Majority loses, too

Wednesday, May 9, 2007

Majority loses, too

Owners who object to a sale without valid reasons should compensate others

Letter from Martin Woo

There has been a spate of letters from minority owners voicing their complaints on the existing en bloc laws. They purport that these laws are "totally inadequate and lopsided", as noted by Tan Kim Liang ("Rights of all owners must be protected during sale", April 30).

In any en bloc sale, there will always be some owners who, at whatever price, will not want to sell and choose to remain where they are.

However, there are also owners who are out to hold the majority owners to "ransom" in order to get more compensation.

This has happened in many cases prior to 1999 where the law required 100 per cent consent from owners. In fact, I was told that now, even with the existing laws, there are still minority owners trying to get more compensation from the majority owners by objecting without valid reasons.

Imagine if the law had not been changed, there would not be any en bloc sales today. Singapore might in no time become a concrete slum. It is precisely because of this that the en bloc legislation was amended in 1999 to allow an en bloc sale based on 90 per cent consent for developments less than 10 years and 80 per cent for those 10 years or older.

One must look at both sides of the coin and not be one-sided in this issue. The government's current review of the laws is the correct way of ensuring even-handedness.

I would like to make two suggestions.

First, developments marked out for en bloc sale should not be less than 15 years old, unless there are extenuating reasons such as structural safety, et cetera.

Second, minority owners who object without valid reasons should be made to pay a financial penalty to compensate the rest of the owners for interests and opportunity costs that resulted from the delay. These objectors now get away virtually scot-free.

Singapore won't be a slum. Bear in mind that only 5-8% of the entire land mass is affected by enbloc sales. Plus developers are innovative enough that they have ways around ensuring renewal if the enbloc rules were never changed, such as:-

1. Leased estates. Developers still hold the title, when they feel it's time to redevelop, they kick everyone out. This is what's happening at Anderson Green.
2. Developers systematically buy up individual units and eventually when they've bought all units, they redevelop. In fact, this probably works out cheaper (but the process is longer).

What counts as a valid reason? I had renovations done to my home, not more than 1 year after the protem SC proudly announced the enbloc start. It cost me over $200k. I refuse to sign. Am I considered greedy (to some people they'll say yes) or am I right in saying that at the very least, if they want me to sign on the CSA, they'd jolly well compensate for the renovation costs.

Finally, because of the way the law is structured now, the ONLY language that everyone - majority and minority - can understand is MONEY. Sentimental reasons are not factored in. Neither are a whole bunch of other reasons. So to talk to the SC and majority owners, the only way they can understand is "how much more are you going to pay for me to sign". In actual fact, such owners may not want to move out at all. The SC then has to decide how desperately they want the sale to go through.

In the end, it all boils down to just how much more greedier can anyone (BOTH majority and minority) wants to become because that's the way the law is.

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Originally Posted by Unregistered

In the end, it all boils down to just how much more greedier can anyone (BOTH majority and minority) wants to become because that's the way the law is.

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Do you realize that if what you concluded is true, then property prices will just keep spiralling out of control?

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Originally Posted by Unregistered

Do you realize that if what you concluded is true, then property prices will just keep spiralling out of control?

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that is already a fact. Property prices are already spiralling out of control. Won't be too long now before govt says re implement the policy to pay 20% up front cash again. So buy buy buy before it's too late. Can always offload 2 months down the line and still make some money.

the majority definitely loses, if there are home owners who needs a replacement home. I've yet to see an enbloc sale where the home owner can buy another property of the same size in the same district with the sales proceeds. Doesn't matter if they're paid $2000psf for the enbloc, because the surrounding condos are probably fetching $2600 psf.

The home owners will need to downgrade to smaller unit and in a location much further away from the current location. The other option is to top up another 40 to 80% to get a similar property in the same district. The second option does not make sense, why top up more money when they already have a house in that location? The third option is to stay at one of the other 5 condos that the owner already owns.

Either of the 3 options are not very attractive unless you are in the privileged group of the third option, in which case, your enbloc vote is screwing up the life of the single home owner, ie. the rich gets richer at the expense of the poor.

Ah, well.... that's the principle here, screw or be screwed.

Quote:

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Originally Posted by Unregistered

the majority definitely loses, if there are home owners who needs a replacement home. I've yet to see an enbloc sale where the home owner can buy another property of the same size in the same district with the sales proceeds. Doesn't matter if they're paid $2000psf for the enbloc, because the surrounding condos are probably fetching $2600 psf.

The home owners will need to downgrade to smaller unit and in a location much further away from the current location. The other option is to top up another 40 to 80% to get a similar property in the same district. The second option does not make sense, why top up more money when they already have a house in that location? The third option is to stay at one of the other 5 condos that the owner already owns.

Either of the 3 options are not very attractive unless you are in the privileged group of the third option, in which case, your enbloc vote is screwing up the life of the single home owner, ie. the rich gets richer at the expense of the poor.

Ah, well.... that's the principle here, screw or be screwed.

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Does it make sense that you sell off your 30-40 yr-old property and expect to buy back a brand new similar size unit at similiar location? Are you talking about buying back another 30-40 yr-old same size, similiar location unit?

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Originally Posted by Unregistered

Does it make sense that you sell off your 30-40 yr-old property and expect to buy back a brand new similar size unit at similiar location? Are you talking about buying back another 30-40 yr-old same size, similiar location unit?

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yes, I was talking about buying back another property of the same age. and size in a similar location.