99-year leasehold homes on freehold sites harder to en bloc

[Fisherman]

LESSON: Never never buy leasehold homes on freehold sites. For reasons read on................

99-year leasehold homes on freehold sites harder to en bloc



Feb 29, 2012 - PropertyGuru.com.sg

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Residential units with a leasehold period of 99 years and built on a freehold site could be harder to sell in the collective sales market, according to experts.

They noted that a collective sale for such property can only be attained through an agreement with the land owner, as the freehold rights of the estate are not held by either the homeowners or the government.

Experts said that the land owner has the power to decide whether to sell the freehold rights to the estate or have the lease tenure of the property topped up.

For a 99-year leasehold project on land owned by the government, developers redeveloping the site through a collective sale tender pay the government to have the leasehold period renewed to 99 years. However, this is not applicable when a non-government owner is involved.

The owner of the property can either buy back the land, grant a lease top-up, sell the freehold tenure or do nothing.

Nicholas Mak, Research Head at SLP International, said that while a collective sale is still possible, the price for a lease top-up will be set by the land owner, who could ask for a higher payout.

“Homeowners might be caught in a bind in the future... The land owner can seek an exorbitant price, to the extent that it is unattractive to other developers, and in the end, as the lease runs out and the property loses its resale value, it will be sold back to the land owner instead.”

Meanwhile, Karamjit Singh, Managing Director at Credo Real Estate, said a collective sale is only possible “if the land owner says 'yes', and they can't be forced to do so.”

“If the land owner wishes to repossess the land upon the expiration of the lease, the (homeowners) would not be able to en bloc it and would have to see out the remainder of their lease.”

[ikan bilis]

only old big big plots hudc can lah!! location has to be CCR/RCR....

OCR GLS now is only about 500-600psf ppr for near MRT plots...

so 99LH wanna enbloc at how much??... 400psf?
need to top up lease to 99 again, need to knock down buildings, may be got development charges also...
you need to have superb fengshui... like east coast directly beside beach may be....

haha... park west can tankuku... wanna enbloc at 1000psf??... dream dream... dream for govt change policy to sell land at LH60 or LH30 then may be can...

govt won;t let you make $$ one!!....

[kane]

I have always said what the report wrote. Good luck to those who buy leasehold where the developer holds the freehold titles.

[ikan bilis]

got one question here....

any lh99 condo estate did major upgrading?? like upgrade all the toilets (similar to hdb)...

most of lh99 condo cannot be enbloc easily... once they grow old with lots of ceiling leaking, cracks, pipe burst, lift breaking down often then how??...

i don't mind getting some older development (LH or FH) of 15-25yrs if condo estates do major upgrading....

[GSLJ]

got one question here....

any lh99 condo estate did major upgrading?? like upgrade all the toilets (similar to hdb)...

most of lh99 condo cannot be enbloc easily... once they grow old with lots of ceiling leaking, cracks, pipe burst, lift breaking down often then how??...

i don't mind getting some older development (LH or FH) of 15-25yrs if condo estates do major upgrading....

Should be covered using the sinking fund?

[maisonjai]

I have always said what the report wrote. Good luck to those who buy leasehold where the developer holds the freehold titles.

What about those condo sitting on top of retail/commercial space?

[felicia_sg]

Good luck to them!

What about those condo sitting on top of retail/commercial space?

[eminor82]

Good luck to them!

u mean waterxxxx?? =D

[DKSG]

There is the other side of the story.

Assuming you are the owner of the FH site and u decided to lease 99 years to the leasee.

At 20 year mark, leasee come to you to ask for another 20 year lease (ie enbloc). What is your decision ?

Of course take the market rate of the land (the current owners will ensure they get the highest price of the enbloc), and continue to get a constant stream of income every 20 years!

This is how the land owners think. Those who think that land owners will wait out the 99 years may have to re-think the principle behind.

DKSG
Stay Calm and Cool

[price]

I have always said what the report wrote. Good luck to those who buy leasehold where the developer holds the freehold titles.

Good luck to Palette buyers?

[ysyap]

Yup... landowner of FH land will not wait 99yrs to renew lease. That's is effectively 3 generations. Even if owner is willing, the 2nd generation will surely sell or renew instead of not benefitting from the land passed down to them... Lol!

[bigapplefan]

hmm.. any idea how to check which land is FH by developer and sold as LH?

[eng81157]

Good luck to Palette buyers?

it started with FEO's 'the shore residences'

[NorthernStar]

Another factor is whether is the piece of land adjusted with higher plot ratio. Else developer will not pay the owner of higher than market value price.

[kane]

Say lease renewal time comes along 20-30 years down, the freehold owner wants a big chunk for redevelopment of the project, won't that mean that the owners holding the leasehold get a smaller share of the pie from the "en bloc" move. Unless the freehold for-profit owner is so altruistic that they will only take a token sum in the redevelopment and re-leasing of the freehold title that they hold.

