NEW EN BLOC RULES - but the onus is still on the homeowner

Changes to the Land Titles (Strata) Act were passed in Parliament, providing more clarity to the en bloc sales process. But some MPs and some others said the amendments do not fully take into consideration the interest of property owners.

Expected to take effect JULY 2010, the amendments are intended to provide greater transparency and streamline procedures for collective sales, after the Ministry of Law was asked by industry experts to review regulations last amended in 2007.

Nationwide debate on the effects of en bloc has seen even MPs entering the fray.  Nominated MP Mildred Tan argued that sales committee members should be required to hold minimum qualifications, such as a basic understanding of property law, property rights and conveyancing. This is because with the 60-day limit now imposed on the mediation of en bloc applications by the Strata Titles Board – after which the case may go before the High Court – the committee members will need to work at a faster pace.

Many have asked are self-appointed sales committees the right vehicle to ensure a sale is fair and transparent?

The new rules also make it tougher for an estate that has failed in a collective sale to be put up for sale again within a two-year period.

Such an attempt would require 50 per cent of the owners’ support; and if that fails, the bar for a subsequent bid is raised to 80 per cent. But once the two years are up, the bar falls back to 25 per cent of owners’ support (or 20 per cent of share value) for another sale attempt.

Home owners who wish to stay put in their condos feel that a two year time bar will still unsettle them and many quip that this is why landed property has rapidly increased in value - the impermanence of condo living being the reason why landed housing is sought after.

MP Ellen Lee (Sembawang GRC) was concerned that, in the time it takes a collective sale to materialise, the property’s reserve price is locked in in the collective sale agreement and may become “out of sync” with the prevailing market value over the course of the two years. 

She suggested making it mandatory that the majority owners reaffirm the price before executing any sale agreement. Such a savvy rule will make the price fairer for the owners. In the case where owners have agreed to sell for $800 psf only to find that they are going back into the property market as buyers for apartments of $1500 psf, makes an en bloc illogical and poor money sense. This has resulted in down sizing for many condo owners who entered the en bloc with pipe dreams of riches.

Many feel that  maintaining the threshold to convene an extraordinary general meeting at 50 per cent will save time and effort for all. 

And some are concerned about lack of advice in what is essentially a transaction between inexperienced private home owners and savvy agents and developers.

“If more than 50 per cent want to explore a sale, they should be well advised by disinterested parties instead of being bull dozed or worse, having their concerns ignored. Ultimately, the sales committee and the developers ignore dissenters and urge many into unreal perceptions to get the necessary 80 per cent or 90 per cent consent, so the the sale will  not fail,” one party commented.

On a similar note, NMP Paulin Tay Straughan pointed out that elderly or disabled homeowners forced to sell their flat face being displaced and risk destroying their social support systems. 

She also proposed that an information resource unit be set up to provide advice on en bloc sales to vulnerable homeowners.

Ultimately, we see whole communities lose their treasured homes with the realisation that living in an apartment is not forever.

Minister for Law K Shanmugam said his ministry was continuously working with surveyors and the Strata Titles Board to publish more information about en bloc sales.

He also reiterated that the onus was on homeowners to decide what was best for their properties, as each of them was different.

“The Government is guided by the principle that we should not micro-manage the process and prescribe too many requirements as they may not be applicable to every development,” said Mr Shanmugam. “Our task is to prescribe certain minimum standards of conduct and to make sure that the whole process is fair, transparent and refined as we go along.”

Resounding words indeed. It's up to us. The fight to save our homes has become perpetual.