New rules will address minority concerns over sale price, transparency
THE property fever that has gripped Singapore for the past year will likely cool in the wake of proposed changes to rules on collective sales.
The new rules – likely to apply in early October – will make collective sales a lengthier, more complex procedure, say industry experts.
‘The market will eventually adapt, but the process will definitely be more long-winded and cumbersome, which should diminish the number of projects which come to market successfully,’ said Mr Jeremy Lake of consultancy CB Richard Ellis.
Lawyer S.K. Phang said Singapore’s rules on collective sales are already one of the most comprehensive in the world, but ‘the latest amendments – so far the most far-reaching in their effects – tighten them further’.
Sales have already been tapering off.
Other pressures have come from a recent hike in development charges that developers pay and a jittery stock market that has unnerved investors.
The new rules come amid seemingly growing resentment among minority owners – those who did not vote for a sale – with the sale process.
Many of their issues, apart from the sale price, concern transparency, with some owners complaining that they are being kept in the dark.
The changes, including a five-day cooling-off period, will help address these concerns, but the changes are still pro-sale, said a lawyer.
Some industry players are not happy with the short transition period for the proposed changes.
Once the amended Land Titles (Strata) Act takes effect, it will apply to all projects except those where the 80 per cent or 90 per cent required majority consent has already been obtained.
Owners are seen rushing to get the 80 per cent approval before the new rules come into effect or risk having to restart the whole sale process under the new law.
The last few signatures, however, are often the hardest to nail, observers say, so those who have not yet signed have even more reasons to resist.
‘The short transitional period may undo some ongoing collective sales, which are in the process of obtaining the required percentages of consensus,’ said Dr Phang.
Estates that have just formed sales committees or started collecting signatures will have to start again at a higher cost. A benefit is that the owners of these estates will be able to monitor the sale process better.
‘The new rules will give owners a chance to be involved,’ said a collective sale seller. ‘If not, the sales committees kind of run the show on their own.’
Mr Nicholas Mak of consultancy Knight Frank said: ‘The requirement to have a vote to set up a sales committee means very committed people are required to sit on the committee, as they will face greater responsibility and accountability.’
Some speculators looking to set up a sales committee or just buying into older properties hoping for a quick gain through the collective sale process could be deterred.
There will be a higher risk that the sale will not succeed and, even if it does, the specuators’ cash will be tied to the property for a longer period.
The proposals could also deter those who are not serious about a collective sale but are just testing the market to see their property’s worth.
‘If the new regulations can weed out such people, that would be a positive effect,’ said Mr Mak.
If fewer estates come to the market, their success rate could rise, said a consultant.
Source: The Straits Times 29 Aug 07