URA announces changes to Housing Developers Rules

The Urban Redevelopment Authority (URA) has announced changes to the Housing Developers Rules (HDR) that will take effect from 18 May 2012.

The changes will enhance transparency in the real estate industry and enable home-buyers to make better informed decisions when buying a home.

Among the changes, developers will have to provide more information on the housing project and property to a home-buyer before the issue of an Option-to-Purchase.

This comes as developers are placing more shoe box apartments – which are usually no larger than four car park lots – in the market.

Eugene Lim, Key Executive Officer with ERA Realty Network, said: “In a brochure today, the floor plans are not drawn to scale. So very few people can actively visualise the space that they will eventually get.

“This is especially important when apartments today are getting smaller. And sometimes buyers do get a shock when they take delivery of the unit, because they did not envisage that the unit will be so small.”

The additional information provided by the developer has to include the estimated land area for landed property, drawn-to-scale location plan, and a breakdown of a unit’s floor area by the various spaces such as bedrooms, balconies and bay windows.

Ku Swee Yong, CEO of International Property Advisors, said: “With the declaration clearly specified in terms of the floor area, investors would not have the ability to say they were actually ignorant of the fact that developers sold this product to them. Overall, it would provide more clarity from the developers to investors and investors should go in with eyes wide open.”

According to the URA, the supply of new shoe box units is set to double to 8,200 units by 2015.

Some analysts said the latest changes to the rules could rein in demand for smaller units, which has helped to drive up sales in the first quarter of 2012. Private new home sales hit a record high in Q1, with over 6,600 units sold.

URA is currently fine-tuning the showflat design specifications and transparency in price data, which should be finalised in the second half of 2012. Experts said this will help potential home-owners make more informed choices during their next purchase.

Developers will also be required to provide information on their track record to home-buyers.

In addition, URA said developers will have to obtain home-buyers’ consent before proceeding with changes to a housing unit.

Substantive changes to common property in the development must also be made known to home-buyers, who will have 21 days to express their objections in writing.

Existing controls on advertisements in newspapers and sales brochures will be extended to those on websites to prevent any false or misleading information.

Developers will also be subjected to a new deadline for the disbursement of refund. In the event where a home-buyer does not exercise the Option-to-Purchase, the developer has to refund 75 per cent of the booking fee within four weeks.

Under the changes, developers will also have to hand over the keys to the units within three weeks after receiving payment due, upon the issue of a Temporary Occupation Permit (TOP), or they may be liable to liquidated damages.

URA said the changes take into consideration feedback from various stakeholders in the real estate industry.

In a statement, the Real Estate Developers Association of Singapore (REDAS) said it welcomes the changes, and is committed to promote good practices and professionalism among developers to deliver better and higher quality homes.

In addition to the changes to the HDR, URA is also finalising changes to the Housing Developers (Control & Licensing) Act, which will take effect in the second half of the year.

The changes will include requirements on setting up show flats to depict the actual units accurately and the publication of transacted prices on a weekly basis.

Analysts said these changes will not drive up marketing costs for the developers.

The Real Estate Developers Association of Singapore (REDAS) said it welcomes the changes and is committed to promoting good practices and professionalism among developers to deliver better and higher quality homes.

Source : Channel NewsAsia – 19 Apr 2012

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