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08-01-2013, 07:59 AM
The Straits Times
www.straitstimes.com
Published on Jan 08, 2013
'Open space' loophole to be plugged
Review of property policy that allows developers to sell free spaces
By Rachel Chang
NATIONAL Development Minister Khaw Boon Wan yesterday vowed to plug a loophole that allows property developers to sell free spaces for profit.
The move comes amid public unhappiness over super-sized, super-priced executive condominium (EC) units with large roof terraces.
Currently, developers are allowed to use outdoor spaces as private or communal roof terraces, and do not have to pay development charges on them.
This policy is intended to encourage them to build communal spaces for residents and promote greenery, said Mr Khaw in a blog.
However, some developers have been packaging "outdoor space open to the sky" as part of swanky units in the form of rooftop terraces and private enclosed spaces, he noted. By including this as part of penthouse units instead of building communal outdoor space, developers are effectively "selling off free space to make an additional profit for themselves", he said. He has asked the Urban Redevelopment Authority (URA) to "review this policy and have it fixed".
Recently, EC project CityLife @Tampines sold a 4,349 sq ft "presidential" penthouse for $2.05 million. It includes a 1,600 sq ft rooftop terrace, for which the developers paid no development charge. ECs are a public-private housing hybrid meant for the "sandwiched class" - those over the income ceiling for an HDB flat who cannot afford private property. They come with subsidies and an income ceiling of $12,000.
In a blog headlined "Who gets short-changed?", Mr Khaw acknowledged public indignation at million-dollar EC units as understandable, as they were "deviations" from what was intended.
Initially, he said, he was baffled that developers would "short-change" themselves in selling such units: "Why not sell more normal-sized EC units at a higher price per sq ft (psf) and make more profit? The space for one super penthouse, for example, can be used to build two or three normal-sized EC units."
CityLife's penthouse was $470 psf, compared with $770 psf on average for the whole project.
He then realised it was because they could profit from the free outdoor space. While this is "not improper under current rules", he lamented the way it shrank communal space for all residents.
Buyers may also be disappointed later that the outdoor space they have paid for cannot be covered up or enclosed, he said.
A URA spokesman confirmed that the new guidelines on private roof terraces and enclosed spaces will apply to all non-landed private developments, not just ECs. She did not say when the new rules could be expected.
Developers and analysts were taken aback. "Because of one or two penthouses, the rules will be changed to restrict the creativity of all property developments," said boutique developer EL Development's managing director Lim Yew Soon. "There are buyers who want these rooftop spaces for small gardens or for jacuzzis. You cannot just throw away the whole basket because of one bad egg."
SLP International executive director of research and consultancy Nicholas Mak said that whether developers will stop the practice of including large roof terraces in their units depends on URA also restricting the size of outdoor space allowed per unit.
Slapping a charge on outdoor space without restricting the size allowed may just make developers boost prices to maintain their profit margins, he noted.
EC penthouse buyer Jaime Chong, 33, whose 2,013 sq ft unit in the Topiary at Fernvale will come with a 301 sq ft roof terrace, said she did not mind paying for space the developer got for free, as it could be made liveable by installing a retractable awning.
"My agent says they usually allow the removable type, and we can make it into a cosy corner."
rchang@sph.com.sg
Additional reporting by Melissa Tan
www.straitstimes.com
Published on Jan 08, 2013
'Open space' loophole to be plugged
Review of property policy that allows developers to sell free spaces
By Rachel Chang
NATIONAL Development Minister Khaw Boon Wan yesterday vowed to plug a loophole that allows property developers to sell free spaces for profit.
The move comes amid public unhappiness over super-sized, super-priced executive condominium (EC) units with large roof terraces.
Currently, developers are allowed to use outdoor spaces as private or communal roof terraces, and do not have to pay development charges on them.
This policy is intended to encourage them to build communal spaces for residents and promote greenery, said Mr Khaw in a blog.
However, some developers have been packaging "outdoor space open to the sky" as part of swanky units in the form of rooftop terraces and private enclosed spaces, he noted. By including this as part of penthouse units instead of building communal outdoor space, developers are effectively "selling off free space to make an additional profit for themselves", he said. He has asked the Urban Redevelopment Authority (URA) to "review this policy and have it fixed".
Recently, EC project CityLife @Tampines sold a 4,349 sq ft "presidential" penthouse for $2.05 million. It includes a 1,600 sq ft rooftop terrace, for which the developers paid no development charge. ECs are a public-private housing hybrid meant for the "sandwiched class" - those over the income ceiling for an HDB flat who cannot afford private property. They come with subsidies and an income ceiling of $12,000.
In a blog headlined "Who gets short-changed?", Mr Khaw acknowledged public indignation at million-dollar EC units as understandable, as they were "deviations" from what was intended.
Initially, he said, he was baffled that developers would "short-change" themselves in selling such units: "Why not sell more normal-sized EC units at a higher price per sq ft (psf) and make more profit? The space for one super penthouse, for example, can be used to build two or three normal-sized EC units."
CityLife's penthouse was $470 psf, compared with $770 psf on average for the whole project.
He then realised it was because they could profit from the free outdoor space. While this is "not improper under current rules", he lamented the way it shrank communal space for all residents.
Buyers may also be disappointed later that the outdoor space they have paid for cannot be covered up or enclosed, he said.
A URA spokesman confirmed that the new guidelines on private roof terraces and enclosed spaces will apply to all non-landed private developments, not just ECs. She did not say when the new rules could be expected.
Developers and analysts were taken aback. "Because of one or two penthouses, the rules will be changed to restrict the creativity of all property developments," said boutique developer EL Development's managing director Lim Yew Soon. "There are buyers who want these rooftop spaces for small gardens or for jacuzzis. You cannot just throw away the whole basket because of one bad egg."
SLP International executive director of research and consultancy Nicholas Mak said that whether developers will stop the practice of including large roof terraces in their units depends on URA also restricting the size of outdoor space allowed per unit.
Slapping a charge on outdoor space without restricting the size allowed may just make developers boost prices to maintain their profit margins, he noted.
EC penthouse buyer Jaime Chong, 33, whose 2,013 sq ft unit in the Topiary at Fernvale will come with a 301 sq ft roof terrace, said she did not mind paying for space the developer got for free, as it could be made liveable by installing a retractable awning.
"My agent says they usually allow the removable type, and we can make it into a cosy corner."
rchang@sph.com.sg
Additional reporting by Melissa Tan
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