Tighter controls on "blank cheques" wef June 1st

From 1 June 2013, the practice of collecting "blank" cheques from property buyers will come with tighter safeguards.

The practice is often used to book private properties before they are launched.

Property agents will no longer be allowed to collect cheques unless there is a request in writing from the developer directly to the agent.

Any issued cheques must be crossed and made out in the name of a payee, like the developer or the project account. It should also come with an authorisation letter setting out clear terms to safeguard the buyer's interests.

Many industry players say the practice of collecting cheques, including "blank" ones, in the private property market have many grey areas and differing perceptions.

With tighter controls kicking in, many say it will reduce impulse buying.

Lim Yong Hock, senior vice president at PropNex Realty, said: "It will help consumers make more informed decisions, rather than writing cheques impulsively without knowing the price of the property. It's a positive change for buyers."

Steven Tan, managing director of property firm OrangeTee, said buyers who give blank cheques to agents often do not have full understanding of the development.

"It's often an impulse purchase," he said.

With the new guidelines, he believes developers will provide more information to buyers, like the concept, floor plans and even the price range, before buyers have to make any decision.

The tighter controls are part of a slew of new rules for the industry.

Issued by the Council for Estate Agencies (CEA) in a professional service manual, the guidelines also require property agents to be extra careful when working with vulnerable consumers, like those who are financially unstable or illiterate.

CEA said it is the first time property agents have a manual that guides them in detail from the start to finish of a transaction.

Chan Mun Kit, director of regulatory control at CEA, said: "Even for those already in the industry, it helps to highlight to them certain practices perhaps they can do more professionally, and certain things they should not be doing anymore."

If the guidelines are flouted, property agents can be fined up to $75,000, and have their licenses suspended or revoked.

Speaking at a consumer seminar on Saturday, Acting Minister for Manpower Tan Chuan-Jin said the real estate service is not just about closing the deal.

He said: "I think it's important for us, those of us who're in the real estate business, to think about not just closing the deal, but I think to remember that the people we're servicing and helping, are making a very big step. For many of them who are homeowners, it's not just buying a physical property; it's buying a place where they're trying to build a home.

"The onus is on those who are in the industry, who understand the landscape better, to advise individuals to understand what it means, to invest, how much loan to take and so on, rather than think about how much commission you might get with a bigger deal done. That's values in action. That's something we appeal to everyone who's involved in the industry to spare a thought, not only from a professional standpoint but from a values standpoint to think about their responsibility to the people around them."

The consumer seminar is part of an effort to educate the public on their responsibilities as well. Those in the industry say there is often a mismatch of expectations between the consumer and the property agent on what their respective duties are.

In tandem, authorities have also launched a brochure to help consumers out.

Lim Biow Chuan, president of Consumers Association of Singapore, said: "Reading this consumer guide gives you some background knowledge, some basic knowledge so that if you transact with someone else you don't go in blind."

With regulation only able to go so far, authorities are also urging consumers to do their part.

Source: Channel News Asia

The wife and I had participated in the "blank cheque" exercise before and from what we can recall, it was nothing overly scary. The cheque was not exactly "blank" as the marketing agents will insert the developer's name (in your presence) once you hand it to them. And if you decide not to proceed with the purchase during the stipulated period of time (which is usually over the next day or two), you can always ask for your cheque back.

Having said that, the last time we went "blank" was quite some years back so the practice may be substantially different these days.

While the wife and I are no proponents of tightening control measures ALL the time, this is one that we can certainly agree with.

Akan datang: Lower subsidies for ECs..?

National Development Minister Khaw Boon Wan has said the government loses "hundreds of millions" of dollars when constructing public flats.

He made the point on Thursday night at a dialogue session on housing issues.

This comes amid calls from some quarters for land costs to be taken out from the pricing of public flats to make them more affordable.

Mr Khaw also hinted at several other changes to come, such as subsidies for executive condominiums.

During the national conversation session on housing issues, many were concerned about the affordability of home prices.

