En bloc seems to be the buzz word regarding the property market in Singapore at the moment. So what exactly is en bloc, what’s the process, and is it something that you should be worried or excited about?
What is En Bloc Sale?
An en bloc sale is simply the sale of an entire private strata development when there is a majority consent among the owners to sell. If there is a unanimous consent among the owners to sell, then en bloc laws do not apply. It was initially brought in as a process to redevelop old property and bring it up to the standards demanded by modern home owners and investors.
What’s the Process?
The whole process follows strict guidelines, as laid down in the Land Tiles (Strata) Act.
1) First of all, those owners attempting an en bloc sale must form one – and only one for each development – sales committee, who must then indicate their consents to the sale by signing a Collective Sale Agreement (CSA).
2) In order for the sale to proceed further, they must obtain majority consent by share value and strata area within one year. These majority consent levels are:
Developments less than 10 years old – at least 90% (share value and strata area)
Developments 10 years and older – at least 80% (share value and strata area)
3) If and when this level is reached, the sale committees need to find a buyer. By law this has to be done through a public tender exercise to ensure complete and utter transparency.
4) When majority consent is obtained, the next step is for the sale committee to find a buyer. To ensure transparency, this must be done through a public tender exercise.
5) Once a buyer has been found, and the sale agreed upon by both parties, they must make a formal application to the Strata Titles Board (STB), who will then consider the application and make a decision on whether to approve the sale.
6) At the stage when an application has been made to the STB, those owners who did not form part of the majority consent can raise objections – again to the STB, who are required to take it into account before making their decision.
7) After the STB has made and announced their decision, either party that is not satisfied with the decision can challenge it through the judiciary’s appeal system.
The issue of en bloc has come into the spotlight for two main reasons lately. First of all, with the property boom, and the sharp rise in prices, there was a sudden surge in en bloc applications, as the more canny residents suddenly saw an opportunity to make money. This was obviously at the expense of the minority, who wanted to remain where and they were. This sudden shift from seeing the roof over their head as a means to make a profit, as opposed to a home and shelter, was something that didn’t sit comfortable with a lot of people, especially considering where the country had come from often less than a generation before.
The other reason that en bloc is so much in the public eye at the minute, is as a result of the potential time bomb with the 99 leasehold properties nearing the end of their time. This has been an opportunity for the en bloc process to win back some of the favor it has lost in recent years, as it is seen as a way out for those worried about their lease coming to an end. Those subject to an en-bloc sale would move to a new flat, and the timer is set once more.
The inevitable fly in the ointment for this however, is that some older residents find it hard to meet the financial criteria of obtaining a new flat.
With so much attention on this at the moment, and people wanting answers and clarity with the whole 99 lease deal, and en bloc’s part in it, the best advice anyone can give is – “watch this space”.
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