Queries on en bloc laws: Ministry replies

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August 10, 2009 Monday

En bloc debate, HK style

Territory's discussion holds up a useful mirror to practices in Singapore

By Tan Hui Yee, Correspondent


WHEN land is scarce, your right to live in your home ends when your neighbours sell theirs.

This logic applies not just to Singapore - which defied expectations by recently producing its first collective sale offer since the recession took hold - but also to Hong Kong, which is now deep in debate over proposed changes to its compulsory property sale rules.

On the surface, the operative concept in both cities is the same: Urban renewal is expensive, and private capital speeds up the process. The government lends a hand by allowing an estate to be sold even if the sale does not get the unanimous approval of all the owners.

But Hong Kong and Singapore differ in the weight each accords to minority owners. Singapore requires an 80 per cent consent for a sale of a property at least 10 years old, and a 90 per cent approval for a development less than 10 years old.

Meanwhile, Hong Kong has maintained a 90 per cent threshold since the 1990s, with a tribunal giving the final go-ahead after considering a host of factors, including the property's age and state of repair.

The Hong Kong administration has recently proposed that the threshold be lowered to 80 per cent - but only in cases where all but one unit has been acquired by one party, and where the development is at least 50 years old.

A observer may think this is just a case of laissez-faire Hong Kong playing catch-up, but the territory's deliberations on the matter actually hold many lessons for the Republic.

For starters, Hong Kong remains protective of minority rights. Even if the proposed change is passed, it would still be harder for the majority of owners in a Hong Kong estate to push though a sale, compared with those in Singapore.

And yet, the opposition to the proposed change in some quarters in Hong Kong has been fierce. The change, they say, is tantamount to a subsidy for developers as it would mean that they would not need to entice as many home owners with a good sale price.

One South China Morning Post reader declared in a letter published on Aug 3: 'The powers to compulsorily take away private homes are a draconian statutory provision that should be vested only in government - and used only for a defined public purpose. Making a profit for developers is not a public purpose.'

The language is refreshing, considering the tendency here to cast in a negative light those opposing an en bloc sale.

At times, they are made out to seem as greedy home owners holding out for more money, or eccentric seniors unduly attached to their property, or simply stubborn people who will not let their neighbours get on with their lives elsewhere.

Some here may point to Singapore's public housing programme, where upgrading works are passed with a 75 per cent vote. If the majority can rule in public housing, why can't it rule in private estates?

But that is hardly a parallel, given that public flat owners who have their homes renovated via a majority vote get to keep their homes whether they approved the upgrade or no. Private home owners have no such comfort.

Another interesting point about the Hong Kong debate is that it gives weight to environmental concerns.

The proposal notes that the normal working life of reinforced concrete buildings - during which they are unlikely to require major repairs - is assumed to be 50 years. Consequently, it sets 50 years as the minimum age for a building which may be subject to a compulsory sale application under the relaxed guidelines.

Given the huge amount of energy and material that erecting a building requires, this safeguard reduces the likelihood of unnecessary demolition waste.

In Singapore, money is by far the biggest measure used to determine whether a collective sale can go ahead.

The Strata Titles Board, which gives such sales the final nod, takes into account the transaction's sale price, the method of distributing the sale proceeds and the relationship of the buyer to any of the unit owners.

Objections to the sale have to be couched in the language of dollars and cents. The minority owner has to suffer a financial loss or be unable to redeem the mortgage against his home in order for the sale to be called off.

The potential loss of built heritage or good architecture is not a consideration. Neither is the environmental cost of demolishing a building that is in good working condition.

There are mitigating factors of course.

Singapore has a pro-active conservation authority which keeps a look-out for historically and architecturally valuable buildings, and adds them to its protected list. This may lessen somewhat the need for stringent collective sale rules to protect urban heritage.

Singapore is also two-thirds the size of Hong Kong. This means the Republic has a smaller buffer of land and cannot afford to leave decaying buildings untouched for long.

Still, the debate in Hong Kong does hold up a useful mirror to our practices, whichever way that debate pans out.

It has been 10 years since the laws were amended here to allow a private estate to be sold without the unanimous consent of all its owners.

In the most recent property peak in 2007, 111 estates changed hands for $12.4 billion, according to property consultancy CB Richard Ellis.

As the Republic braces itself for the next en bloc wave, it could also cast its eye beyond its shores for clues as to how else it might reshape the Singapore skyline.

Urban renewal, after all, is far from being only a numbers game.

