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http://www.straitstimes.com/forum/letters-in-print/lower-consent-threshold-for-collective-sales
Lower consent threshold for collective sales
Apr 3, 2016
We live in a densely populated island city-state, and making full use of our land space is a priority.
The Government implemented the "en bloc" strategy as a means to encourage the redevelopment of older estates as a practical solution towards enabling a growing population in the future.
Previously, in order for a collective sale of a development to take place, there needed to be 100 per cent agreement by property owners.
The minimum level of agreement to sell has since been changed to 80 per cent of owners.
Though it is an improvement, recent outcomes have shown otherwise.
In recent times, almost all collective sales have fallen through owing to the high reserve prices.
One of the main reasons is that rather unrealistic reserve prices have been set so as to make it attractive to get 80 per cent of owners to agree to the sale.
Therein lies a tension in marketing practices, where if a reasonable price is set, it would be difficult to convince owners to sell.
So, a "future price" is predicted based on an upward market trend.
But if the market is stagnant, then a high reserve price would not be matched.
It may be time to review the current rules, such that the percentage of nods required is based on an estate's age.
For example, for estates 30 years and older, the minimum level of agreement among owners could be set at 70 per cent; this level could be set at 75 per cent for estates 25 years and older.
This will facilitate collective sales where redevelopment is necessary.
A company needs the equivalent of 51 per cent of shares to pass resolutions, so a collective sale proposition that requires 70 per cent of owners to agree seems reasonable.
Eric Ang Teck Sin
"We live in a densely populated island city-state, and making full use of our land space is a priority."
Why not write to URA to increase the plot ratio to 100 immediately instead of incrementally increasing the plot ratio little bit by little bit since time immemorial. Then there will be no need for enbloc for the next 100 years. The technology to build 100 story HDB flat was already available in 1930s. (The empire states building was built in 1931).
So the culprit is not minority 20% owners, but URA, which incentivise enblocs by increasing plot ratio over time.
"We live in a densely populated island city-state, and making full use of our land space is a priority."
Why not write to URA to increase the plot ratio to 100 immediately instead of incrementally increasing the plot ratio little bit by little bit since time immemorial. Then there will be no need for enbloc for the next 100 years. The technology to build 100 story HDB flat was already available in 1930s. (The empire states building was built in 1931).
So the culprit is not minority 20% owners, but URA, which incentivise enblocs by increasing plot ratio over time.
owners hold off en-bloc for various reasons, and greed is surely one of them
plot ratio is one of the building control parameters, which is different from the construction technology
a much more advanced construction technology than the one from 1931 is needed under a plot ratio of 100, and it will not be cost effective for HDB flats any time soon
if no incentive from the government for redevelopment as you suggested, owners will have to fork out money to fund the redevelopment their aged properties.
Whether redevelopment/en-bloc is good for the country/environment/society or not is a different argument
http://www.straitstimes.com/forum/letters-in-print/lower-consent-threshold-for-collective-sales
Lower consent threshold for collective sales
Apr 3, 2016
We live in a densely populated island city-state, and making full use of our land space is a priority.
The Government implemented the "en bloc" strategy as a means to encourage the redevelopment of older estates as a practical solution towards enabling a growing population in the future.
Previously, in order for a collective sale of a development to take place, there needed to be 100 per cent agreement by property owners.
The minimum level of agreement to sell has since been changed to 80 per cent of owners.
Though it is an improvement, recent outcomes have shown otherwise.
In recent times, almost all collective sales have fallen through owing to the high reserve prices.
One of the main reasons is that rather unrealistic reserve prices have been set so as to make it attractive to get 80 per cent of owners to agree to the sale.
Therein lies a tension in marketing practices, where if a reasonable price is set, it would be difficult to convince owners to sell.
So, a "future price" is predicted based on an upward market trend.
But if the market is stagnant, then a high reserve price would not be matched.
It may be time to review the current rules, such that the percentage of nods required is based on an estate's age.
For example, for estates 30 years and older, the minimum level of agreement among owners could be set at 70 per cent; this level could be set at 75 per cent for estates 25 years and older.
This will facilitate collective sales where redevelopment is necessary.
A company needs the equivalent of 51 per cent of shares to pass resolutions, so a collective sale proposition that requires 70 per cent of owners to agree seems reasonable.
Eric Ang Teck Sin
the comparison of company resolution and collective sale threshold in the last paragraph is really funny
the comparison of company resolution and collective sale threshold in the last paragraph is really funny
perhaps the equivalent should be akin to dissolving the company
or can minority shareholders force the majority to buyout it shares ?
