Wednesday, February 14, 2007

Singapore - En bloc backlash

A rather amazing thing has started to happen. After writing to the Straits Times about the insanity that is the Singapore en bloc property market, I was annoyed that they had censored my letter, so I posted it on the blog.

I received a comment from a fellow calling himself Dr. Minority who has a blog dedicated to the topic of en bloc issues at Enblocking Singapore.

Getting a comment was unusual enough, but today I received a phone call from someone who wanted to say that they agreed with the letter in the ST Forum. She had gone to the trouble of finding my home phone number by noting that I had mentioned Ardmore Park in the letter.

I realize a sample of two is not significant statistically, but folks, nobody in Singapore ever speaks up about government policy.

At a time when the Integrated Resort projects are leading to an influx of new people, and when the Singapore government has indicated a desire to raise the population level of the country, they have unleashed a process in which the housing stock is being destroyed.

The Singapore government needs to wake up and understand that the en bloc rules have led to the forced eviction of the very people who vote for them. When you are forced to sell your home at a price that cannot even buy an equivalent replacement, something has gone badly wrong.

1 comment:

Anonymous said...

In this New Millennium, the spate of Collective Sales has hit those of us in Districts 9 and 10 where East meets West, as Dr Minority of puts it so elegantly.

1. Constitution. Is it even constitutional, I wonder? Perhaps, it is only in this little red dot where North nearly meets South where a law could be passed in 1997 with such equanimity by a Parliament of 82:2 mandating collective sale of Privately-Owned property based on 90% share-value majority if your estate is less than 10 years old from the date of issuance of TOL (Temporary Occupation Licence) or 80% majority if 10 years or older. Should a collective sale of a property bought prior to the enactment of this law be subject to this 90% (or 80%) majority?

2. Impact vs Regulation. What is even more galling is that after passing this "innovative" piece of legislation in 1997, they have conveniently left a huge void on everything else related to it.

2.1 To sell the entire estate - there is no regulation or legislation to govern the Sales Committee who dictates the terms of such collective sale and the apportionment method of sales proceeds that are binding on ALL owners. The Sales Committee might as well be a "Committee of One" because - naturally - only like-minded owners will be invited to join. Also, shouldn't the law legislate that the Sales Committee be auto-dissolved once the CSA attempt fails to garner the requisite share-values? Even if the dissenting owner goes for review by the Strata Title Board (STB), so what? STB is bound by the existing guidelines (or lack thereof) and isn't it a case of fait accompli by then? In form, we have a recourse but in substance, it counts for almost nothing. As they say, "the devil is in the details".

2.2 To repair a broken lock in the estate – In stark contrast, there is an entire statute under the Building Maintenance and Strata Management Act to regulate the Management Corporation.

3. Paradigm shift. Pray, let's not be hemmed-in by the marker lines drawn for us.

3.1 Labels of "majority" versus "minority" are misplaced. We are talking about Private Property that we bought at prevailing market prices with our hard-earned money. No government subsidy. Not dipping into taxpayer's money. Are we living on some communal farm all of a sudden when it comes to collective sale?

3.2 10 years! This would be hilariously funny if it wasn't so tragic. How long did your fridge last? Mine is still frightfully cold after 13 years! Man, we are talking about bricks and mortar here. The law says "less than 10 years" and "10 years or more". The first CSA attempt on my estate was four years from TOL - even the central air-conditioning system provided by the developer to me was still under warranty!

3.3 What kind of Master Plan does our MND drum-up when the land use/plot density ratio could be hypothetically out-of-sync from Day 1 of TOL issuance? Hongkong is now talking about 40 years whereas in Singapore we have been slapped with this CSA potential/risk from Day 1 of getting TOL. Bizarre, no? On our finite-resource Planet Earth, wouldn't it be more sensible to bar CSA for the first 20 years from TOL at a minimum?

4. Property share-values. Dr Minority has done his homework about share-values approved by the Commissioner of Buildings (COB). The share-value bands were only narrowed recently and hence the legacy problem was created by COB in the first place. The esteemed Commissioner apparently did not have the foresight to envisage that a self-appointed Sales Committee of a collective sale could apportion sales proceeds based on such Committee's totally arbitrary formulae/weightages pegged to share values.

5. Apportionment method. A rocket scientist it does not take to derive a mathematical basis of apportionment. Searing as this may sound but it is unconscionable that the Strata Title Boards sanctions such arbitrary apportionment method of sales proceeds by a self-appointed Sales Committee.

5.1 At the time of purchase, you pay for every sq cm of space. Every month, you pay for every share value as approved by COB.

5.2 Now, based on a collective sale forced down your throat if you are amongst the dissenters, you are obliged to accept the apportionment based solely on share value or some dreamed-up weightage decided by the self-appointed Sales Committee even though your apartment is 50% larger than your neighbours.

5.3 Why is there no law to apply a mathematical basis of apportionment? Example: The ratio of "common property" versus aggregate "strata title area" could be established by a quantity surveyor (eg, 1000 sq m of common property of the estate versus 4000 sq m of aggregate strata title area of all apartments - ratio of 1:4). The collective sales proceeds, say $15mn, should then be divided into these proportionate ratios. Hence, $3m would be apportioned based on share values of each apartment and $12mn would be apportioned based on the strata title area of each apartment, thus mathematically and factually accounting for the full apportionment of such collective sales proceeds of $15mn. Similar ratio principles could be applied to mixed-development estates where market valuation, share values and unit sizes are all factored-in in the apportionment method based on the professional opinions of independent real estate appraisors and quantity surveyors.