Evalyn Khoo, a mother of two, said: “I'm concerned about the home asset value. I'm also concerned about how the younger generation can actually afford a house for themselves in the future."
Participant Philip Lee said: “I think in the past three years or so, there has been more anxiety in the market because even Singaporeans couldn't get properties through the Build-To-Order (scheme) and they have to resort to the resale market and I think if there is sufficient supply channeled to BTO, we may see more happy Singaporeans and possibly less demand in the resale market and hopefully the prices will be within range."

With regard to calls for price of new Build-To-Order (BTO) flats to be de-linked from land costs, Mr Khaw said it may be politically easy to say land is free because it belongs to everybody, but that is not the case.

He said the price of land is tied to acquisition costs, reclamation and the building of infrastructure around it.

Mr Khaw said: "You need to acquire a piece of land; you need to reclaim a piece of land. All those costs money to taxpayers and we are just trustees of taxpayers and those costs are to be accounted for. And even when you have got that land prepared, land is only valuable when we invest in infrastructure, roads, MRT... And all those costs billions of dollars. So to say that land cost is a pittance and therefore should be excluded from total construction costs… I myself think it is not quite an appropriate argument.”

He also revealed that the Housing and Development Board, which is the developer for public housing, is losing money for every flat it sells.

He said: “Every year, hundreds of millions of dollars of losses were incurred by the HDB and that's why MOF (Ministry of Finance) has to give the HDB an annual grant, otherwise the HDB will be in the red. It cannot be forever in the red, because there's no way it can make money. Because every unit that we sell, we lose money, HDB loses money. The accounting for the HDB is deficit accounting. So if you incur a $300-million loss, there is a grant of $300 million that covers it. That is how we operate the HDB.

“Let us not perpetuate this talk about HDB is making money out of building houses because if it was so simple, life would be straightforward, but that's not the case.”

The HDB pays market rate for its land and construction costs. When it prices flats below market rate, it incurs a housing deficit.

A recent report said the deficit is now in the region of about $1 billion a year, including other costs such as upgrading.

The National Development Ministry told Channel NewsAsia: "The cost of building HDB flats includes the cost of land, design, construction, financing and other project-related costs. It varies from project to project and year to year. Averaging over the past three years, the Home Ownership Programme costs HDB S$874 million per year."

Mr Khaw added that the government has to offer more subsidies with its ramped-up flat supply.

One area where subsidies are being reviewed is that for executive condominiums (ECs), which cater to Singaporeans who can afford more than an HDB flat, but find private property out of their reach.

The current household income ceiling for executive condominiums is $12,000.

Mr Khaw said: “There is this sense of inequity here that the lower-income group is getting lower subsidies than somebody who is earning $12,000, so something is wrong somewhere and therefore I think we cannot carry on the EC in this current mode."

Mr Khaw also said he is confident that he can bring down the price of new flats in non-mature estates to four times the annual median salary of a buyer - down 30% from the current 5.5 times. He is wary of some "transitional problems".

He said there needs to be "distinct differentiation" between the cheaper new flats and those built earlier.

Mr Khaw said both the MND and HDB will need to sort out this issue over the next few months.
He said: "I am fairly confident of being able to do it but some groups already anticipate transitional problems, which is what I got to sort out. If yesterday you bought (a flat) at five and half years' salary and tomorrow HDB announces a new pricing package, which is only (priced at) four years’ salary, you are going to cry 'blue murder' right?

“Therefore, I think we should not be prevented from offering a new pricing model but obviously there must be a distinct differentiation between the two products to explain why one is five and a half years and the one is four years."

The national conversation session is the second in a series of about 10 dialogue sessions on housing issues. Participants were first broken up in small groups of six and then came together in a larger group where the conversation continued. The aim is to gather feedback from Singaporeans to shape future housing policies.

The topic of affordability will be further discussed at a future Our Singapore Conversation discussion.
Details can be found on www.mnd.gov.sg/HomeSweetHome

Source: Channel News Asia

The wife and I were discussing the latest comment by our Minister Khaw about EC subsidies with a friend over dinner earlier: So will we now see more people at or around the $12K monthly income claiming to be "poor"..?

Enbloc news: Versailles

A 55-unit residential development at Guillemard Road has been put up for collective sale by tender.

