Frequently Asked Questions (FAQ)

Home Seller (General): En-Bloc Sales FAQ

1. What is the meaning of selling en-bloc?

It means all the owners of separate units in an apartment, condominium or even an office building, collectively sell their properties.

2. How can an en-bloc sale be conducted?

Commonly either by way of private treaty or tender.

3. What are the legal documents in an en-bloc sale?

There are two mainly two legal documents – the Collective Sale Agreement and the Sale and Purchase Agreement.  However, if the property is sold by tender, then the latter would take the form of a Tender Document.

4. What are the main steps involved in an en-bloc sale process?

• Phase 1:  Pre-Sale Preparation (1 months or more depending on the complexicity and number of owners involved in the Sale) – it includes the signing of the Collective Sale Agreement
• Phase 2:  Public Tender Stage (1 month) – Development is up for Public Tender, and await developers to submit their bids
• Phase 3:  Post Tender (1 month) – Evaluation of bids and negotiations with developers if necessary
• Phase 4:  Legal Completion (3 months) – if there is less than 100% consensus, an application for an order to sell to the Strata Title Board is required.

5. On the average, how long does the en-bloc sale process take?

Generally, it takes about 9 to 12 months.

6. What are some of the principal terms in the Collective Sale Agreement?

1. Reserve price – the minimum price that owners agree to sell
2. Method of apportionment of  sale proceeds
3. The validity period of the Collective Sale Agreement
4. Date to deliver vacant possession, and how much is to be retained by the developer till vacant possession is delivered
5. The last day for all existing tenancies, -Owners are to inform their tenants with regards to the last day if the existing tenancies expiry dates are beyond the last day.
6. The Indemnities for the Sale Committee and between owners-The Sale Committee’s authority to sign plans for submission by the purchasers to the relevant authority.

7. What happens to the deposit paid for an en-bloc sale when only the majority owners have agreed to sell?

During this time, the developer purchase is on condition that an order to sell is given by the Strata Title Board. The deposit paid usually is held by the Vendor’s lawyer as stakeholder.

8. What is required by the Strata Titles Board to approve an en-bloc sale?

1. For developments that are less than 10 years old – the subsidiary proprietors with not less than 90% of share values must agree to sell
2. For developments of 10 years or more – the subsidiary proprietors with not less than 80% of share values must agree to sell
3. The “Age” is taken from date of issue of the latest Temporary Occupation Permit (TOP) or, if no TOP is issued, then the date of the latest Certificate of Statutory Completion is used.
4. The agreement to sell must be in writing under a Sale and Purchase Agreement, which specifies the proposed method of distribution of the sale proceeds
5. En-bloc Sales Committee Members must now be appointed at EGM of the respective developments
6. Majority need to give an undertaking to pay the costs of the Strata Titles Board
7. Majority need to consider the collective sale at an extraordinary meeting
8. Advertise the particulars of the application in four languages in the local newspaper
9. Send a copy of the proposed application to all subsidiary proprietors, mortgagors, CPF Board (if CPF fund are used for the purchased) and the placement of a copy under the main door of every unit
10. The application should include copies of the advertisement in the four languages, the Sale and Purchase Agreement, a statutory declaration by the purchase on his relationship, if any, to the subsidiary proprietors, minutes of the EGM, and valuation reports on each type of the apartment and method of distribution
11. Affix a copy of the notice in the 4 official languages to a conspicuous part of each building

9. What actually happens before the approval of an en-bloc sale?

The Strata Titles Board will make an order for sale if it is satisfied that:-

* the sale was done in good faith.
* the sale was conducted fairly, the Board will consider all the facts of the sale-such as the sale price, the distribution of the sale proceeds, and the relationship between the purchaser and any of the owners.

10. What are some examples of en-bloc sale not done in good faith?

An example is where owners of larger units agree on a certain method of apportionment which favours them and try to force the minority to agree to it.  Other questionable methods include collusion between the majority owners and the developer; and sellers being coerced into a joint venture with the developer.

11. Under what other circumstances would a collective sale would not be successful?

If the minority owners are likely to suffer a financial loss as a result of the sale going through, the Strata Titles Board may not allow the sale.

If the apportionment amount is not able to discharge the outstanding mortgage.

12.  What are the methods used to apportion the sale proceeds?

The Singapore Institute of Surveyors recommends the following methods:-

1. Share value Method: the apportionment for each unit is proportionate to its unit’s share value in relation to the total share value for the development.
2. An average of the strata floor area and the share value method – the apportionment is according to the unit’s strata floor area in relation to the total strata floor area.  The figures derived from the share value Method and floor area method are then averaged by taking 50% of each method.
3. General valuation – a value is estimated for each typical unit.  This valuation is on an individual market basis, ignoring collective sale potential, floor level, facing etc.. The valuation of each typical type of unit would vary according to the floor area of each unit on the basis that the larger the unit, the lower the value per square foot.  The apportionment for each unit would then be in proportion to that unit’s value in relation to the total value for the whole development.
4. The combination of general valuation and share value Method – a value is estimated for a typical unit of each type as in (c), and the total value is computed.  This total value is then deducted from the sale price, and the balance is distributed to each unit according to each unit’s share value as a proportion of the total share value for the development.

