View Full Version : HDB to ban assignment of tenanted shops and industrial properties
princess_morbucks
14-10-13, 13:46
http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/5954DC1F6B097AD448257C0400062D8E?OpenDocument
HDB will also disallow the assignment of both commercial and industrial tenanted properties. This move aims to weed out rising assignment fees and unhealthy speculation.
Revised Assignment Policy
5. HDB has about 8,000 commercial tenants and 10,700 industrial tenants. Currently, commercial and industrial tenants in HDB properties are allowed to assign their tenancies. This policy was to facilitate the exit of marginal tenants and to minimise disruption of services. However, in recent years, HDB has seen an upward trend in the average assignment fee and tendered rent.
6. High assignment fees and tendered rents contribute to higher operating costs, which may be passed on to residents and consumers. Assignment may also encourage unhealthy speculation.
7. HDB commercial and industrial properties are meant for tenants to operate businesses to serve the needs of HDB residents and consumers. They are not meant to serve investments or speculative purposes. To preserve this original intent, HDB will disallow the assignment of commercial and industrial tenancies:
· For new tenancies, assignment will not be allowed with effect from 16 Oct 2013. These tenants must return the premises to HDB for re-tender if they wish to exit their businesses.
· For existing tenancies, a 3-year window period will be given to help existing tenants make business adjustments. From now till 15 Oct 2016, existing tenants can continue to assign their shops or industrial premises. However, their assignees can no longer further assign the premises as they are considered new tenants.
8. This new measure is aligned with the market practice of other government agencies and private landlords.
9. To help shop tenants who wish to scale down their business operations, HDB will continue to allow shop tenants to sublet up to 50% of their shop space. However, only one sub-tenant is allowed.
10. HDB tenants can call 1800-866-3073 (Commercial properties) or 1800-866-3077 (Industrial Properties) for further enquiries on the new measure.
Wow. Lucky did not invest in one of these units.
http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/5954DC1F6B097AD448257C0400062D8E?OpenDocument
HDB will also disallow the assignment of both commercial and industrial tenanted properties. This move aims to weed out rising assignment fees and unhealthy speculation.
Revised Assignment Policy
5. HDB has about 8,000 commercial tenants and 10,700 industrial tenants. Currently, commercial and industrial tenants in HDB properties are allowed to assign their tenancies. This policy was to facilitate the exit of marginal tenants and to minimise disruption of services. However, in recent years, HDB has seen an upward trend in the average assignment fee and tendered rent.
6. High assignment fees and tendered rents contribute to higher operating costs, which may be passed on to residents and consumers. Assignment may also encourage unhealthy speculation.
7. HDB commercial and industrial properties are meant for tenants to operate businesses to serve the needs of HDB residents and consumers. They are not meant to serve investments or speculative purposes. To preserve this original intent, HDB will disallow the assignment of commercial and industrial tenancies:
· For new tenancies, assignment will not be allowed with effect from 16 Oct 2013. These tenants must return the premises to HDB for re-tender if they wish to exit their businesses.
· For existing tenancies, a 3-year window period will be given to help existing tenants make business adjustments. From now till 15 Oct 2016, existing tenants can continue to assign their shops or industrial premises. However, their assignees can no longer further assign the premises as they are considered new tenants.8. This new measure is aligned with the market practice of other government agencies and private landlords.
9. To help shop tenants who wish to scale down their business operations, HDB will continue to allow shop tenants to sublet up to 50% of their shop space. However, only one sub-tenant is allowed.
10. HDB tenants can call 1800-866-3073 (Commercial properties) or 1800-866-3077 (Industrial Properties) for further enquiries on the new measure.
These are meant for HDB owned units right?
These are meant for HDB owned units right?
Yes, originally meant to help old shop-keepers retire with a sizeable assignment fee. With the new rules, assignment fees will collapse. Poor, old HDB shopkeepers will suffer in their retirement years. :(
Yes, originally meant to help old shop-keepers retire with a sizeable assignment fee. With the new rules, assignment fees will collapse. Poor, old HDB shopkeepers will suffer in their retirement years. :(
the original intent was never to help tenants to retire with assignment fees.
princess_morbucks
14-10-13, 18:47
Can someone please explain to me?
There are shop keepers who own the HDB shop house right?
These owners can continue to let out as they please, right?
There are another group of shop keepers who rent the shop from HDB .
Do this group of tenants need to pay HDB a lump sum for renting?
Before the new rule -
These are the tenants who can assign their shops to assignees for a fee (eg $100K), and the rent will be paid by the assignees?
When the assignee's tenancy is up, does he need to pay the main tenant another fee again?
Can someone please explain to me?
There are shop keepers who own the HDB shop house right?
These owners can continue to let out as they please, right?
There are another group of shop keepers who rent the shop from HDB .
Do this group of tenants need to pay HDB a lump sum for renting?
Before the new rule -
These are the tenants who can assign their shops to assignees for a fee (eg $100K), and the rent will be paid by the assignees?
When the assignee's tenancy is up, does he need to pay the main tenant another fee again?
