Wednesday, August 3, 2011

Don't hope for en bloc windfall yet

HOME buyers who are willing to pay top dollar for a unit at Braddell View for its en bloc potential may face a longer wait than what they bargained for.
The road towards a possible collective sale of the HUDC estate looks like a long and bumpy one, with the unique status of the development throwing up hurdles along the way.

While Braddell View has facilities such as a clubhouse and swimming pool - suggesting a private condominium-like status - home buyers are often surprised to find out that the estate is not classified as fully private.

In fact, it is the only remaining HUDC estate out of 18 such estates that has yet to be privatised or earmarked for privatisation.

This means the sprawling 30-year-old estate, with an area of 106,000 sq m, cannot be put up for collective sale yet. But some property agents have been highlighting its en bloc potential in their listings, in hopes of attracting buyers looking for capital appreciation.

When asked about the background, the Housing Board told The Straits Times that the development has not been designated for privatisation yet as it was developed in two phases, with each phase being issued a separate state lease with a different expiry date.

The issue of lease harmonisation has to be resolved before the estate can be privatised, it added.

A check with the Singapore Land Authority's (SLA) land information service showed the estate as consisting of two leases which expire about 21/2 years apart.

'(The lease harmonisation) is currently being reviewed and will take some time as it requires further study and consultation with the relevant authorities.

'We will look into the designation of Braddell View for privatisation under the Land Titles (Strata) Act once the review is completed,' the Housing Board said.

The Act governs the issue of strata titles and the collective sale of a development, among other things.

Ms Leong Pat Lynn, a partner at Rodyk & Davidson LLP's real estate practice group, suggested that one way the two leases can be brought in line with each other is by the Housing Board working with the SLA to either surrender or top up the lease difference.

But this will mean that the two authorities have to work together to resolve any payments needed to achieve the purpose.

In a normal situation, if a lessee decides to top up its lease, it might have to pay the SLA, and if it surrenders part of its lease term to the SLA, it may receive payments instead, Ms Leong said.

The more than 900 homes at Braddell View - consisting of high-rise apartments, low-rise apartments and maisonettes - are considered private property as they are not sold under the Housing and Development Act.

They are also unaffected by policy revisions that affect Housing Board flats, such as the ethnic and permanent resident quotas.

Assuming the leases are harmonised, for Braddell View to be considered a full-fledged private property and be eligible for a collective sale, the titles of its flats, which now fall under the HUDC Housing Estates Act, need to be first brought under the Land Titles (Strata) Act.

This is done through the privatisation process which converts the existing leases to strata titles. But the process itself presents another hurdle as it requires the support of at least 75 per cent of the residents before it can proceed.

Property agents The Straits Times spoke to said serious buyers are mostly aware that Braddell View cannot go en bloc as yet. But many are also drawn to the good location and large unit sizes of the development, they noted.

DTZ sales director Sherry Tang, who markets units in the estate, said there has been 'very healthy interest' in the development.

'The possibility of a collective sale is still there and the lease situation is likely to be resolved one day... so buyers think that, since Braddell View is well-located and of a good size, they can at least enjoy the space and facilities while waiting,' she added.

Prices at the estate have moved upwards in the past year, in line with the booming property market.

In the first six months of this year, 18 units of Braddell View were transacted at an average unit price of $706 per sq ft (psf), according to caveats lodged with the Urban Redevelopment Authority, compared with the 26 transactions at a lower average price of $604 psf in the same period last year.

The estate was built under HUDC Phases I and II and completed in the mid-1970s to the early 1980s.

Its facilities are managed and maintained by a management committee, which collects maintenance charges from the flat owners.

This is unlike HUDC estates under Phases III and IV - completed between the early- and mid-1980s - which are managed and maintained by town councils instead.

Some HUDC estates, such as Lakeview, Laguna Park and Farrer Court, were also built under Phases I and II. But with the exception of Braddell View, all the estates have already been privatised.

HUDC flats were built as an option for middle-income families, but were phased out in 1987 as demand declined. Privatisation began in 1995 in response to the rising aspirations of Singaporeans to own private housing.

There are 18 HUDC estates comprising 7,731 residential and 23 shop units built under four phases.

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