http://www.straitstimes.com/PrimeNew...ry_771440.html
99-year-lease homes on freehold land 'harder to sell en bloc'
Published on Feb 28, 2012
By Esther Teo
HOMES with 99-year leases that have been built on freehold land will be harder to sell en bloc, experts say.
This is because, with an estate where the freehold rights are not held by either the Government or the home owners, a collective sale can only be explored with the agreement of the land owner.
The land owner has power over whether the lease tenure can be topped up, or the freehold rights to the estate sold.
When the lease runs down for 99-year projects on land owned by the Government, developers which redevelop the site in a collective sale pay the Government to have the lease rewound to 99 years.
This is a fairly routine matter but not so when a non-government owner is involved.
The owner can either grant a lease top-up, buy back the land, sell the freehold tenure, or do nothing.
SLP International research head Nicholas Mak noted that while collective sales are still possible, the price for a lease top-up will be set by the land owner, who may ask for 'a king's ransom'.
'Home owners 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.'
Credo Real Estate managing director Karamjit Singh said: 'A collective sale is only feasible 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 (home owners) would not be able to en bloc it and would have to see out the remainder of their lease.'
Selling a lease term on freehold land is rare, but privately-owned developer Far East Organization has done it: The Shore Residences, on freehold land in Katong, is being sold with a 103-year lease.
While Far East had to settle for lower prices for the leasehold units, this move will allow the family-owned firm to hold on to the site for the benefit of future generations, experts say.
Far East also launched Cabana in Sunrise Terrace and The Greenwood in Greenwood Avenue on freehold land with 103-year leases.
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