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Thread: Developers get more room for en bloc sites

  1. #1
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    Default Developers get more room for en bloc sites

    http://www.businesstimes.com.sg/arch...sites-20121204

    Published December 04, 2012

    Developers get more room for en bloc sites

    Govt adjusts start point of deadlines to STB order date


    [SINGAPORE] Developers who buy residential en bloc sale sites are getting more time to meet the government's deadlines to finish developing their sites.

    This is to take into account the time taken to get a collective sale order from the Strata Titles Board (STB) or the High Court.

    The changes are in response to feedback from the industry which had asked for a fairer treatment of the rules, and are expected to give some breather to residential en bloc sales.

    It takes several months for the collective sale order to be granted and this currently eats into the five-year deadline set for developers. The changes mean the deadline will start from the date of the en bloc sale order - instead of much earlier under current rules.

    The changes involve two regulations under the ambits of the ministries of law and finance.

    The first concerns foreign developers who buy residential en bloc sale sites for which they are given a five-year project completion period (PCP). The PCP currently starts from the date of the issue of a Qualifying Certificate (QC), which foreign developers must obtain from the authorities to buy private residential land in Singapore.

    Under the change announced by the Singapore Land Authority (a statutory board under MinLaw), for QCs issued on or after July 1, 2012, the PCP for residential en bloc sites will now start from the date of the collective sale order.

    The refinement "is to enable the developer to have the full PCP to complete the project", the SLA said yesterday in a circular to the Real Estate Developers' Association of Singapore (Redas), law firms and law organisations.

    The Ministry of Finance (MOF) said that it would adopt the same approach as MinLaw with regard to the additional buyer's stamp duty (ABSD). To avoid paying the 10 per cent ABSD for the purchase of residential land, developers have to undertake to complete developing the project and selling all the residential units in it within five years of the date of contract or agreement to purchase the site. In the case of collective sales, this would be the date when the site is awarded by the en bloc sales committee.

    Under the change, for residential sites bought through collective sales from July 1, 2012, "the start date of the five-year period for the completion and sale of all residential units to qualify for ABSD remission will start from the date of the collective sale order", MOF said yesterday.

    The 10 per cent ABSD is payable by all developers - even those who do not have foreign shareholders or directors - and applies to all residential site purchases, including Government Land Sale plots bought on or after Dec 8, 2011.

    Developers and en bloc sale agents have requested the authorities to make the changes.

    Jones Lang LaSalle's head of investments and residential, Karamjit Singh, welcomed the change. "This may not be a major game changer for collective sales but it is a much-needed tweak of the ABSD and QC regulations bearing in mind that the completion period of an en bloc sale can range from as short as three months (if there is unanimous approval from the owners and hence STB or court approval is not required) to as long as nine months."

    It takes three months to complete an en bloc sale after the STB or court order.

    "So the changes will help to calibrate the QC and ABSD clocks to start ticking three months before completion of the sale as opposed to from the QC issue date or signing of the agreement respectively," he added. "The changes will have greatest impact on the larger residential en bloc sale sites as any time saving would be more crucial given the scale of the project."

    Under the Residential Property Act, housing developers whose shareholders and directors are not all Singapore citizens have to get a QC from SLA's Land Dealings (Approval) Unit (LDAU) to buy private residential property for development. This rule is aimed at controlling foreign ownership of land here. One of the conditions of the QC is the five-year PCP.

    A point to note about the tweaking of the start date of the PCP under a QC to buy residential en bloc sale sites is that it is aimed at fairness and equity of an existing policy. The current rules will continue to ensure that foreign companies which develop residential properties in Singapore dispose of the developed units and not hold on to them for investment.

    Separately, SLA in its circular yesterday also made an announcement pertaining to developers who had responded to the government's call in 2008 and deferred redevelopment of en bloc sale sites they had bought and instead rented out the units in the existing development to alleviate a shortage of rental homes at the time. LDAU will grant a one-time extension of the PCP (upon application and without charge) based on how long these developers rented out their units.

