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.