It is no secret that en bloc sales in Singapore have almost come to a stop after the property curbs in July. Since then, just two en bloc sales were completed, down from the S$3.8 billion worth of transactions in the previous quarter. There are of course a number of developments that are still trying for an en bloc sale, like Mandarin Gardens at S$2.79 billion and Pine Grove at S$1.86 billion. If you are one of those people, you must be wondering about the en bloc process timeline. If a sale does go through, what happens next? Do you have adequate time to look for a replacement?
Let’s dive right into the en bloc process timeline.
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En bloc process timeline – what happens next?
There are a couple of stages to the en bloc process timeline, and at certain stages this can be drawn out longer, depending on the outcome of it.
Stage 1: Setting Up
Time taken: 1 to 2 months
How any en bloc process starts would usually be a few interested owners that band together to form a pro-temp sale committee. This means starting the Extra-ordinary General Meeting (EOGM) in order to set up the Collective Sales Committee (CSC). In an ideal scenario, this includes representatives from all the different sized units. If the committee is experienced, they would know that it is important to allow for fair representation at the beginning. This is to prevent further disputes at crucial points down the line. The CSC has an important job to generate interest among the residents to get the majority vote required.
Note: For developments less than 10 years, they will require 90% consent by share value as well as strata area. For developments older than 10 years this will be set at 80%.
There will be a few EOGMs set to determine various aspects of the Collective Sales Agreement (CSA) and also to appoint the correct consultants for the job. For example, the lawyers and the property agency in charge of the tender and sale process. It is also at this stage where the reserve price, valuation and Method of Apportionment (MOA) will be set. These are very crucial to the en bloc process timeline as the price set has to be high enough such that the majority of votes needed can be garnered, but not too high that it would even deter developers from bidding for it.
The decision of the reserve price will take into consideration many aspects such as, the current plot ratio and actual plot ratio, current market conditions, surrounding en bloc sales and if there were any successes and the price it was sold at, potential developments around the development, lease top up premium and development charge. Sometimes additional due diligence will be done and an independent valuation would be consulted to get some bearings on the reserve price.
Next, is the MOA, which can result in a lot of disagreements during this process. Why is this important? Because the MOA determines how much each resident will be able to obtain from the en bloc sale. So the CSC has to propose an MOA that is fair to all residents in the development. Disagreements always happen at this point because some residents would feel that their unit is worth more, perhaps because of the level, the facing, or the uniqueness of the unit. Hence, all these issues have to be resolved so that the en bloc process can continue.
Stage 2: Getting the required 80% or 90% vote
Time taken: 12 months or less
At this stage, the CSC will have 12 months to attain the required number to launch the public tender for sale.
Stage 3: Launching en bloc sales via public tender
Time taken: 1 month if not 10 weeks for private treaty
The tender will usually close within one month. If there is no successful bidder, this will go into a sale by private treaty arrangement, and there is a 10 week timeframe for this.
Stage 4: Apply to Strata Title Board (STB)
Time taken: 3 to 9 months
It is at this point in time where any resident who objects to the sale can file an objection. The dispute will have to be mediated by the STB, if it cannot be resolved, the STB will issue a stop order and it will have to be escalated to the High Court. This will obviously drag the en bloc process timeline even further.
Stage 5: Completion of Sale and Handover
Time taken: 3 months for completion
Once STB approves the sale, it will take another 3 months to complete it entirely. After the completion, residents will have up to 6 months to move out and provide the developer with vacant possession of the unit.
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2 Comments
Hi Druce,
Is there any latest update for 2020? Thank you.
Raymond Ho