5.4 No-brainer. In most estates, the larger units are invariably outnumbered by the smaller units. It is a no-brainer when it comes to apportionment method because the majority of the owners who own the smaller units would naturally vote to use share-values-only or to assign a weightage to share-values favourable to themselves.

6. High-rise slums. Estate maintenance of a development with CSA potential/risk is a Catch-22 issue. In high-density high-rise living on a little red dot, high-class slums can evolve willy-nilly in our Global City. We should have a scaled time-bar for next CSA attempts relative to the estate's age (eg, no CSA for less than 20 years from TOL; 5-year time bar after a failed CSA attempt for estates between 20-40 years from TOL, 3-year time bar after a failed CSA attempt for estates above 40 years). If owners have an assurance that this CSA cycle has a timeline (and not going into infinity), then the quality standard of buildings in Singapore will be upkept and maintained properly.

7. Financial planning/CPF. Most of us would have used CPF monies substantively to buy a private property. CPF policies ostensibly encourage prudent and stable investment of our CPF monies with net positive gain over time. Hence, the CPF criteria are more stringent for investment properties versus owner-occupied properties.

7.1 The greatest irony is CSAs are almost guaranteed to result in an investment downgrade or downsize for owner-occupiers who need a replacement unit (if new replacement unit) or constant churning of investment (if old replacement unit as yet another CSA is likely to eventuate). This does not even take into account that real estate investment is truly unique - Unit #01 may be much less favoured and therefore worth less than Unit #02 even if both are in the same block on the same level with the same design layout.

7.2 All of us have different cashflow needs, risk appetites and investment-risk/time-horizon profiles. However, CSAs enforced on dissenting owners in effect communalizes all of us into "cashing-out" our original real estate investment.

8. Architectural legacy. Ever notice the difference between apartments built in the 60s, 70s, 80s, 90s and 00s? With all this urban renewal from Day 1 of TOL, what architectural legacy could we even hope for?

9. Community bonding. We are losing our citizens despite our near-First-World trappings. We talk incessantly about community bonding but our policies do everything to DIScourage bonding.

9.1 We are after all human and being human, we tend to be territorial. If we are serious about community bonding, principles similar to HDB SERS should be applied to CSAs to keep a sense of neighbourliness and community - more so for the people with private properties (and their children) are likely to be more mobile in terms of migration possibilities.

9.2 As the developer/buyer of an estate under collective sale is tapping on the land use potential belonging to the original unit owners, developers could be obliged by law to offer a same-size replacement unit at the redeveloped estate or within a 1-km radius of same or higher quality as one of the “settlement consideration” options in addition to outright cash. Undoubtedly, supplemental policies would be needed to cover completion risk during redevelopment (eg, performance bond guarantee issued by full-licence/QFB banks in Singapore in favour of all unit owners who opted for replacement units). This option is viable for most collective sales except for those where land use has been changed from, say, residential use to hotel or commercial or white site usage, in which case such option would be naturally inapplicable as the collective sales proceeds would be at a vast premium to facilitate an equivalent/upgraded replacement unit for the collective sale unit owner.

9.3 Interestingly - in contrast - Singapore can't even seduce our Permanent Residents to give up their Malaysian, Indian or Mainland Chinese passports despite whatever commonly perceived downsides of these countries at present.

10. Environmental impact/wastage. Again, we have a senseless contradiction. We harp on Asian values, of which frugality is one. Yet our policies foster wanton wastage as gleaming marble floors of less than 10 years or even of 25 years if well-maintained go under the wrecker's ball. It takes an obscene amount of energy to produce a ton of aluminium window frames and yet it's kosher to twist them all up with a CSA and to smash all these double-glazed full-height windows to smithereens?

11. Individual versus Minority versus Majority. However hard we try, I reckon Singapore will not become a Global City of First World Standard in essence (perhaps in trappings, we can pass it off).

Why? Because the hallmark of such places at its peak is giving people the space to grow and evolve into a rich pluralistic diversity yet with a strong commonality. Underpinning their society, there is invariably a healthy respect for the individual (what more for the minority?).

Sadly, we Singaporeans have learned to be a parrot-society veering to a convenient singularity with highly selfish motivations of kaisuism. Instead, underpinning our society, we have tyranny by the majority - be it in HDB Lift Upgrading or Private Estate Collective/En bloc Sale.

Knowing the mass media's pro-CSA slant and the dearth of civil society in Singapore, I have not even bothered to write-in to the mass media. Instead, I have chosen to give grief directly to our humble civil service and statutory boards and whatever mouthpieces the government has deigned appropriate for us to squawk into.

Only Time will tell if the powers-that-be really "listen". And if they did in fact "listen" but can't or won't take what we say into account for whatever reason (valid or otherwise), then at least they could "talk-back" so that we dissenters to collective sales at least would know why we are being led to slaughter, eh?

Let me end off by saying that - at the bottomline, we Singaporeans know the Price of everything but the Value of nothing.