Le Arc Apartment, a freehold property collective sale site at 6, Lorong 26 Geylang has has just been launched for sale by tender by sole marketing agent, ERA Realty Network. The freehold property collective sale site is 12-unit residential development.
The owners of the freehold property collective sale site are expecting offers of between $20 million and $22 million.
This works out to about $915.59 psf per plot ratio (psf ppr) or $832.35 psf ppr after taking into account the 10 percent bonus balcony space as well as the development charge of about $150,000. Each owner of the freehold property collective sale site is expected to receive $1.6 million to $1.8 million in proceeds from the successful sale of the freehold property.
Comprising a gross plot ratio of 2.8, the 7,859.9 sq ft site is zoned residential under the 2014 Master Plan with an allowable height of up to eight storeys. Located near the Aljunied and Dakota MRT stations, the freehold property is within 1 km from Kong Hwa School and Geylang Methodist School (Primary).
ERA Realty Network, the freehold property collective sale site’s sole marketing agent, said that the site can potentially yield 23 to 30 new housing units. The tender for Le Arc Apartment closes on 7 November.
Mr Paul Ho, chief mortgage consultant of iCompareLoan said owners of the freehold property collective sale site have to act quickly and decisively.
Whatever decision owners facing en bloc sale make, it is better to make it fast so that the sale (or non-sale) can be concluded with minimal delay and maximum benefit to the owners. One way he said was to conduct a Collective Sales Agreement (CSA) as well as concurrently collect a “Non Collective Sales Agreement (NCSA)”, so that once a NCSA reaches 20%, the collective sale process is called off. There is really no point to drag on.
As collective sale process takes 20 to 30 months to complete, during this time, the owners typically do not have sufficient funds for down-payment and their CPF OA funds are tied up in the property, hence they cannot buy a new condominium early.
By the time the transaction is completed in 20 to 30 months later, the property prices would have already moved up 10 to 20 per cent. This is already evidenced by sellers of older estate asking higher prices. Hence if the process takes 20 months to 30 months, owners may need to consider the cost of a replacement unit by that time, else they may want to hold up a higher selling price.
Mr Ho pointed out that the rules are quite onerous and stringent and is governed by the Land Titles (Strata) Act – section 84A. Over the years, additions and amendments by the Ministry of Law to the en bloc law have made the collective sale rules even tighter.
He said that many of the home owners who refinanced their home loans to fixed rate home loans or those with 2 years locked-in or 3 years locked-in period will incur full home loan redemption penalty. This penalty is usually 1.5% of the loan amount. This tends to affect those who have bought their properties in recent years as their loan size tends to be bigger and their corresponding home loan redemption penalty higher.
Mr Ho suggested that if one’s home is at risk of en bloc, the owner could consider a home loan where there is no locked-in penalty, but instead entails a higher housing interest rate cost. The next best option is to look for packages with a waiver of locked-in penalty due to sale of property. Such owners may contact a mortgage broker to assist them to find such packages with waiver of locked-in penalty.
In order to understand how and whether to go into an En Bloc sales and sign on the Collective Sales Agreement (CSA), the owners will need to know how long it will take you to complete the En Bloc sales in case it is successful.
1st EOGM to appoint CSC.
2nd EOGM to appoint Marketing agents, solicitors and approve CSA.
2 – 3
Signing of Collective Sales Agreement (CSA)
3 to 15
Owners meeting prior to launch of public tender for sale
4 to 17
Launch and close of tender
1 month (Max)
5 to 18
Award of tender.
Negotiate sale by private treaty (if bidding falls below reserve price)
10 weeks (Max)
7.5 to 20.5
Apply to STB or High Court
3 – 9 months
10.5 to 29.5
Completion of sale
13.5 to 32.5
Handover of vacant possession
18.5 to 38.5
The maximum and minimum duration of the en bloc sales process as indicated in the cumulative timeline in the table is roughly between 18.5 months to 38.5 months.
The earliest any home owners can receive any en bloc sales proceeds could be around 13.5 months and the latest will be 32.5 months.
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