  2. #2
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    Default Timeframe maximised for collective sale projects

    http://www.straitstimes.com/archive/...jects-20121204

    Timeframe maximised for collective sale projects

    Govt changes rule to let developers have full project completion period

    Published on Dec 04, 2012

    By Esther Teo, Property Reporter


    THE Government has moved to maximise the timeframe in which property developers are required to complete residential projects on collective sale sites.

    The change has been welcomed by some developers as fair but others are already calling for greater clarity as they fear it could have unintended consequences.

    Developers have long called for greater flexibility over the rules applying to completion dates for residential projects.

    They worry strict rules force them to complete projects when market conditions are not necessarily favourable.

    In the latest change detailed in a circular to industry players by the Singapore Land Authority (SLA), the project completion period (PCP) for a collective sale site will now start from the date the collective sale order is granted.

    Previously, the starting date was when the developer's qualifying certificate (QC) was issued.

    The change applies to QCs issued on or after July 1 this year. It is to enable the developer to have the full PCP to complete the project, the circular obtained by The Straits Times said.

    It was sent to the Real Estate Developers' Association of Singapore (Redas), law firms and other organisations yesterday.

    Separately, the Ministry of Finance (MOF) also told The Straits Times that it will adopt the same approach for the start date of the additional buyer's stamp duty (ABSD).

    Under the Residential Property Act, housing developers whose shareholders and directors are not all Singaporeans are required to get a QC to buy residential property for development.

    This is imposed to control foreign ownership of land here.

    The rule gives developers up to five years to build the project and requires them to sell all the units within two years of obtaining the temporary occupation permit.

    They are not allowed to rent out unsold units.

    To ensure compliance, a developer has to put up a banker's guarantee of 10 per cent of the purchase price of the property, which may be forfeited if the developer fails to fulfil the QC's conditions.

    Some developers The Straits Times spoke with said the change was welcome as it offered them more flexibility.

    It could also protect them against the risk of a lengthy en-bloc battle eating into their five-year development timeframe, experts add.

    Mr Teo Hong Lim, executive chairman of Roxy-Pacific Holdings, said that the changes were fair as a developer cannot be sure that he can acquire a collective sale site until an order by the Land Titles (Strata) Act is issued.

    "It is a positive move because it gives the buyer a longer period to manage the land bank... It is the most fair compared to having the PCP start on when the QC was issued or the sales contract date," he added.

    But some lawyers point out that some developers might obtain their QC after the collective sale order has been made.

    Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, said that this scenario was "quite common" and would mean that the developer has less time to complete its project instead.

    "Still, this change shows that the Government is willing to listen to feedback from developers and to consider special circumstances.

    "Maybe the guidelines can be changed to state that the PCP will start either from when the QC is issued or when the order is granted, whichever is later, instead," he added.

    Yesterday, SLA also announced that it would grant PCP extensions for certain projects.

    The circular said that in 2008, the Government had called on developers to defer the redevelopment of collective sale sites.

    Where a developer had responded to this call, and rented out the property instead to alleviate the rental housing supply crunch back then, an extension might be given, it said.

    The Land Dealings (Approval) Unit will grant a one-time extension of the PCP upon application, commensurate with the period of tenancy, without charge.

    Applicants, however, will have to submit documentary proof for consideration, the circular by SLA's controller of housing Vincent Hoong noted.

    City Developments said that it will be applying for an extension for its Lucky Tower site in Grange Road.

    The firm added that it welcomed the announcement as it had heeded the Government's call then to defer the redevelopment of the property.

    The MOF added that for collective sale sites purchased by a developer from July 1 this year, the start date of the five-year period for the ABSD will begin from the date of the collective sale order.

    The ABSD requires developers to build and sell all their residential units in five years or pay a stamp duty of 10 per cent.

    This applies to land parcels bought on or after Dec 8 last year.

    Law firm Rodyk & Davidson partner Norman Ho said that while industry players have not been officially informed of this change yet, it will be a welcome one as the five-year period had previously started from when the sales and purchase agreement was inked.

    As it took six months to a year before the sale order was issued, this had led to developers' appetite for collective sale sites being affected over the past year.

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