Enbloc

[etan]

Hi, I am from the previous forum if some of you might remember...

Many thanks to the moderators and ppl who have spent a generous amount of their time to help set up this forum. There is much to be gained from the on-going discussions posted from time to time.

Ok, my Q for discussion is:
If yr house gonna go enbloc, is it really good news? Or issit the start of problems to come?

[kazukirai]

Hi, I am from the previous forum if some of you might remember...

Many thanks to the moderators and ppl who have spent a generous amount of their time to help set up this forum. There is much to be gained from the on-going discussions posted from time to time.

Ok, my Q for discussion is:
If yr house gonna go enbloc, is it really good news? Or issit the start of problems to come?

Welcome back etan!

I think this is a really interesting topic. Would be great for those with experience (either industry or personal) to share their thoughts. As for the rest of us, what we know about Enbloc sales e.g. the frustrations of those who see the apartment as a home vs. those invested probably come from the papers.

My own personal take is that if the apartment subject to enbloc is a primary residence, the homeowner is unlikely to benefit much from the enbloc sale.

For those whose apartments is their primary residence, it would mean quite a bit of hassle in adjustment to a new environment.

For those where it is their primary as well as only residence, I'm not sure how much would be left from the sale after buying another place. Would that return justify the sale? Or maybe they would make lemonade with lemons by downgrading to a smaller place or public housing. Even then, what's left would be unlikely to make them millionaires.

For those invested, it's probably a good thing if they didn't buy in a bubble. This is probably the happiest group of the lot.

Koh-san, what's your take? What are the relevant figures for enbloc sales? Are property owners whose apartments have been sold through enbloc really much better off?

Etan-san, out of curiousity, are you asking because you're in such a situation now?

[redcorolla95]

Financially, the enbloc is usually a good thing because there is a premium over the prevailing market price.
Once you can monetize it, the owner can use the money to buy a comparable unit somewhere else.
The rest of the premium = net benefit of the en-bloc.

However, the premium may not be monetizable quickly enough, especially if:
(i) property prices are skyrocketing,
(ii) there is a lawsuit that slows things down. Furthermore, sometimes there's an exit clause allowing the developer to back out for a small fee.

The net benefit could be squandered by:
(i) waiting too long to buy the comparable property. Especially if the en-bloc happens at the start of raging bull market, e.g. a 1 year delay could result in missing the price rise of maybe 10-30%.
(ii) investing in the wrong things. Typically valuations of Singapore stocks & properties would be high at this point.

For a very astute market timer, the net benefit could be multiplied by taking the money and living in a rented unit until property prices bottom. But bcos most people (myself included) are not, this is not generally recommended.

So enbloc is like the lottery or striking gold/oil/diamonds: winning is great, but one must be able to keep the winnings.

[koh_52]

Hi etan welcome back, nice to see you here again...

Good ans from redcorolla95 san.....
In most En-bloc cases is a strike lottery windfall, except that Horizon case whereby the project was sold too early before property prices fly to the moon..hehe, so they back-up the sale and when to the court in a prolong hearing, both side lawyers laughing all the way to the bank.

Well, to what I know 95% of en-bloc owners make money...in 2005 my sister Fernhill en-bloc got 1.5 million and she bot Mapplewood slightly smaller size at 700k..Then in 2007 my friend Leedon ht en-bloc he got 2.5 millions and he went accross the road bot Summerville at also a smaller size for 1.5 million. (so we called sell low, buy low)

My 1 bedder apt somewhere in Bukkit Timah along 1 of the down-town line, right infront the mrt in 1997 bot 450k, now talking & in the process of en-bloc worth aro 900k, but i might not be opting for it becos with money i might not able to buy another good location ppty or atmost breakeven. (sell high, buy high)
Some advise me to encash and retire with the money, hehe can consider hor.

Anyway, some write-out on En-bloc below.....only sale commited member have access to this info...of cos delete some sensitive figure lar...

Collective Sale Timeline
The chart below shows the estimate timeline for the proposed collective sale by Tender. Under present
law, the 80% support (based on total share value and strata area) to launch the collective sale has to
be obtained within 12 months from the day the first person signs the Collective Sale Agreement. Once
the 80% support is reached, it takes 10 - 16 weeks to prepare to launch the collective sale and
evaluate the tender results. A further 6 to 9 months is required for obtaining approval from Strata Titles
Board and/or High Court for the sale and 3 months for legal completion. Hence, upon achieving 80%
mandate, the collective sale process takes approximately 15 to 21 months. However, if approval from
Strata Titles Board is not required (i.e. 100% consensus), the timeline is potentially shortened by 6 to 9
Months


Up to 12 mths/ 10 – 16 weeks/ 6 to 9 months / 3 months/ Up to 6 mths

Obtain 80% /Tender & Evaluation of tender results STB and,or High Court Approval/ Completion /Vacant Possession