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August 15, 2009 Saturday

En bloc sales: Adopt HK's 50-year limit


I APPLAUD Monday's well-argued commentary, 'En bloc debate, HK style', which highlighted the disparity between Hong Kong's code of practice for collective property sales and that in Singapore where the rights of minority secondary proprietors are plainly prejudiced in comparison.

I particularly admire that quotation from a South China Morning Post correspondent: 'The powers to compulsorily take away private homes are a draconian statutory provision that should be vested only in government - and used only for a defined purpose. Making a profit for developers is not a public purpose.'

I also endorse the environmental concerns of Hong Kong over the needless destruction of good architecture with perhaps decades of useful longevity ahead, and the subsequent costly redevelopment of any such site. For example, I would welcome the introduction of a 50-year age limit before any development could be considered for collective sale; that would at least relieve me of the incessant worry of enforced eviction from my treasured dwelling for the rest of my anticipated lifespan.

I would probably be categorised as one of the 'eccentric seniors unduly attached to their property' which I have occupied contentedly since August 1986, but I earnestly hope the Singapore Government will review legislation relating to collective sales without the unanimous consent of all secondary proprietors to alleviate the disadvantages they face compared to owners of both landed property and HDB flats.

Dennis Butler

http://www.straitstimes.com/ST%2BFor...ry_416788.html

August 15, 2009 Saturday

Still waiting for changes to en bloc rules


MANY unit owners or subsidiary proprietors (SPs) who live in private estates are unlikely to be happy at the prospect of 'the Republic's next en bloc wave' envisaged in Monday's report, 'En bloc debate, HK style'.

The report compared legislation in Singapore and Hong Kong. Those in Singapore who are likely to be affected cannot but feel that Hong Kong adopts a more empathetic approach to the concept that an individual's home is his castle, with the right to undisturbed residence.

Sadly, where condominiums in Singapore are concerned, such comfort is replaced with the insecurity that a group of self-interested SPs can, and often do, band together in an attempt to sell the estate collectively - the main carrot dangled almost always being the prospect of a higher-than-market price for their unit.

As I recall, new rules governinig collective property sales were introduced from October 2007. After barely a few months, it was reported that the Ministry of Law was considering making amendments. That was almost 18 months ago.

In the meantime, there have been acrimonious lawsuits involving collective sales, which can only suggest that the rule changes were found wanting.

To the average Singaporean, buying a home is the biggest single investment in his life. In earlier years, the Government avidly pursued and promoted the admirable policy of 'affordable public housing for the masses'.

But private housing was left basically to the law of supply and demand, which would have been admirable had it been left at that. But rules relating to private estates in general, and collective sales in particular, have left much to be desired.

If it is the intention of any would-be property buyer to live there, being ejected summarily by a group with some vested interest rather than any altruistic motives can only instil a sense of insecurity.

In any case, reducing majority approval to 80 per cent seems strangely at odds with the position in limited companies, where only the holdings of minority shareholders with less than 10 per cent of capital can be compulsorily bought out at the majority shareholders' option.

Minorities everywhere always feel unsure of their position, and most countries take measures to ensure their rights are not abused.

This feeling must surely apply in even greater degree to SPs, many of whom would likely have struggled for years to pay off their housing loan and just want to be left in peace to enjoy their golden years.

I look forward to whatever improvements the Ministry of Law has been mulling over in the past 18 months.

Narayana Narayana

http://www.straitstimes.com/ST%2BFor...ry_416797.html

August 15, 2009 Saturday

Private estates badly kept? Says who?


I REFER to Monday's report, 'En bloc debate, HK style', which mentions, inter alia, that Singapore is two-thirds the size of Hong Kong. This means the Republic has a smaller buffer of land and cannot afford to leave decaying buildings untouched for long.

Older Singaporeans remember with dismay the 1960 and 1970s when the Government had a policy of 'Stop at two' and made it clear that parents who ignored the campaign to limit family size to just two children would have to pay the price financially.

The principal reason for this unpopular policy was Singapore's land size. If I recall, the optimum population that could be comfortably accommodated was about three million.

However, that policy has proven over the years that Nature knows best and Singaporeans began to be concerned about the declining rate of population growth.

The result is that today couples are urged to have more than two children and not to worry about being crowded out as Singapore can hold six million people, though more recently, that figure has been tweaked to a slightly lower number.

Meanwhile, Singapore encourages nationals of selected countries to settle here and become permanent residents.

Finally, the report insinuates that private estates tend to have 'decaying buildings' just because they were built decades ago. Just because HDB takes care of only HDB estate upgrading, it does not mean private property owners let their properties decay.

