Singapore En bloc sales: Find fairer way to compensate all
Mon, Dec 17, 2007
The Straits Times
THE Singapore Institute of Surveyors and Valuers (SISV) recommends the following methods of apportionment for collective sale: the share value method; 50per cent strata floor area and 50per cent share value method; general valuation method; or the combination of general valuation and share value method.
The share value method favours small units, while the strata floor area method favours units with large areas.
The 50per cent strata floor area and 50 per cent share value method has been quite equitable for the past couple of years as, generally, the bigger units are transacted at a lower rate per sq ft (psf) than the smaller units.
But during the last two years, there has been a growing number of bigger units where the asking on a psf basis is equal or more than that of the smaller units.
One of the reasons could be the reduction in unit size as developers try to maximise the buildings, and hence the scarcity of larger units.
I would like to suggest further variations to the above methods to minimise the objections by the minority owners who own bigger units.
For example, 85per cent strata floor area and 15 per cent share value; or 90per cent strata floor area and 10 per cent share value; or a combination of the percentage of the strata floor area and share value be used, instead of the fixed 50 per cent strata floor area and 50 per cent share value method.
The method chosen will have to be discussed at an extraordinary general meeting.
It will be a win-win situation this way, as a smaller unit is compensated for its share by getting a better psf than a larger unit. At the same time, the larger unit will not be losing out too much. The rationale is to find a fairer way for all owners to be compensated.
During the debate on the Land Titles (Strata) Amendment Bill on Sept20, Nominated MP Siew Kum Hong brought up the matter of apportionment, and the response from Deputy Prime Minister and Law Minister S. Jayakumar was that ‘Mr Siew Kum Hong expressed his unhappiness with the guidelines…on how proceeds should be apportioned or distributed. I would look into this. But let me say that we understand that the SISV is working on refining valuation guidelines…Of course, we are not able to specify in the law a standard apportionment method because there are a multitude of factors to consider in deciding on a single method of distributing the sale proceeds…But I take his point about the guidelines, and we will have discussions with the SISV’.
It would be good if we could know the outcome of these discussions.
Source : Straits Times - 17 Dec 2007
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