Versailles has an indicative price tag of between $105 million and $110 million, which translates to some $1,088psf to $1,133psf.

The site has a land area of around 53,073sqft.

Exclusive agent for the deal Jones Lang LaSalle said the development has a potential gross floor area (GFA) of about 122,598sqft and could yield some 148 units of varying sizes.

The building is located near the Paya Lebar MRT station and the Dakota MRT station.

The global property consultant said the new project will attract owner-occupiers and investors due to the upcoming Paya Lebar Central, and the lack of supply of new residential projects in the vicinity.
It added that the site is near popular schools like Tanjong Katong Primary School and Chung Cheng High School.

National Director of Investments at Jones Lang LaSalle, Yong Choon Fah, said: "This is a rare freehold condominium redevelopment site that is located within walking distance to the up-and-coming Paya Lebar Central.

"According to the Urban Redevelopment Authority, 12 hectares of land around Sims Avenue have been set aside for this commercial hub at the city fringe. It will comprise a mix of offices, hotels, retail and public spaces, some with riverfront."
The tender will close at 2.30pm on 30 May 2013.

Source: Channel News Asia

Spottiswoode Residences: Thorn amongst the roses or other way around?

The wife and I were passing through Spottiswoode Park Road and took this photo of the "under construction" Spottiswoode Residences.

The 36-storey apartment block does look a tad outta place alongside the rows of pre-war terrace houses that lined Spottiswoode Park Road. Then again, one cannot stands in the way of progress, no?

ABSD Relief: A case of "Animal Farm" revisited?

This may be old news to some but the wife and I just realised that SINGLE person who buys a home to live in will be hit with the additional buyer's stamp duty (ABSD) if he does not dispose of his existing residence first.

That means a single person might have to find accommodation in between selling the old home and completing the purchase of the new one.

The clarification apparently came from the Ministry of Finance (MOF) on March 28th (not an excuse here but we were on vacation that week so that might explain the oversight), following uncertainty over whether stamp duty concessions for married people would also apply to singles ("No stamp duty relief for singles switching homes"; ST Forum, March 30)

Some married couples will get a refund of the ABSD if they dispose of their first property within six months of buying a resale home or the completion of an uncompleted one.

This relief is provided for joint purchases by married couples with at least one Singaporean spouse. Both parties must also not own any other property at the time of purchase to qualify.

But these do not extend to singles. This means singles will have to sell their existing home first before buying another - even if the new unit is meant for occupation and not investment. And if they do not comply with this rule, they will be hit with a hefty additional tax in the form of the ABSD.

The rule could mean much inconvenience, with single people having to find a rented place for the short term, bunk in with a family member temporarily or secure an extension of stay with the buyer between the transactions.

The new levy was part of the seventh and most extensive set of property cooling measures that were unveiled in January.

These slapped a 7% ABSD on Singaporeans buying their second home.

A spokesman from the MOF said that the Government raised the ABSD rates to moderate demand for properties and help cool the market. It limited ABSD concessions to a narrow group of buyers, namely Singaporean married couples, to help them acquire and upgrade their matrimonial homes. So if more groups, such as singles, were able to qualify for ABSD concessions, it would defeat the purpose of the cooling measures.

But some experts disagreed with the policy, noting that all Singaporeans should be treated equally, regardless of their marital status. They felt that singles should not be penalised as long as they will own just one house eventually. The ABSD relief offered to married couples should be extended to them as well, as long as they commit to selling their current home within six months of the purchase.

The Government's measure has prompted Ms Karen Yip to raise the question of whether there is a proven correlation between one's marital status and the runaway prices in the property market, or has the original cooling objective of the ABSD bifurcated into one that attempts to address demographic anomalies as well. She felt that such measure, as it stands, is not only unfair but also diminishes the value of Singapore citizenship for singles. After all, they also contribute to nation building and pay as much tax as married citizens, if not more. ("Stamp duty refund: Shed light on singles' exclusion"; ST Forum, April 19).

Maybe it's time for MOF to step onto the plate (again) and better explain the rationale for denying singles the ABSD remission?