Denis Distant

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August 21, 2009 Friday

Hong Kong's 50-yr rule has marred skyline


COLLECTIVE property sales opponents like Mr Dennis Butler ('En bloc sales: Adopt HK's 50-year limit', last Saturday) and Mr Augustine Cheah ('The difference', last Saturday) have quickly latched on to Ms Tan Hui Yee's piece, 'En bloc debate, HK style' (Aug 10) and hailed it as a 'well-argued commentary'.

Few people in Singapore know that all Hong Kong properties are on a 50-year leasehold term, beginning from the handover date July 1, 1998, except the land on which St John's Cathedral stands in Central, which is the only freehold land in Hong Kong.

That may be one reason why the Hong Kong administration proposed a condition to lower the 90 per cent consent threshold to 80 per cent - that the building be at least 50 years old. For example, if a 30-year-old building was demolished after a collective sale, the remaining lease on the land would be below 20 years.

From Hong Kong's international airport, you take a ride through the scenic beauty of the New Territories. Then you pass through downtown Kowloon and Hong Kong Island on the way to Central, and your opinion changes as you see many dirty and derelict buildings along the way. Many note that Hong Kong is a city of great contrast: modern skyscrapers exist side by side with rundown buildings.

With Mr Butler's suggestion of a 50-year age limit before a collective sale can take place, the Hong Kong scenario could well be part of our skyline in time to come.

Still, I believe buildings under 20 years old, in particular those under 10 years old, should be barred from collective sales unless there are structural problems.

Mr Butler and Mr Cheah latch on to a comment from a Hong Kong letter writer: 'Making a profit for developers is not a public purpose.' I do not dispute the sentiment but I am surprised they left out those who also make money: home owners who sell out, voluntarily or not.

There have been more than 100 collective sales in Singapore over the years, with 80 to 90 per cent consenters and 10 to 20 per cent objectors in each sale. Thus the proportion of proponents to opponents is four to one or higher. I hope the authorities will take note of this point if they see fit to fiddle with the collective sales rules yet again.

Ace Matthews

http://www.straitstimes.com/ST%2BFor...ry_419431.html

Aug 21, 2009

EN BLOC SALES

Rights of all owners adequately protected


I REFER to last Saturday's letters by Mr Dennis Butler ('En bloc sales: Adopt HK's 50-year limit') and Mr Augustine Cheah ('The difference').

In 1999, the Land Titles (Strata) Act was amended to allow collective property sales by majority consent. One of the key considerations in this amendment was to facilitate urban renewal and avoid situations where a small minority of owners can hold up the sale of the development where the use of the land could be optimised.

We have taken steps under the Act to ensure the rights of all owners are adequately protected and provide recourse for those who feel aggrieved for any reason. For example, all collective sales applications have to be considered by the Strata Titles Board. Minority owners who object to the sale can raise their objections to the board, and the board is required to consider these objections before it decides on the outcome of the sales application.

In 2004 and 2007, we refined and updated the Act to provide more safeguards to owners in a collective sale process. For example, owners will have a mandatory five-day cooling-off period after signing a collective sales agreement to reconsider their consent.

Mr Butler has suggested that only developments that are more than 50 years old should be considered for collective sale redevelopment. It would be too rigid to set such an age limit. There could be other factors that warrant redevelopment like its state of disrepair. It is better to leave it to the owners in each development to determine the viability and timing of collective sales.

The current policy has resulted in a better use of our limited land to create more quality housing units for Singaporeans.

For example, the 390-unit Goldenhill Park Condominium sits on the site formerly occupied by the 95-unit Goldenhill Condominium; and the 100-unit The Ansley used to be occupied by the 44-unit Mandalay Court. These former developments were less than 50 years old at the time of the collective sale and redevelopment - Goldenhill Condominium was 15 years old and Mandalay Court was 31 years old. Collective sales also offer a viable alternative for owners to seek new accommodation with new and better facilities.

We thank Mr Butler and Mr Cheah for their feedback. The Ministry of Law will continue to monitor the impact of collective sales rules, and would review the law as and when appropriate.

Chong Wan Yieng (Ms)
Head (Corporate Communications)
Ministry of Law

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August 25, 2009 Tuesday

Questions on collective sale laws


I REFER to last Friday's letter by the Ministry of Law, 'Rights of all owners adequately protected'.

I am particularly troubled by the statement: 'We have taken steps under the Land Titles (Strata) Act to ensure the rights of all owners are adequately protected and provide recourse for those who feel aggrieved for any reason.' For any reason? According to current laws, the Strata Titles Board will consider only financial objections. Non-financial objections are deemed irrelevant. So anyone objecting to a collective property sale for non-financial reasons has no legal recourse.