These are units rented by HDB to the assignor. When business situation is bad, it can be paying a fee to get assignees. And assignee will take up the existing rent payable to HDB.
Right now, no new units from HDB, so to takeover an unit has to pay this fee.
This is not applicable to HDB shophouse which was sold in the market.
Paying a fee to get assignee? No lah..... haha......... Assignment fees can go up to $500K for gd locations. Now those lofty fees will be a thing of the past.
This is an even better policy of MAS monetary policy to control inflation!
a good move all in all. too much layering causes prices to rise much faster and this is affecting the heartlands.
princess_morbucks
14-10-13, 22:16
These are units rented by HDB to the assignor. When business situation is bad, it can be paying a fee to get assignees. And assignee will take up the existing rent payable to HDB.
Right now, no new units from HDB, so to takeover an unit has to pay this fee.
This is not applicable to HDB shophouse which was sold in the market.
How long is HDB's lease to the assignor?
Does the assignor need to pay HDB a lump sum payment to rent the unit?
Is this amount refundable once the assignor gives up the unit?
Coffeeshops covered in this or not?
How long is HDB's lease to the assignor?
Does the assignor need to pay HDB a lump sum payment to rent the unit?
Is this amount refundable once the assignor gives up the unit?
I believe at the initial stage, the existing tenant (assignor) has bid the highest rent to secure the unit. HDB will lease it to him as long as he pays the monthly rent and till HDB decides to terminate the lease for the whole estate. Two or three deposit as usual and refundable but not lump sum.
princess_morbucks
14-10-13, 22:49
I believe at the initial stage, the existing tenant (assignor) has bid the highest rent to secure the unit. HDB will lease it to him as long as he pays the monthly rent and till HDB decides to terminate the lease for the whole estate. Two or three deposit as usual and refundable but not lump sum.
Thanks for your answer :)!
How long is HDB's lease to the assignor?
Does the assignor need to pay HDB a lump sum payment to rent the unit?
Is this amount refundable once the assignor gives up the unit?
For units which are returned to HDB, an open tender sys is practised. For units belonging to old shop-keepers, they pay a subsidized rent somewhat. These are the units which attract assignment, as the assignee takes over the subsidized rent.
The new HDB rules seem to suggest that the old subsidized rent will stay only for the duration of the current tenancy agreement, after which it will be revised to the market rent. HDB is not v clear on this last part..........
Wow. Lucky did not invest in one of these units.
If u enter early, 15k takeover. and all asking 150-300k takeover fee. Low layout high returns. Why not?
$5000 rental x 12 months/ $15000= 400%
There's alway a entry and exit time.
This is what I invest and exit, in my earlier posts
These are units rented by HDB to the assignor. When business situation is bad, it can be paying a fee to get assignees. And assignee will take up the existing rent payable to HDB.
Right now, no new units from HDB, so to takeover an unit has to pay this fee.
This is not applicable to HDB shophouse which was sold in the market.
Lucky I got rid of my shop unit 2 years ago... it is a matter of time hdb will step in regarding assignment fees.
Hopefully they will regulate coffee shop. Its meant to provide affordable meals to resident not for owners or reits to earn rents.
likewise they should also regulate hdb flats. Afterall it is for own housing needs and should not be rented out as investment.
Early bird catches the worm.
If u enter early, 15k takeover. and all asking 150-300k takeover fee. Low layout high returns. Why not?
$5000 rental x 12 months/ $15000= 400%
There's alway a entry and exit time.
This is what I invest and exit, in my earlier posts
If someone took over an assigned HDB shophouse after payment of $300K in assignment fees to the exiting tenant on 1 Oct 2013, what will be the implication to the new assignee?
The guy who took over the coffee shop at hougang is even worst.
If someone took over an assigned HDB shophouse after payment of $300K in assignment fees to the exiting tenant on 1 Oct 2013, what will be the implication to the new assignee?
The guy who took over the coffee shop at hougang is even worst.
This coffees shop is likely a HDB unit which was released for sale in the early 90s for a leasehold of 99years. It has changed hand and owners make a kill each time. The latest owner probably believe there is still room for appreciation. HDB has stopped this scheme, I think there are only about 8000 such units in the market.
For those units that was assigned recently will be badly hit by the new ruling. Imagine paying even say $15k to takeover, u still have to pay monthly rent to HDB. If biz is good then no issue. Now no hope to find someone to assign to. $$$ gone.
princess_morbucks
15-10-13, 11:58
This coffees shop is likely a HDB unit which was released for sale in the early 90s for a leasehold of 99years. It has changed hand and owners make a kill each time. The latest owner probably believe there is still room for appreciation. HDB has stopped this scheme, I think there are only about 8000 such units in the market.
For those units that was assigned recently will be badly hit by the new ruling. Imagine paying even say $15k to takeover, u still have to pay monthly rent to HDB. If biz is good then no issue. Now no hope to find someone to assign to. $$$ gone.
Ya....I noticed a shop in a new estate where my mum's flat is.