Pre-Sale Preparation
a. Brief owners on what to expect in a Collective Sale
b. Preparation of sales kit
c. Advise on Reserve Price and Distribution of sale proceeds
d. Advise Sales Committee to address owners' concerns, if any
e. Advise on Collective Sale Agreement
f. Advise on Tender Document
g. Prepare flyer and investment Report
h. Prepare advertising and publicity campaign
i. Prepare direct mail campaign

Tender Stage
a. Launch and monitor advertising and direct mail campaigns
b. Respond to queries and provide further information
c. Initiate direct personal marketing
d. Conduct on-site viewing
e. Answer queries relating to Property or Tender Documents
f. Follow up with likely prospects
g. Administer receipt of Offers from prospects

Post Marketing Stage
a. Analyze and evaluate offers
b. Make appropriate recommendations to Sale Committee on bids and any conditions
c. Negotiate with prospects on price or conditions where necessary
d. Conduct sale by private treaty if necessary
e. Advise on any additional legal documentation to conclude the sale
f. Give evidence at Strata Titles Board if necessary

Sole Marketing Period
Our appointment shall commence from the Sale Committee’s confirmation of our appointment and end
on the expiry of the Collective Sale Agreement. Any extension of time will be by mutual agreement.

Marketing Fee
Upon successful sale, our fee shall be as follows:
Gross Transacted Price Achieved
Professional Fee....(% of Gross Transacted Price)
Up to S$65 million....0.6%
S$65 million & above....0.6% for the 1st S$65 million
'2% for any amount in excess of S$65 million

GST is payable upon completion of the sale.
We shall bear the following:
i) All cost in preparing, printing and posting marketing materials such as flyers, investment
report and property summary (except legal fee); and
ii) All advertising costs, estimated to be around S$8,000 - S$12,000 (exclude advertisement
to STB application)
Our fee does not include all disbursements, cost in obtaining building plan drawings, application for
Outline Planning Application, Development Baseline Application, legal fees for the preparation of the
Collective Sale Agreement, Option / Sale & Purchase Agreement, any other valuation fees and any
other legal fees in connection with the sale including any application to the Strata Titles Board. Such
fees/costs shall be borne by owners.

Appointment of solicitors
We shall coordinate with a reputable firm of solicitors to help draw up a Collective Sale Agreement and
other necessary legal documents. We can recommend a few leading firms with a long-standing track
record in collective sale, to give us their quotation for your consideration, once we are appointed as
your sole marketing agent.

Forfeited Sum
If a prospective purchaser shall fail to sign or execute the agreement or complete the sale, and any
sum of money paid by the purchaser is forfeited to the owners, we shall be entitled to 50% of the
forfeited sum or 50% of our fee entitlement had the sale proceeded, whichever is the lower.

[etan]

Kazukirai, redcorolla95, Koh_52 : Thank you all for yr response to this thread.


Yes, Kazukirai, U are spot on! And Redcorolla95 has touched on the gist of any enbloc situation. And Koh_52 – U have listed down a detailed timeline flow chart of enbloc process.

To-date, our estate has not obtained 100% consensus, the agents are still working on it. Besides the hardcore cases, heard that there is also a case where they cannot locate one of the owner’s wife who has been overseas for many years. so most probably may need to escalate to STB to get approval. If it still cannot be resolved, will need to apply to High Court, thereby dragging the completion date. If it drags longer (but still within a certain timeframe) I think it may be good – property prices are likely to go down a little?

To me, I think it’s basically one house exchange for 1 house, nothing much left I suppose. Unless I am selling a GCB, and moving into an average house, I would have lots $$$ left over. It's good to dream good dreams sometimes! Like all parents, I hope to leave my little house to the next generation when I am gone.

With the new ruling, the Govt is making life difficult for me to make a choice:
1) if buy hdb, must sell off pte property within 6 mths
2) If buy condo, have to make sure it will not kenna enbloc within the next 4 yrs, (subject to additional SSD)
3) failing the above 2, temporary move to JB until such time SG property is good for buying?
Talk easy …


Seller stamp duty:
On 13 January 2011, the Government announced the extension of the holding period for imposition of SSD on residential properties from 3 years to 4 years based on new rates. The new SSD rates will be imposed on residential properties which are acquired (or purchased) on or after 14 January 2011 and disposed of (or sold) within 4 years of acquisition, as follows:

 Holding period of 1 year : 16% of price or market value, whichever is higher
 Holding period of 2 years : 12% of price or market value, whichever is higher
 Holding period of 3 years : 8% of price or market value, whichever is higher
 Holding period of 4 years : 4% of price or market value, whichever is higher

You wanna move to where? front, back, left, right - cul de sac situation?

Why is life getting more difficult for the average Singaporean leh? Sigh…

Oh btw, since this is value investing forum, I have this to add:
If the enbloc goes thruough, my profit would be 370% after living in it for 18/19 yrs! Isn't this great? But how seow one lah, with the $$$, can only buy 1 house, so still the same, don't gain much.