Also, an objector to a collective sale may be ordered by the Strata Titles Board to pay the legal costs of the majority consenting owners if his objection fails. For an individual, the prospect of having to pay legal costs is intimidating and makes any application to the Strata Titles Board to object to a sale a non-starter.

I also refer to the aim of land use optimisation, said to be the policy consideration behind the collective sale laws. What specifically is meant by 'optimisation' and how is it evaluated? Is it linked to national good, which is more heartfelt and intangible? Or is it to be measured in terms of economic or financial benefits only, and if so, whose?

Are collective sale laws retained because the benefits outweigh or justify the social costs and detrimental effects of the sales? These are - among others - destruction of social communities caused by pitting neighbour against neighbour, demolition of good buildings for commercial profit and emotional distress of losing one's home.

Finally, I am curious why only strata title owners bear the burden of this presumably national-interest public policy. If land use optimisation is the aim, there should be a nationally applied policy by which no property owner (not even owners of good class bungalows) is exempt from having his property compulsorily acquired if he is not optimising the use of the land he owns.

Jeannette Chong Aruldoss (Ms)

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August 15, 2009 Saturday

The difference

'Hong Kong protects minority rights while, in Singapore, money largely decides the fate of a collective sale.'

'Hong Kong protects minority rights while, in Singapore, money largely decides the fate of a collective sale.'

MR AUGUSTINE CHEAH: 'As Ms Tan Hui Yee pointed out on Monday ('En bloc debate, HK style'), the key difference between Hong Kong and Singapore regarding collective property sales is that Hong Kong protects minority rights while, in Singapore, money largely decides the fate of a collective sale. One gets far more home ownership security in public housing than in expensive private housing. With more Singaporeans moving from public housing into condos, the deficiency in our collective sale laws must be addressed properly as it will affect a larger number of people in time to come. The authorities such as the Law Ministry and the Urban Redevelopment Authority have received many suggestions over the past two years, but official replies have been few. Certainly, we have not seen any changes. To proponents of the comparatively liberal collective sale laws who argue that these laws are no different from compulsory government acquisitions of the past, Ms Tan's explanation nails the difference neatly: Private developers make a profit at the expense of someone's home in collective sales, while government acquisition is a sacrifice made for the public good.'

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Sep 4, 2009 Friday

Queries on en bloc laws: Ministry replies


I REFER to Ms Jeannette Chong Aruldoss' letter, 'Questions on collective sale laws' (Aug 25). It states that the Strata Titles Board (STB) will consider only financial objections under current laws. This is not accurate.

The STB must also consider objections on grounds that the transaction was not done in good faith, in addition to financial objections.

Ms Aruldoss says the prospect of an objector having to pay the legal costs of the majority owners is intimidating. Most cases which have gone to the STB have in fact been successfully mediated by the STB. If there is no settlement, then an objector will have to decide if he wants to take the matter further to adjudication by the STB or by the courts. He will have to pay costs if his objections are untenable. It would be unfair to the other owners if an objector can unduly delay the collective sale transaction, at no cost to him, without good reasons.

Ms Aruldoss also seems to suggest that only strata title owners bear the burden of land optimisation. This is quite inaccurate and ignores the history and impact of land acquisition in Singapore.

The Government's land acquisition schemes have mostly affected land owners. The general public, on the other hand, have been the primary beneficiaries of such acquisitions, through public housing, building of infrastructure for public benefit and various other developments, including the building of condominiums - the latter allowed condominium owners to enjoy the land which was originally enjoyed by land owners.

The Masterplan sets out the different types of uses, including land for public housing, condominiums, industrial and commercial uses, as well as landed properties. Within the framework of the Masterplan (and subject to possible acquisition by the Government), owners of the various properties have the right to decide for themselves whether their properties should be developed.

For properties owned by individuals, each individual makes this decision. For condominiums, the question is what number of owners is needed to make such a decision. There have been suggestions that even one objector should be able to stop such a sale. But many stakeholders oppose that approach as it would give disproportionate say to one owner. In finding the appropriate balance, we also need to take into account the need for modernisation, rejuvenation of estates and optimisation of land use.

The law currently requires 80 per cent of owners (by share value and strata area) to agree if the property is at least 10 years old, and 90 per cent of owners to agree if the property is less than 10 years old. Our approach is comparable with that of Ontario, Hawaii and Hong Kong.

Chong Wan Yieng (Ms)
Head (Corporate Communications)
Ministry of Law