Home Seller (General): Valuation FAQ

1. Why do I need to get a valuation done before I sell my house?

In volatile markets, selling your property based on the latest transacted prices may be inaccurate due to the time lag between the actual transaction and the published transacted prices.  Also, most buyers would want to know the valuation or the bank indication of the value of your property to assess their ability to purchase your home.

In the case of HDB properties, the Seller would normally obtain a Valuation before putting the property for sale in the open market. This is because the valuation will help the Seller to determine a fair selling price, whilst at the same time enables a potential Buyer to compute his financial commitment towards the purchase.

2. What are the main factors that affect the value of my property?

The factors are:
a) Tenure
b) Location
c) Quality
d) Proximity to conveniences and facilities such as MRT, market, bus-stops
e) Surrounding features such as beautiful scenery/landscape
a) Current demand for the property

3. How much does it cost to obtain a valuation report?

Generally, a valuation exercise costs from 0.5% to 3% of a property’s value.
The costs of obtaining a Valuation for a HDB property is about $150.00.

Home Buyer (General): Stamp Duty FAQ

1. What is Stamp Duty?

Stamp Duty is a tax levied on documents which record transactions, such as disposition or transfer of interest from one party to another.  Therefore, stamp duty is payable by the person who purchases any immovable property.

2. How much Stamp Duty do I have to pay?

Three(3%) percent of the Sale / Purchase price, less $5,400.00. ( for property prices of at least $360,000.00 or above)  otherwise to compute by breaking down the Sale / Purchase price:

The formula to calculate is:
First  $180,000 (1%)
Next  $180,000 (2%)
Thereafter (3% )

Examples:

(1) Transacted property price          S$2,000,000
3% of S$2,000,000                         S$60,000
less S$5400                                   S$5,400
 
Stamp duty payable                        S$54,600

(2) Transacted property price           S$2,000,000   

Property purchase price                   S$2,000,000
1% on the first S$180,000                S$1,800
2% on the next S$180,000               S$3,600
3% on the remaining S$1,640,000    S$49,200
Total stamp duty payable                 S$54,600

3. When do I have to pay for the stamp duty?     

Depends on whether the property bought is completed or still under construction.  For completed properties, the stamp duty is payable within 14 days  of the completion of the sale if the document is signed in Singapore.  If the document is signed outside Singapore, the stamp duty has to be paid within 30 days after the Sale and Purchase Agreement is received in Singapore.

For uncompleted properties, the Stamp Duty is payable within 14 days after the TOP (Temporary Occupation Permit) is issued or when you sell the property, whichever is earlier.

4. Does a seller of a property need to pay stamp duty?

Under the Anti-speculation curbs announced by the government on 20 February 2010, the seller of a residential property needs to pay for the stamp duty if the sale of property was made within 3 years after the purchase of the property.  This regulation was suspended by the government on 18 November 1999, and has since been repealed.

Home Buyer (General): Property Tax FAQ

1. What is Property Tax?

It is a tax payable by a property owner, based on the annual value of the property.  The annual value is calculated from the potential gross rental the property can generate in a year on the basis that the owner is paying for the costs for repairs, insurance, and maintenance (excluding GST).

2. What is the rate of Property Tax?

The property tax rate varies.  If you are occupying a residential property, the property tax is only 4% of the annual value of the property.  If the property is not owner-occupied, you have to pay the tax rate of 10% of the annual value of the property.  In the case of non-residential property and vacant land, the tax rate is 10%, regardless of whether it is owner-occupied or not.

3. What is Annual Value?

Annual Value is the estimated annual rent of your property assuming it is let out. Amount excludes the rent for furniture and fittings and the service charge. The Chief Assessor will determine the Annual Value of the property by analyzing rents of comparable buildings and relevant data. The annual value is determined in the same manner regardless of whether the property is let, owner-occupied or vacant.

4. Does the owner-occupier’s concessionary tax rate apply to companies with ownership of the property?

No.  Only individual owners are qualified.  Even if the property owned by a company has been used as living quarters for employees, the company is still liable for the property tax rate of 10% per annum of the annual value.

5. If I reside in 3 different properties, can I be granted the owner-occupied rate for all the 3 properties?

No.  You can only be granted the owner-occupied rate of 4% for only 1 residential property .

6. If I own a HDB flat and a private apartment, can I choose to have the owner-occupied rate of 4% for the private apartment?

No.  If you own both a HDB flat and a private apartment, the owner-occupied rate can only be for your HDB flat.  However, if you owner-occupy 2 private properties, you may then choose to have the owner-occupied rate for any of them.

7. I have just purchased a property and found out that the previous owner did not pay for the outstanding property tax prior to the sale.  Am I then liable to pay for him?

Unfortunately, the government looks to the property and not the owner for collecting the property tax.  Therefore, in this case, you are liable to pay for the property tax bills for the previous owner.

8. How can I find out the amount of property tax for the property I wish to purchase?

The easiest way to find out is to ask the Seller for his current property tax bill.

9. How can I be sure that the Seller has already paid for the property tax?

Your Lawyer can request for the Seller to produce the receipt for property tax or the Confirmation Note issued by the Comptroller of Property Tax.

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