Question from Bill Tay
I bought a 8,788 sq ft detached house in Pasir Ris Beach Park with a balance of 67 years in the tenure.
Can you advise me on the following:
Is it worthwhile to build a pair of semi-detached houses with a development charge of $150,000 and building cost of $1.5 million?
What do you think is the likelihood that I would be able to top up the lease to 99 years, given that this estate consists of both 99 and 999 leasehold houses.
Do you have any other suggestions besides building a pair of semi-detached houses?
Reply from Mr Colin Tan, head of Research and Consultancy at real estate consultancy Chesterton Suntec International
I am assuming that the information provided by you is accurate; I have not made any checks myself.
If indeed your lease is 99 years with 67 years remaining, the relevant tax for intensifying land use – that is, to redevelop the property with larger floor areas (your suggestion is to build two houses in place of one) – is known as the differential premium.
The corresponding tax for freehold land is called the development charge.
So, for you, the relevant tax is the differential premium. Topping up of the lease involves yet another payment to the Government.
If I remember correctly, the master land owner of the 99-year lease land is the HDB. Please do check with the HDB with respect to the amount of all the taxes.
If I were to put myself in the shoes of the master planner, I would most likely not allow any top-ups until I have firm plans as to what I intend for the entire area. Have a look at the Master Plan for the area in the URA website www.ura.gov.sg.
I would say the chances are slim, mainly because I think the planners are unlikely to have decided on what they intend for the area any time soon.
Most planners prefer to keep their options open for as long as they can if there is no urgency to develop the area. You can check this with the HDB planners.
Also, I see the area as suitable for expanding the recreational space in that part of Singapore. So, the chance of a rejection for top ups is not insignificant.
As a result of the uncertainty – unless you get different feedback from HDB – the properties there are likely to be most suitable for owner-occupiers and renters.
If you can get a better price than what you paid for, you may want to give it serious consideration. Please do engage the services of a property consultant to give you more detailed advice.
Source : Today – 13 Aug 2010