Owners of Spanish Village have initiated collective sale relaunch of their property despite failing to attract any buyers in its first en bloc attempt.
The collective sale relaunch of Spanish Village has an indicative price of $882 million.
Located along Farrer Road in District 10, the freehold condominium stands on a massive 331,457 sq ft site. The collective sale relaunch site is close to Empress Road Market and Food Centre. Aside from being near to Dempsey Hill, Holland Village and Chip Bee Gardens, it is also close to Nanyang Primary School.
Exclusive marketing agent for the collective sale relaunch site, Edmund Tie & Co’s senior director of investment advisory Tan Chun Ming, said the Land Transport Authority (LTA) has given in-principle approval to redevelop the 226-unit condo into a residential project yielding 703 homes.
The collective sale relaunch of Spanish Village comes after the Government’s new property cooling measures introduced in July and the new unit-size restrictions which was announced in early October to raise the average unit size and lower the maximum number of houses at new non-landed projects outside Singapore’s Central region.
The Urban Redevelopment Authority’s (URA) new guidelines to restrict development of excessive shoebox units mandate the maximum permissible number of housing units for a development outside the central area by dividing the development’s proposed building gross floor area by 85 sq m. The new rules will take effect for development applications submitted from 17 January 2019. This new requirement which aims to “safeguard the liveability” of residential estates by stemming the reduction in unit sizes, also requires a higher average unit size of 100 sq m to apply to nine specific areas.
The buyers of the collective sale relaunch site could therefore potentially avoid the new rules.The tender exercise for Spanish Village will close on 20 November.
Mr Paul Ho, chief mortgage consultant of iCompareLoan said owners of the collective sale relaunch site have to act quickly and decisively.
Whatever decision owners facing en bloc sale make, it is better to make it fast so that the sale (or non-sale) can be concluded with minimal delay and maximum benefit to the owners. One way he said was to conduct a Collective Sales Agreement (CSA) as well as concurrently collect a “Non Collective Sales Agreement (NCSA)”, so that once a NCSA reaches 20%, the collective sale process is called off. There is really no point to drag on.
As collective sale process takes 20 to 30 months to complete, during this time, the owners typically do not have sufficient funds for down-payment and their CPF OA funds are tied up in the property, hence they cannot buy a new condominium early.
By the time the transaction is completed in 20 to 30 months later, the property prices would have already moved up 10 to 20 per cent. This is already evidenced by sellers of older estate asking higher prices. Hence if the process takes 20 months to 30 months, owners may need to consider the cost of a replacement unit by that time, else they may want to hold up a higher selling price.
Mr Ho pointed out that the rules are quite onerous and stringent and is governed by the Land Titles (Strata) Act – section 84A. Over the years, additions and amendments by the Ministry of Law to the en bloc law have made the collective sale rules even tighter.
He said that many of the home owners who refinanced their home loans to fixed rate home loans or those with 2 years locked-in or 3 years locked-in period will incur full home loan redemption penalty. This penalty is usually 1.5% of the loan amount. This tends to affect those who have bought their properties in recent years as their loan size tends to be bigger and their corresponding home loan redemption penalty higher.
Mr Ho suggested that if one’s home is at risk of en bloc, the owner could consider a home loan where there is no locked-in penalty, but instead entails a higher housing interest rate cost. The next best option is to look for packages with a waiver of locked-in penalty due to sale of property. Such owners may contact a mortgage broker to assist them to find such packages with waiver of locked-in penalty.
In order to understand how and whether to go into an En Bloc sales and sign on the Collective Sales Agreement (CSA), the owners will need to know how long it will take you to complete the En Bloc sales in case it is successful.The maximum and minimum duration of the en bloc sales process as indicated in the cumulative timeline in the table is roughly between 18.5 months to 38.5 months. The earliest any home owners can receive any en bloc sales proceeds could be around 13.5 months and the latest will be 32.5 months.
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