Condo owners hope potential reforms will boost en bloc prospects 

SINGAPORE: Home owners at the 47-year-old Laguna Park condominium are making their fifth attempt to sell the estate en bloc – and they are hoping this time will be different. 

Under current regulations, 80 per cent of owners in developments that are at least 10 years old must agree before a collective sale can proceed. 

The previous four attempts at Laguna Park fell short of that threshold. 

This time, the Marine Parade development’s collective sales committee says it is optimistic due to strong momentum – 50 per cent of owners have agreed so far and the deadline is next August. However, organisers caution “nothing is guaranteed”. 

They argue that this one-size-fits-all threshold is impractical. Instead, they are calling for a tiered system based on the estate’s size, suggesting that the limit should be lowered for bigger developments.

“We have diverse owner profiles. We have 528 units … (and) a wide range of unit sizes. There are real logistical challenges to get to the 80 per cent. A handful of undecided owners can stall the process (even if it’s) supported by the vast majority,” said the committee’s secretary Rita Waswani. 

“The timeline you're given is very constrained, because you have to work on lots of different things – engagement with the residents, the procedural requirements of getting approval, etc.” 

Meanwhile at Loyang Valley, other rules are tripping up home owners in the also-ageing development. 

In September, the 40-year-old condominium was put up for collective sale for a third time since 2018. Despite a lower reserve price from the last tender, it closed with no bids. 

Residents point to complex regulatory requirements that must be organised and presented to potential developers – a time-consuming process.

Committee chairman Ernest Paul said developers could be deterred by uncertainties in planning perimeters that home owners may not be privy to, such as potential changes to road access, transport links or future neighbourhood plans.

“When you buy a government land sale property, it's clear – all the issues have been clarified. When you buy en bloc land, there are certain questions,” he said. 

“So, developers – they want clarity. They want certainty. They don't want to be surprised with, (for example) the government says we (may) need a walkway, or lights here … that becomes the responsibility of the estate.” 

REVIEW OF EN BLOC REGIME

The Ministry of Law said last Thursday (Nov 20) that it is reviewing the policies and regulations under the Land Titles (Strata) Act. This could mean changes to the en bloc sales regime. 

For property owners at private estates like Laguna Park and Loyang Valley, the potential reforms have rekindled hopes of success. 

Real estate agency Huttons said it has seen an increase in inquiries since the announcement. 

The company noted that only four en bloc sales were made last year, compared to 36 in 2018. However, market conditions have shifted since then, with increased construction costs and higher additional buyer's stamp duties.

There is also strong competition from Government Land Sales (GLS), which some developers prefer as they can be more straightforward, said Mr Terence Lian, Hutton’s head of investment sales. 

"Whereas for en bloc sites, you're facing regulatory requirements. Usually, developers will give owners another six-month rent-free period before they can demolish the development. So, there's (also) a holding cost,” he noted. 

“That said, if a site has the right, realistic pricing, you’ll still be able to find a buyer to acquire the site.” 

KEEPING LAND USE EFFICIENT 

Provost Chair Professor Sing Tien Foo at the National University of Singapore (NUS) Business School’s real estate department said the review is timely to ensure land in Singapore remains efficiently used, especially in prime areas. 

“This is part of the urban renewal process, so that the older buildings that were not built (as high) or not as densely built will be demolished and give way to a newer development,” Prof Sing said. 

He added that pressure for en bloc sales will likely increase as more flats reach the end of their lease. 

Currently, over 30 per cent of condominiums in Singapore are at least 30 years old. The figure is expected to rise to 40 per cent in the next decade.

Real estate agency ERA estimates that there are 2,703 condo developments in Singapore today, covering both leasehold and freehold projects. 

Of these, 836 – or 31 per cent – are at least 30 years old. This number could increase to 1,160 by 2035, assuming none is sold en bloc.

The Ministry of Law said proposals for reform will be announced when they are ready.