Safeguards already in place against en bloc sale of newer projects

The en bloc fever got an airing in Parliament on Tuesday, with a member of parliament (MP) asking whether the government should consider setting a minimum age for developments seeking to go for a collective sale.

In response to the question from MP Lee Bee Wah (Nee Soon GRC), Minister for National Development Lawrence Wong said other safeguards are already in place.

For instance, the collective sales framework requires newer developments to achieve higher consent thresholds. The Land Titles (Strata) Act requires buildings under 10 years old to obtain consent from at least 90 per cent of the owners for a collective sale to go through; older developments need to amass 80 per cent consent.

Of the 40 developments sold en bloc in the past three years, 13 were under 30 years old at the point of sale. That being said, most of them were more than 20 years old then, and were small developments of under 20 units each.

In terms of number of housing units, around 240 units, or 6 per cent of some 4,000 units sold en bloc in the last three years were less than 30 years old.

Even after the consent thresholds are reached, the developer that subsequently secures the site has to submit its development plans to the Urban Redevelopment Authority (URA) for approval.

Mr Wong told the House: “The URA will go through the plans and look at planning considerations to make sure that height, unit sizes are kept to regulations, and that adequate provisions, for example, are made for parking.

“The main objective of the collective sales framework is to give owners the choice of whether to go for redevelopment.

“Such redevelopment allows rejuvenation and land-use optimisation in residential developments.”

There were 27 collective sales of residential redevelopment sites and three involving commercial or industrial redevelopment sites last year, bringing the total collective sales value to S$8.7 billion. This was a stark jump from 2016, when there were only three residential sites sold collectively for S$1 billion.

Some consultants believe that the collective sales fervour has already started to ease; a number of public tenders closed recently without concluding a sale.

Price gaps between the sellers and the buyers of some sites may be impeding the closing of the deals.

Due to the euphoria of recent successful collective sales, new sites going for collective sales tend to be optimistically priced, but having secured sites, many developers would be more measured in their bidding.

Adapted from: The Business Times, 7 February 2018