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   data.entry 01 | 06 | 2008

01| 06 | 2008

The Sunday Times

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1st June, 2008

The Sunday Times

 

Think

text | Jessica Cham

En Block sales bring out the worst in Singaporeans

After a most spectacular year for the en block market last year, sales activity has finally frizzled out and for most parties involved, it is a welcome time-out. While property agents may lament the slowdown, one group of home-owners can heave a sigh of relief, as the threat of being forced to sell their homes retreats into oblivion.

Well, for most, anyway.

The recent debacle at the annual general meetings of two of the most iconic condominiums on the East Coast - Bayshore Park and Mandarin Gardens - proves that while the market has gone dead, en block woes have not, and will not, go away.

Some points of contention that arose at the meetings were the use of proxy votes to influence decisions, and conflicts of interest arising over the roles of management councils and sales committees.

In the course of my job, I have covered my fair share of en block deals, and as a non-partisan observer of proceedings, I have come to one conclusion about the "uniquely-Singaporean" phenomenon that is the en block.

It is ugly. And it brings out the worst in Singaporeans..

Recent developments have also highlighted weaknesses in the law regarding collective sales and a private property owners' rights. This is despite the tightening of en block rules that kicked in last October, which ensure, among other things, that sales committees are properly elected, and collective sales agreements witnessed by lawyers.

This has no doubt cooled the en block fever which gripped the nation last year, with a total of 116 collective sales generating record investment sales of $13.64 billion.

But some glaring flaws in the en block process remain. They include the distribution of sales proceeds, the role of the management committee, and the use of proxy votes at annual and extraordinary meetings.

Let me elaborate.

Firstly, owners should be compensated according to their flat attributes - height, cost of renovation, view.

I have found that pro-en block types usually own low-floor units, with average furnishings and view. Anti-en block types, by contrast, typically own beautifully renovated top-floor units with stunning views - it is no wonder that these owners want more compensation or refuse to sell, according to how much they have invested in their homes.

Current laws favour the average owner, who receives a pay-out equal to that of his top-floor neighbor, which is obviously unfair and has been the root of many conflicts and arguments.

The Strata Title Board [STB] has also previously rules that renovations, along with interest, are not a 'deductable expense'. which means your renovations count for nothing in a collective sale.

To create a level playing field, provision should be made so that owners get fair value for their homes, perhaps by a government-appointed independent valuer.

Secondly, the management council and sales committee should be kept separate by law, since the role of the former is to maintain the upkeep of the estate, while the other's role is to sell it.

Current laws allow a sales committee member to be on  the management council as well, but this has caused unhappiness at many estates - not just at Bayshore and Mandarin Gardens - where suspicion breeds among residents towards those who carry both positions.

On the issue of proxy votes, it is theoretically democratic. But it also allows decisions to be skewed one way, because residents who want certain things changed will attend meetings and get proxies from similar-minded neighbors to achieve the results they desire.

Meetings currently require only 30 percent of the total share value held by residents of an estate to attend, which enables decisions to be made without majority consent.

This should be looked at. One solution could be to raise the minimum requirement of residents present to 80 percent, or instead to do away with proxy votes altogether so that voting cannot be manipulated - perhaps via an online or e-mail voting system.

My advice in the meantime?

Don't buy into a strata-titled property if you do not want to be forced to sell your home. Current laws do not ensure you will be able to live in your condominium unit until your dying days - even though, in my opinion, you should be able to.

Most countries in the world allow this basic right, why can't we?

Perhaps the lawmakers could take some of these issues into consideration when compiling the next set of refinements.

Beyond the economic value of urban rejuvenation or boosting shareholder value for property developers, the en block phenomenon has ripped apart the moral fibres and harmony of our society. Is this a cost our society is willing to pay?

On the one hand, I can sympathize with those who want to sell: they may be approaching retirement, or perhaps have plans to move away, and want to get the best price.

But there are people who have spent hundreds of thousands of dollars beautifying their homes to be their retirement nests, plus those who value the environment they live in beyond any amount of realizable value.

Do the former have the right to determine if the latter lose their homes? Owners still have a choice to sell their homes on the open market.

In terms of "specuvestors' who swoop in to snap up units in the hope of making a quick collective sale buck, their motivation is even more inexcusable. It is okay to want to make money, but do it without hurting someone else.

It's not just Singaporeans who become embroiled in controversial sales, but also foreigners and permanent residents. I just hope that my estate never has to go through this nightmare. It is sure to do permanent damage to relationships which have taken years to build up, but which take only a sales notice to destroy.

30| 06 | 2008

The StraitsTimes | Forum

 

Is Singapore no longer a civilized place?

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 19| 02 | 2008

FORM magazine features Pearlbank Penthouse One

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 23 | 09 | 2007

Penthouse One is featured in the October issue of Condé Nast Traveler

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18 | 09 | 2007

Fire breaks out at a 31st floor flat

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08 | 09 | 2007

Penthouse One is featured in the Business Times, Singapore

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08 | 09 | 2007

30+ Building Botox

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04 | Archive

The original Pearlbank Sales Brochure

ca. 31 | 12 | 1972

Hock Seng Enterprises (Pte) Ltd

English text

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05 | Archive

The original groovy Pearlbank Show flat

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