[devilplate]

anyway i believe most 99LH ocr condos will be very difficult to enbloc too....however, high chance govt will allow top up of lease

anyway so many 99LH ppty nowadays.....all die tgt lor....wakakakaka

[ikan bilis]

Should be covered using the sinking fund?

cannot cover by sinking fund lah... sinking fund for small things like painting and etc...

if there is hdb style toilet upgrade, can easily cost 50K/unit, or 25mil project for a 500-units condo estate...


so... what people do with very old condos (i.e. 25-35yr old)?... whole estate everything will be leaking liow...

[DC33_2008]

Garment will make more $ then.

anyway i believe most 99LH ocr condos will be very difficult to enbloc too....however, high chance govt will allow top up of lease

anyway so many 99LH ppty nowadays.....all die tgt lor....wakakakaka

[HP65]

it started with FEO's 'the shore residences'

If I'm not wrong, there were earlier precedence, eg Gardenvista (Yeo Hiap Seng)...

If I may add....LH projects on FH land owned by other org like clans, religious etc. Eg, Rochelle, 8 @ Sophia. End of the day, the problem is between Govt or Private developer, I would say its harder to negotiate with private developer. Yes, they can/ will sell to other developer to top up lease instead of waiting 3 generations. But if its so attractive to redevelop, why don't the origninal developer do it themselves or if they lack funds, team up with their preferred partner. End of the day, its either charging other developers an arm or leg to top up the lease, or offering a low premium to the owners to enbloc. Either way, the owners of the LH condo units will not have a fair compensation.

On the other hand, LH developments on govt sites has a comparatively more transparent lease top-up value. As such, it would be imo easier to enbloc such LH sites.

[Wild Falcon]

Precisely, the land owners the likes of FEO will ask for the market price, unlike the government. If you notice, in most enblocs, the government ask for too little for lease topup resulting in the owners having a windfall. There is a formula for lease topup which is ridulously cheap esp in the early years.

If the land owner is not desperate, they will just wait for the lease to depreciate. Remember it depreciates at an faster and faster rate as it gets older. If by 40 years still don't enbloc, the sellers are in deep trouble because the leasetop up would be so exorbitant. It's like 40% of an equivalent freehold is gone.

So held at ransom lah. But what I could see government will always agree to enbloc as long as u top up lease.

There is the other side of the story.

Assuming you are the owner of the FH site and u decided to lease 99 years to the leasee.

At 20 year mark, leasee come to you to ask for another 20 year lease (ie enbloc). What is your decision ?

Of course take the market rate of the land (the current owners will ensure they get the highest price of the enbloc), and continue to get a constant stream of income every 20 years!

This is how the land owners think. Those who think that land owners will wait out the 99 years may have to re-think the principle behind.

DKSG
Stay Calm and Cool

[radha08]

Good luck to Palette buyers?

why is that freehold land??? what about livia and NV...

[price]

why is that freehold land??? what about livia and NV...

Dont you know? the entire plot by HL is freehold and selling u as 99 years..

[heroes]

it started with FEO's 'the shore residences'

Sigh... I almost bought the shore... Just before i gv cheque.. I realize that 103 yr lh is wrong...

[heroes]

Dont you know? the entire plot by HL is freehold and selling u as 99 years..

So, is true that livia sitting on fh land?

[kane]

Dont you know? the entire plot by HL is freehold and selling u as 99 years..

oh i didn't know that as well, so livia, palette, nv are all under City Dev as freehold land?

[heroes]

oh i didn't know that as well, so livia, palette, nv are all under City Dev as freehold land?

@devilplate: About 2 years ago, my mum bought a Livia Condo 4 bedrooms unit at Pasir Ris, where the average cost psf is only $650. As of this writing, the psf has shoot up to $800 plus. So my mum have made about $200k on paper.
Just for your information, Livia is develop by CDL, city development limited and they actually bought the entire land more than 10 years ago as freehold.
But CDL is developing the condos and sell as 99 years lease. Isn’t that a smart move?......-------> I copy from : www.liviacondo.com

not sure is true or not?


I ever asking about this a few months ago

[kane]

@devilplate: About 2 years ago, my mum bought a Livia Condo 4 bedrooms unit at Pasir Ris, where the average cost psf is only $650. As of this writing, the psf has shoot up to $800 plus. So my mum have made about $200k on paper.
Just for your information, Livia is develop by CDL, city development limited and they actually bought the entire land more than 10 years ago as freehold.
But CDL is developing the condos and sell as 99 years lease. Isn’t that a smart move?......-------> I copy from : www.liviacondo.com

not sure is true or not?


I ever asking about this a few months ago

I knew they applied to convert farm land to resi, but i didn't know they held the fh titles.

[devilplate]

I was told by few agents tat it is a 99lh land leh.....

I tink many tot is fh bcoz cdl owned the land for so long oredi and den how come can launch as a fresh 99yr lease.....but hor dun forget cdl can pay to top up the lease lor....

Best is to ask cdl directly before u buy lor if u r bothered by this

[price]

oh i didn't know that as well, so livia, palette, nv are all under City Dev as freehold land?

Yes, the entire plot of huge land they are developing is freehold. Many agents or even CDL themselves may tell u otherwise.

[maisonjai]

So, is true that livia sitting on fh land?

Want to spend few bucks to find out?
http://www.inlis.gov.sg/Layout/Produ...trLandLotNo3=L