That shop is supposed to be a dental clinic but it opened on and off, most of the time is closed.
I was wondering what kind of biz the owner is doing, getting the shop space but leaving it vacant and paying rent.
Lately I noticed people viewing the shop.
I guessed that they may be assigning a new assignee.
I was imagining the take over fee.
No wonder the main tenant chope the shop space.
He could have easily have a bundle.
It is money made out of no where.
But now, if he had thought of doing so, the plan has blew up in his face!
He has no choice but to continue his business and pay rental, for i guess the next 3 years.
princess_morbucks
15-10-13, 12:03
If someone took over an assigned HDB shophouse after payment of $300K in assignment fees to the exiting tenant on 1 Oct 2013, what will be the implication to the new assignee?
From what I understand, ie after reading from the website, the new assignee can continue with this arrangement for the next 3 years.
After which, the shop will revert back to the original tenant, who can either continue his business on his own, or sublet 50% of the shop space, or totally give up the shop space back to HDB.
No more opportunity to milk the cow. Garment is really all they can to reduce rental. What will they do next? :eek:
From what I understand, ie after reading from the website, the new assignee can continue with this arrangement for the next 3 years.
After which, the shop will revert back to the original tenant, who can either continue his business on his own, or sublet 50% of the shop space, or totally give up the shop space back to HDB.
No more opportunity to milk the cow. Garment is really all they can to reduce rental. What will they do next? :eek:
They will charge biz a bomb..... The REIT game....
No choice but to join in the game. Otherwise, get squeeze more.
They will charge biz a bomb..... The REIT game....
They definitely need to do something about the industrial, commercial, and retail REITs jacking up prices of industrial, commercial, retail space rentals because only a few big players controlling the market! :rolleyes:
No more opportunity to milk the cow. Garment is really all they can to reduce rental. What will they do next? :eek:
Look at ascendas: 80% of portfolios is reits with the remaining as non reits. Temasek is big shareholder.
They definitely need to do something about the industrial, commercial, and retail REITs jacking up prices of industrial, commercial, retail space rentals because only a few big players controlling the market! :rolleyes:
From what I understand, ie after reading from the website, the new assignee can continue with this arrangement for the next 3 years.
After which, the shop will revert back to the original tenant, who can either continue his business on his own, or sublet 50% of the shop space, or totally give up the shop space back to HDB.
No that's not correct. After 3 years, HDB will offer the new assignee a new rental contract. The shop will revert to HDB for open tender if the new assignee does not want to carry on. Nothing to do with original tenant any more.
With this new policy, I expect assignment fees to drop at least 50% in the coming 3 years. I speak with a bit of experience, being an ex-assignor who saw that this rule was coming, after what happened to the hawker stalls.
:2cents:[QUOTE=Warren49;438246]No that's not correct. After 3 years, HDB will offer the new assignee a new rental contract. The shop will revert to HDB for open tender if the new assignee does not want to carry on. Nothing to do with original tenant any more.
Yes. I agree this is what it is supposed to mean...
I think the little few hdb shop which u can still buy and own and rent.
there are indeed speculator who use assignment to ride up the mkt given lower outlay. Wasnt it sometimes ago some people were trying to cook up jawker stall....
princess_morbucks
15-10-13, 15:30
No that's not correct. After 3 years, HDB will offer the new assignee a new rental contract. The shop will revert to HDB for open tender if the new assignee does not want to carry on. Nothing to do with original tenant any more.
With this new policy, I expect assignment fees to drop at least 50% in the coming 3 years. I speak with a bit of experience, being an ex-assignor who saw that this rule was coming, after what happened to the hawker stalls.
Thanks for the clarification.
That means once the new assignee takes over, the shop is his until he decides to give up or if HDB decides to take back the shops in the whole area.
Early bird catches the worm.
Nope. when the herd are chasing after residential, it's a matter of time govt will step in to control, causing indirectly buyers to commercial and overseas props. It's those who can foreseen the scenario and step into the "other" market early, thus be the early bird.
Ex-boss son step into boat quay commercial only after some of the cms, and thanks to intro of full blast of cms which push up the commercial units. His profits is cool 6mio, in less than 2years timeframe.
If someone took over an assigned HDB shophouse after payment of $300K in assignment fees to the exiting tenant on 1 Oct 2013, what will be the implication to the new assignee?
he will feel as if he bought US bonds:D:D:D
They definitely need to do something about the industrial, commercial, and retail REITs jacking up prices of industrial, commercial, retail space rentals because only a few big players controlling the market! :rolleyes:
this thing will not change. you have to look at the beneficial owner of the REITS
this thing will not change. you have to look at the beneficial owner of the REITS
You'll never know. PE BE is a huge slap on the face. He cannot tahan another slap come 2016.
he will feel as if he bought US bonds:D:D:D
Not so bad lah. The syndicates' IRR target is to get back their investment capital after 5 years. So what they will do is to continue with their current methods, and initial outlay will be recouped after 5 years.
As for their 'current methods', that is another topic altogether.
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