court will tell you that either way, the en bloc sale has damaged relationships in the estate beyond repair. As I stood outside the room where the weekly Meet-The-People’s sessions were conducted last Monday, one resident remarked to me (we were waiting for the owners to finish their meeting with National Development Minister Mah Bow Tan) that she, a majority owner, wasn’t even sure if she should be happy or sad about the sale anymore.
On one hand, she has already committed to another home elsewhere so she is keen to let go of her Tampines Court home. On the other hand, her kids grew up in Tampines Court where it holds invaluable memories, and life there is so convenient as they live near to work, schools, amenities etc. To uproot her entire family and move somewhere else isn’t as glamourous as it is made out to be, she said wistfully.
“The sad thing is,” she added, “from beginning till the end, the entire en bloc process has been fraught with unhappiness.”
To which I immediately responded, “which en bloc has ever been a happy one?”
Tampines Court’s story - although laden with its unique twists and turns - is no different from the en blocs before them - Horizon Towers, Waterfront View, Gillman Heights, just to name a few recent ones.
On the whole, it might benefit more owners who had bought their units at low prices and have got a windfall from their homes. But there are also many who bought their units at the last property peak (1995/6) and face having their homes expropriated, leaving them with zero cash in their pocket.
This is partly due to the recent change of rule in 2002, that banks now get first charge from the sale proceeds, and the CPF account, the second. In a landmark ruling concerning a resident in Waterfront View, the STB had ruled that the shortfall in an owner’s CPF will not be considered as financial loss. (This shortfall occurs if the sale proceeds are not enough for both the bank charge and CPF principal plus interest monies) This amount gets wavied, and the owner does not have to pay back this money into the CPF. However, this also means his CPF is left with a gaping hole that he would not have had to realize if he was not forced to sell his home.
Some might argue that that is the money he had to pay for living in his home for the last x number of years that he has had it. After all, we can’t expect to live somewhere for free, right? But is it right for an individual’s neighbours to decide for him that it is time to leave your home, realize the loss in your CPF account, and look for a different place to live?
Singapore is a young country, and our en bloc laws are even younger. It is not yet perfect, and what is becoming more apparent in our unique strata-titled property landscape is that these laws have to be tweaked to make the process more transparent and equitable.
This will likely take a long time, and claim many en bloc “victims” along the way. But as long as we do not stop improving our en bloc laws, perhaps someday, we can finally achieve this myth that’s called the “happy en bloc” and urban rejuvenation can happen without the expense of an inidividual’s basic human right to keep his home.
Letty Aw said:
Dear Jessica
Since there is no right to property in the Singapore constitution and in the LTSA, and your neighbours can vote to sell away your property, despite your clear protest, there is no basic human right to keep your home in Singapore.
For those of us, the middle class, the foot soliders of the economy who love Singapore, there is no more sense of permanence or belonging since our homes can be taken away from us. Worse, we live in the fear that in both good times and bad, the law supports our greedy neighbours and eggs them on. The law slights minorities and favours whatever-the-cost-to-logic-and-fair-play en bloc rulings.
So far, the law has contorted itself in every which way to ensure speedy and unfair en bloc rulings.
For Horizon Towers, the deal was clearly done in bad faith. But the court did not think so.
For Gillman Heights, the NUS involvement reeks and is a national disgrace. A lesson to our children indeed of money over honour.
For Airview Towers, despite the lack of two vital signatures, the courts ruled for the majority.
If Singapore is willling to sacrifice the foot soldiers of the economy in favour of urban renewal, and take away their very homes without conscience, making a mockery of due process into the bargain, there will never be a happy en bloc.
In fact, the very concept of “freehold” now belongs to developers. There is no “freehold” for the citizens of Singapore. At best, one can stay in one’s home 20 years before one gets booted out in the interest of urban renewal.
So, there’s no 99 years leasehold for en bloc victims. 15-20 year tenure is the new reality.
This is my country, this is the foot soldiers contribution to Singapore - my home, my memories, my community.
Majulah Singapura!
Niamh Choo said:
One point about the ‘hole’ in CPF accounts:
The good thing about having CPF first charge is that an owner will have their CPF and their Bank mortgage fully redeemed.
The bad thing about CPF second charge is if the sale price is too low, then CPF will waive the outstanding amount, leaving a ‘hole’. This impacts negatively on the owners ability to buy his next home, his savings for retirement, childrens’ educational plans etc.
All properties were CPF first charge prior to 2002 - all properties, that is, except HUDC’s phases III and IV (eg Tampines Court, Waterfront View).
For some inexplicable reason, these properties had their apron strings cut long before any other property, as early as 1996 (when I bought my unit) and probably even before.
