Developers fear URA will charge for outdoor space

[reporter2]

http://www.straitstimes.com/archive/...space-20130109

Developers fear URA will charge for outdoor space

Published on Jan 09, 2013

By Rachel Chang And Esther Teo


THE Government's intention to fix a loophole that allows property developers to sell off free outdoor open spaces for profit has got them worried.

They fear the Urban Redevelopment Authority (URA) will now slap a charge on such spaces if they are sold as private roof terraces or ground-level private enclosed spaces.

Instead, they hope the URA review will - at most - restrict the size of such areas.

After all, they argue, it was overly big roof terraces in subsidised executive condominiums (ECs) that aroused public indignation, and not roof terraces per se, which are popular with buyers and a fixture of penthouse units.

"Developers have been operating like this for so long. To suddenly make us pay a charge on outdoor space would be chaos," Mr Teo Hong Lim, executive chairman of Roxy-Pacific Holdings, said yesterday.

Mr Terence Teo, investment manager at developer Tong Eng Brothers, said a levy for outdoor space would mean a hefty increase in costs for developers. This could cause them to exclude roof terraces in their penthouse units altogether.

"I wouldn't want it to be a case where developers end up taking away such spaces completely in the design of units because of the charge, as people enjoy them," he said.

In a blog post on Monday, National Development Minister Khaw Boon Wan noted unhappiness over huge EC units.

While he did not name developments, a 4,349 sq ft EC penthouse at CityLife@Tampines featuring a 1,600 sq ft roof terrace was recently sold for $2.05 million.

He noted that at present, "outdoors space open to the sky" is not counted as part of a project's gross floor area. This is to encourage developers to build communal open spaces for residents and encourage greenery.

But developers have been packaging this space into units and this has become an easy way for them to increase the saleable area of an apartment at low cost.

Mr Khaw has asked the URA to "review this policy and have it fixed".

The URA declined to say when the results of its policy review would be ready, nor whether the change would involve restricting the size of roof terraces, or charging developers for outdoor space.

Analysts said that if private roof terraces were to be taxed and at the same charges as, say, balcony space currently is, the CityLife@Tampines presidential penthouse would cost about $470,000 more for the developer. But they added that any charge was likely to be less than that levied on balcony space, as that is covered, and lease terms of ECs are 99 years, while these charges apply to freehold private apartments.

Developers said that in the past few months, URA has discouraged them from submitting plans which have large roof terraces or private enclosed spaces.

But they are concerned that the review may result in their having to pay for outdoor space.

"To be fair to most developers, we do not price the roof terrace at the same price per sq ft (psf) as indoor areas," said one developer, who declined to be named. "So, it's not fair to charge us for the outdoor space."

While analysts said that new restrictions in whatever form might mean that a 1,600 sq ft roof terrace becomes a thing of the past, they do not see private roof terraces going the way of planter boxes or bay windows.

In 2009, in response to developers including big planter boxes or bay windows to increase saleable space, the Government included them as part of the project's allowable gross floor area. They are now rarely seen in new developments.

Roof terraces, meanwhile, remain popular with buyers like engineer Ram Ramesh, 45. He recently bought a private penthouse in Pasir Ris that comes with a 500 sq ft roof terrace.

"It gives me extra space that opens up to the sky and provides fresh air," he said.

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http://www.businesstimes.com.sg/arch...arges-20130109

Published January 09, 2013

Private spaces may incur development charges

Analyst say more measures targeting HDB resale market could be introduced

By Mindy Tan


DEVELOPERS may be saddled with additional development charges if private roof terraces and enclosed spaces are included under the gross floor area (GFA), said Lee Lay Keng, associate director of research at DTZ.

"One possible measure could be that private enclosed areas like the patio for ground floor units, or roof terraces for penthouses could be chargeable for developers," said Ms Lee, who was part of a discussion panel at the DTZ Property Seminar 2013 yesterday.

Ms Lee was responding to a question about possible measures that the government might roll out in the coming year.

Currently, developers of all non-landed private developments and executive condominiums (ECs) do not have to pay development charges for outdoor spaces that are open to the sky as they are not considered part of the GFA.

Despite public indignation over such super-sized EC units, "developers selling off free space to make additional profit for themselves is not improper under current URA (Urban Redevelopment Authority) rules", National Development Minister Khaw Boon Wan said in a blog post on Monday. He has since directed URA to review and fix guidelines on the issue.

Additional measures targeting the resale flat market may also be in the works, said Ms Lee.

"The rise in prices in the mass market over the last two years was (partly) driven by HDB resale prices, with a lot of demand coming from the HDB upgrader segment," said Ms Lee.

To tackle this, the government can consider making it a requirement for upgraders to sell their flats before purchasing a private home, said Ms Lee. This will be similar to current practices in which private property owners who want to buy a HDB flat have to dispose of their private homes within six months.

Alternatively, more restrictions can be placed on owners who want to retain their HDB flats in pursuit of rental yield after upgrading to a private property.

A host of measures targeting the non-residential sector, too, could be introduced.

"Over the last year, a lot of investment was driven from the residential sector to the non-residential sector because of the stamp duties (imposed on the former). If prices were to run away, one possible measure is to have similar seller stamp duties, because we see a lot of sellers flipping commercial units quite quickly, some selling their unit within weeks," said Ms Lee.

Specific to the industrial sector, the government will likely step up enforcement against non-qualifying users of industrial spaces, said Ms Lee.

"There's also a large supply (of industrial sites which) comes from the private sector. Sites from the industrial Government Land Sales Programme have certain restrictions including minimum unit size, and certain sites cannot be strata-titled within 10 years to ensure there's sufficient sites for end-users. This (set of rules) could be applied to private sites as well," she said.

[kane]

I notice only the small time developers making noise. The tile up roof terrace and they sell it to you at 300-500psf in some cases. The cost of tiling one sqft with homogeneous tiles is around $3-5psf. Honestly, the developers won't lose money. They will merely make less profits that's all. And if people like roof terrace you can build it for them and bill them. I can't see what's the big ruckus about if they have to pay for these spaces.

[dare2]

......why KBW did not mentioned about how a 12K household can afford the mortgage on a $2M property?

[darkseed73]

......why KBW did not mentioned about how a 12K household can afford the mortgage on a $2M property?

Becos he himself is a father and i am sure he gave his son a few millions to buy PCs too.

So why should he shoot myself on the foot?

[kane]

so now it becomes part of GFA. no more free lunches.