Downside to en-bloc sales shouldn’t be thrust upon owners
My husband and I bought a resale apartment this year, after a property search spanning nearly a decade.
We thought that we had found our ideal home, which was large enough to accommodate an extended family of eight and was close to our children’s schools and to public transport. Unfortunately, these attributes led to developers eyeing the property.
After receiving our keys, we were told that an en-bloc process was under way.
Before we figured out what was going on, a marketing agent tracked us down and showed up at my parents’ home with the aim of persuading us to sign the collective sale agreement.
The agent’s overtures and conversations with neighbours eager to jump on the bandwagon made us wary. We were aware of bullying incidents in other en-bloc cases and began avoiding our new neighbours to be on the safe side.
After the en-bloc tender results were announced, we discovered that we would be subject to a Seller’s Stamp Duty of nearly half a million dollars, which has to be paid within 14 days of the sale.
Being taxed such a sum early on also penalises us in terms of lost interest income or capital gains from investments. Since we did not agree to the sale, this tax on an involuntary transaction on our part seems unfair.
As we had bought the property for long-term stay, we had used up most of our cash for the down payment and were unprepared for this contingency.
To make matters worse, the penalty for failing to cobble together the cash in time is up to four times the stamp duty amount.
Even if we borrow enough to pay the stamp duty, we must wait months before we receive the sale proceeds. Should my husband become unemployed in the interim, we may be unable to obtain a loan for a replacement home.
With property prices expected to appreciate, it will be increasingly difficult for us to find a home of the same size and calibre (“Singapore property analysts turn bullish, predict 10% price gain”; Sept 18, online).
The delay in receiving proceeds prevents us from re-entering the market right after the sale. The Seller’s Stamp Duty gives us a double whammy, as we will not have spare cash left for the down payment on a new property.
Although we understand the need to have a Seller’s Stamp Duty to discourage speculation, the imposition of a tax on parties who did not wish to sell cannot be an intended consequence of the policy, which the authorities should revisit.