For these properties, the order of charge is
1) HDB
2)Credit POSB
3)CPF
This is the reason why many owners in these properties have experienced/are experiencing huge CPF shortfalls compared to other private properties. Some owners are losing as much as $260,000 from their CPF accounts. They will also walk away with zero cash as the CPF would have mopped up every last cent of the sale proceeds.
En blocs are not supposed to make people poorer, but alas, in HUDCs, they inevitably do.
Jeannette Chong Aruldoss said:
Dear Jessica Cheam & Letty Aw
It is indeed regrettable that the right to property (elsewhere considered to be sacrosanct) is not protected by the Singapore Constitution. But our Constitution does guarantee every Singaporean equality before the law and the privilege of enjoying equal protection under the law.
Recently, the minority owners of Horizon Towers in their appeal to the High Court, charged that en bloc laws are discriminatory and therefore unconstitutional. Unfortunately, the learned High Court judge disagreed and upheld the constitutionality of enbloc laws. But I’m not convinced.
All of us who are relegated to being Minority owners by virtue of holding on to our OPINION not to sign the CSA, are by virtue of en bloc laws, denied of legal protection of our legally acquired property rights.
Two owners who have the same kind of property rights should be treated equally and should enjoy equal protection by the law. Yet, en bloc laws divide the owners into 2 types, with one group given compulsory acquisition rights (which hitherto only the State had), and the discrimination is determined only by a Difference of Opinion.
Discrimination can take many forms: difference in skin colour, religion, gender, age or (in our case) opinion. To my understanding, all such discrimination is unjustified and the Constitution is there to guard against such discrimination.
En bloc laws give Majority owners the right to sell away my property without my signature and force me to a party to their Agreement (CSA) against my will; Minority owners have their property rights denied in return for little or no protection. We have seen that STB will more or less rubber stamp the sale application as en bloc laws give Minority owners HARDLY ANY ground to object to the sale.
To add insult to indignity, the law places on the slight shoulders of the resource-less Minority Owners the burden (onus) to explain why his property should not be forfeited! Having been denied of grounds to object to the sale, and bearing the burden of proof, Minority owners are reduced to a pathetic state of resorting to crying foul over procedural irregularities like “missing pages” or missed deadlines. Minority owners in fact have nothing to go on, but much to lose.
If a citizen, who has done no legal wrong, is to have his home (not to mention, his valuable, and sometimes, only, real estate) confiscated, then such a draconian law must BALANCE the interests of competing groups. A law which imposes compulsory forfeiture should give minority owners an adequate or full range of grounds on which to oppose the forced sale. This also serves the principle of equality or parity of arms in combat i.e. the idea of fair play and to win fairly.
Instead, en bloc laws arm Majority owners to the teeth and leave Minority owners weaponless. Isn’t the role of the Rule of Law supposed to protect the weak against the strong? How is the Public Policy of National Interests served by “facilitating” (wording in preamble of LSTA) Big Boys to oust Little Man from his home? Do we need laws to equip the Strong against the Weak ? No! We already have the Law of the Jungle for that!
En bloc laws discriminate against minority owners and are therefore unconstitutional, in my humble opinion.
Jessica Cheam said:
Hi Letty, Niamh and Jeannette,
thanks for leaving your comments and adding to the discussion.
The points you have raised are valid, and I think there’s definitely more room for adjustments in our en bloc laws…
Finding the balance between the interests of the majority and minority owners is a complicated task. I can understand why the government would be pro-urban renewal for a land scarce country like Singapore, but I think there should be certain standards in place to make sure the interests of our citizens is not lost in the pursuit of commercial gain.
Anyway, all eyes are on STB now for it’s decision this afternoon….
Patrick said:
Jessica,
Have you visited the Tampines en-bloc Blog page recently?
There is one new blog about the very same Dennis Wee agent who while working on the en-bloc 2 years back said all the bad stuff about the estate and we need to en-bloc.
Now he is selling a unit for one of the residents, see how he market it now! Not only the price ($750K) is higher than the en-bloc (less than $695K), the description of the place is perfect!
http://www.caganreign.myweb.sg/11
You tell me, will there be happy enbloc?
Why can’t people who wants to sell, sell it individually?
Check this out: http://blog.foreignpolicy.com/node/4115
kelly said:
Dennis Wee is one agent whose staff look at candidate’s age before employing them!! Discrimination!! Sorry - off-topic but can’t help commenting!!
Good entries here Jessica! Keep it up!
David Smith said:
It seems that the issues of unfair credit agreements is getting bigger in the UK. I hope that people can get help without huge charges