...
plot ratio is one of the building control parameters, which is different from the construction technology
...
a much more advanced construction technology than the one from 1931 is needed under a plot ratio of 100, and it will not be cost effective for HDB flats any time soon ...
the article stated
"We live in a densely populated island city-state, and making full use of our land space is a priority.
The Government implemented the "en bloc" strategy as a means to encourage the redevelopment of older estates as a practical solution towards enabling a growing population in the future."
If the stated noble purpose it to max land usage, then plot ratio is key instead of redevelopment.
Can there be enbloc if plot ratio remains the same (or decreasing)? Perhaps.
As for the part about HDB not cost effective, land is an expensive component. The higher the plot ratio/ stories, the cost of land becomes smaller.
...
if no incentive from the government for redevelopment as you suggested, owners will have to fork out money to fund the redevelopment their aged properties.
...
And why should there be incentive from government to fund redevelopment?
2 different objectives
If the concern is about re-development, then set the LH period to 30 years (or less). Will have urban renewal.
If the concern is growing population, then increase plot ratio.
the article stated
"We live in a densely populated island city-state, and making full use of our land space is a priority.
The Government implemented the "en bloc" strategy as a means to encourage the redevelopment of older estates as a practical solution towards enabling a growing population in the future."
If the stated noble purpose it to max land usage, then plot ratio is key instead of redevelopment.
Can there be enbloc if plot ratio remains the same (or decreasing)? Perhaps.
As for the part about HDB not cost effective, land is an expensive component. The higher the plot ratio/ stories, the cost of land becomes smaller.
And why should there be incentive from government to fund redevelopment?
2 different objectives
If the concern is about re-development, then set the LH period to 30 years (or less). Will have urban renewal.
If the concern is growing population, then increase plot ratio.
As you pointed out, the purpose of en-bloc stated in the article is to encourage redevelopment of older estate, not to maximized land usage, so increase plot ratio to 100 defeats the purpose of renewing aged estate
land is expensive, but it is relative to the total construction cost
As plot ratio is just one the building control parameters, to max-out the gross floor area based on a plot ratio of 100, buildings of more than 500 floors need to be built, which will definitely not be feasible for HDB flats
redevelopment is a commercial activity, it shall be funded by developer or the owner. however, government can provide incentives to make that happen, and taking in tax revenue at the same time
set the LH period to 30 years can partly solved the issue, but won't help FH properties. It has have implications on the building quality, construction costs, and property price
increasing plot ratio can address the growing population issue, but it has to be done over time, based on the population growth.
once the plot ratio is increased, it becomes an incentive for voluntary redevelopment
http://www.straitstimes.com/forum/letters-in-print/high-consent-threshold-for-collective-sales-appropriate
High consent threshold for collective sales appropriate
Published Apr 24, 2016
Singapore may be one of the most populated cities in the world, but that alone is insufficient to justify lowering the threshold of consent for something as major as a collective sale ("Lower consent threshold for collective sales" by Mr Eric Ang Teck Sin; April 3).
In principle, for any decision that has serious ramifications for a large group of individuals, it is imperative that strict criteria be set.
For example, most legislatures, including Singapore's Parliament, require a two-thirds majority to amend the Constitution or introduce certain laws. In these instances, a simple majority is considered to be too narrow a margin.
Since a collective sale affects an individual's ownership of a residence - a high-value asset that is an integral component of living standards, and not so easily replaced - a high bar for approval, such as the current 80 per cent threshold, is entirely appropriate.
Residential properties are also often considered by their owners to be more than mere financial assets.
They are homes for long-term investments for the next generation as well.
Many people form sentimental attachments to their homes, especially if they associate them with powerful memories, priceless past experiences and neighbourly bonds.
The general reluctance to abandon a long-time abode is at least partially responsible for the failure of many collective sale proposals.
In purely pragmatic terms, even with reimbursement from the sale, many residents might lack the financial means to relocate to new properties, given the ever-rising cost of housing.
The arguments against streamlining the collective sale process also extend to the societal level.
Many of the properties involved in collective sales still have a considerable amount of useful life in them.
An over-reliance on collective sales to drive urban redevelopment, and shorter cycles of construction and demolition would entail a considerable waste of resources.
Therefore, in the interest of preserving homes and cultivating sustainable rates of urban redevelopment, the current rules governing collective sales should remain unchanged.
Paul Chan Poh Hoi
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