New rules come into effect today
The rush to complete the process of a couple of en bloc sales this month have probably paid off for the owners. This is because if there had been any delay, their properties would be subject to new en bloc rules which will come into effect today.
Two recent en bloc sales sealed this month are the People’s Mansion at Lorong 31 Geylang sold for $42.68 million, and Meng Garden Apartments at Killiney Road for $137 million.
Changes to the Land Strata Titles Act will kick in today, after the Amendment Act was enacted in Parliament on May 18.
A spokesperson from the Ministry of Law said the new legislation will have no impact on en bloc deals which have been completed on July 14 or earlier.
The objective of the amendment is to discourage numerous attempts at en bloc sales when there is insufficient interest from the owners.
Among them, a two-year restriction period will be imposed starting from the date an initial collective sale attempt failed.
The first re-try to convene an Extraordinary General Meeting to reappoint a sale committee will need the backing of at least 50 per cent share value or total number of owners.
For second or subsequent re-tries during the two-year period, 80 per cent will be needed.
Currently, the requisition threshold is set at 20 percent by share value or 25 percent of the total number of owners.
Analysts told MediaCorp that overall, this is good news as the amendments will provide more clarity to the en bloc sales process and balance the interest of property owners.
Mr Colin Tan, head of research and consultancy at Chesterton Suntec International said: “If the majority of owners have a real interest to go for en bloc, these new rules don’t matter.
“This will only affect ongoing en bloc projects that have many undecided or opposing owners.
“The new ruling will protect these owners from being harassed into selling their property for en bloc.”
Property watchers reckon that with these rules, fewer en bloc will go through in future, because now it will be harder for aggressive property owners to keep trying their luck for an en bloc – especially when majority of owners are not willing to sell their property.
Mr Karamjit Singh, managing director at Credo Real Estate, said: “The two-year restriction will raise the hurdle for owners to get started once again.”
Another amendment is that the Strata Titles Board will be empowered to issue a “stop order” to cease mediation once it becomes clear that the affected owners want adjudication to be done in court.
Currently, the Strata Titles Board mediates and adjudicates on objections filed by minority owners in en bloc sales.
The change could help to reduce the costs and time taken to resolve more contentious en bloc applications.
Some of the changes will apply to the en bloc sale committees.
Among them is the requirement for those standing for election to the sale committee to declare the extent of ownership that they or their immediate family have in the development.
To ensure that the sales process is not dragged out, the sale committee will have one year to obtain the first signature for the Collective Sale Agreement, or it will be automatically dissolved.
The one-year time frame will start from the date the sale committee is formed.
These changes will apply to en bloc applications made on or after the date of commencement of the Land Titles (Strata) (Amendment) Act.
Source : Today – 15 Jul 2010