Friday, April 20, 2012

Rules to protect property buyers set to kick in

Straits Times: Thu, Apr 19
ROUND one of the new 'what you see is what you get' property rules are finally set to be rolled out next month.

The rules aim to ensure developers do not mislead home buyers by gilding the lily and that buyers know exactly what they are paying for.

Developers will have to give more information in writing on the housing project and unit to buyers before the option-to-purchase document is issued.

The changes were made yesterday by the Urban Redevelopment Authority (URA) to its Housing Developers Rules, which sets out relevant rules.

The first phase includes a requirement for developers to provide a drawn-to-scale project location plan and site plan. They must also give a unit floor plan and breakdown of a unit's floor area by spaces such as bedrooms, balconies and bay windows.

Websites will now also be covered by controls on newspaper advertisements and sales brochures barring 'false or misleading information'.

A second set of new rules, to ensure showflats accurately reflect the finished product, are still being worked on and are expected later this year.

The first phase - to be applied to all new sales from May 18 - addresses longstanding complaints. Home buyers complain that developers and agents occasionally stretch the truthfulness of marketing material with maps not drawn to scale, along with artists' impressions that paint a rosier picture than reality.

For instance, MRT stations and other amenities are placed closer than they actually are on maps, and stunning views are included in artists' impressions while unsightly landmarks are omitted.

Industry players said that the moves are welcome as they will standardise the practice required of all developers and give buyers more information.

Mr Wong Heang Fine, president of the Real Estate Developers' Association of Singapore (Redas), said the body supports these changes, which will help potential buyers make more informed choices.

'As a body representative of a large community of property developers, Redas is committed to continually promoting good practices and professionalism among developers to deliver better and higher-quality homes,' he added.

A UOL spokesman added that most of the measures announced by the URA have already been met by the firm. 'It is more a question of giving some of the detailed specifications upfront at point of sale and that is no hassle to us,' he said.

ERA Realty key executive officer Eugene Lim said there is a wide range of developers. 'In the disclosure of information that may affect potential buyers' decisions, some developers do the bare minimum, while others do more. In short, there are different levels of professionalism and transparency.'

He said the changes would standardise what is required of developers, which would help buyers make informed decisions.

Other new requirements by the URA include getting the consent of home buyers before making changes such as adjustments to a unit's layout.

The URA is also finalising changes to the Housing Developers (Control & Licensing) Act, expected to be implemented in the second half of this year. This means showflats will have to depict the units accurately. Transacted prices must be published weekly.

Developers sometimes take artistic licence in showflats by removing structural walls and columns and raising ceilings to make a unit look bigger.

But investor Anthony Ong, 47, said that while the rules are beneficial for the buyer as it increases transparency and provides clearer information, buyers must also take responsibility in doing their research before committing to a home purchase.

These rules come on the back of a record 6,682 new homes sold in the first three months of the year as sales volumes continued to defy gravity despite five rounds of cooling measures.

The trend is made more worrying, with analysis by R'ST Research showing that about one in seven new homes sold last year were tiny shoebox apartments of 500 sq ft and smaller.

Experts worry that with many more shoebox homes coming onstream in the year or so, investors might not be able to achieve the rental yields they were promised, especially if interest rates rise...

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Martin Koh/ Sherry Tang
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