Thomson View Condominium has joined a growing list of failed en bloc initiatives. The collective sale committee was unsuccessful in securing the requisite 80 per cent approval rate to kick-start a sale. Only 76 per cent of owners backed the reserve price of $938 million (which was raised 3 times to meet owners’ demands). This resulted in the sale agreement lapsing on Sept 24. The 255-unit estate in Upper Thomson Road failed en bloc attempt is its fourth.
Thomson View Condominium has a lease that started in 1976. Already 42 years of the lease has expired. It has 57 years left. As each year goes by, the value of the units in Thomson View is expected to fall. As the condominium is old, the owners have to spend a lot of money to keep the units in good condition to live in or to rent out. The failed en bloc sale site comprises 200 apartments, 54 townhouses and one shop unit on a 540,314 sq ft site.
Owners of the failed en bloc project would have received between $2.6 million and $5.5 million if the sale had gone through.
Mr Paul Ho, chief mortgage consultant of iCompareLoan said owners of the failed en bloc sale site were right in acting quickly and decisively.
Whatever decision owners facing en bloc sale make, it is better to make it fast so that the sale (or non-sale) can be concluded with minimal delay and maximum benefit to the owners. One way he said was to conduct a Collective Sales Agreement (CSA) as well as concurrently collect a “Non Collective Sales Agreement (NCSA)”, so that once a NCSA reaches 20%, the collective sale process is called off. There is really no point to drag on.
As collective sale process takes 20 to 30 months to complete, during this time, the owners typically do not have sufficient funds for down-payment and their CPF OA funds are tied up in the property, hence they cannot buy a new condominium early.
By the time the transaction is completed in 20 to 30 months later, the property prices would have already moved up 10 to 20 per cent. This is already evidenced by sellers of older estate asking higher prices. Hence if the process takes 20 months to 30 months, owners may need to consider the cost of a replacement unit by that time, else they may want to hold up a higher selling price.
Mr Ho pointed out that the rules are quite onerous and stringent and is governed by the Land Titles (Strata) Act – section 84A. Over the years, additions and amendments by the Ministry of Law to the en bloc law have made the collective sale rules even tighter.
He said that many of the home owners who refinanced their home loans to fixed rate home loans or those with 2 years locked-in or 3 years locked-in period will incur full home loan redemption penalty. This penalty is usually 1.5% of the loan amount. This tends to affect those who have bought their properties in recent years as their loan size tends to be bigger and their corresponding home loan redemption penalty higher.
Mr Ho suggested that if one’s home is at risk of en bloc, the owner could consider a home loan where there is no locked-in penalty, but instead entails a higher housing interest rate cost. The next best option is to look for packages with a waiver of locked-in penalty due to sale of property. Such owners may contact a mortgage broker to assist them to find such packages with waiver of locked-in penalty.
In order to understand how and whether to go into an En Bloc sales and sign on the Collective Sales Agreement (CSA), the owners will need to know how long it will take you to complete the En Bloc sales in case it is successful.
|Stage||Milestone||Duration (Est.)||Timeline (months)|
|1||1st EOGM to appoint CSC.||1 month||1|
|2||2nd EOGM to appoint Marketing agents, solicitors and approve CSA.||1-2 months||2 – 3|
|3||Signing of Collective Sales Agreement (CSA)||12 months||3 to 15|
|4||Owners meeting prior to launch of public tender for sale||1-2 months||4 to 17|
|5||Launch and close of tender||1 month (Max)||5 to 18|
|6||Award of tender.||–|
|7||Negotiate sale by private treaty (if bidding falls below reserve price)||10 weeks (Max)||7.5 to 20.5|
|8||Apply to STB or High Court||3 – 9 months||10.5 to 29.5|
|9||Completion of sale||3 months||13.5 to 32.5|
|10||Handover of vacant possession||6 months||18.5 to 38.5|
The maximum and minimum duration of the en bloc sales process as indicated in the cumulative timeline in the table is roughly between 18.5 months to 38.5 months.
The earliest any home owners can receive any en bloc sales proceeds could be around 13.5 months and the latest will be 32.5 months.
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