The following post is excerpted from the newly launched Secrets of Singapore Property Gurus, in an interview with Dillon Loi, Master Trainer at the Real Estate Academy. Click here to get your copy now.
What is a collective sale?
An en bloc sale, or collective sale, is the sale of an entire private strata development by way of majority consent and is governed by the Land Titles (Strata) Act.
If there is unanimous consent to sell the development, the laws governing en bloc sales will not apply.
How does the en bloc process work?
The first step in an en bloc sale attempt is for owners to form a sale committee. The law requires that only one sale committee be elected for each development and that sale committee must follow certain procedures as stated in the law.
Once a sale committee has been formed, owners will indicate their consent to the en bloc sale by signing a Collective Sale Agreement (CSA). The majority consent by share value and strata area must be obtained within one year before the sale attempt can proceed further. The majority consent levels are:
• For developments less than 10 years old – at least 90% by share value and strata area or
• For developments 10 years and older – at least 80% by share value and strata area
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. When a buyer is selected and the sale agreed upon, an application must be made to the Strata Titles Board (STB) which will consider the application and deliver a decision on whether the sale will go through.
When an application for an en bloc sale has been made to the STB, the owners who do not consent to the sale can raise objections to the STB. The STB is required to consider these objections before deciding on the outcome of the application for sale. Any party dissatisfied with the STB’s decision can challenge the decision through the judiciary’s appeal system.
How long does it typically take?
It typically takes at least one year after the collective sale process has commenced before the transaction is completed and up to another six months before the sale proceeds are distributed out.
In Secrets of Singapore Property Gurus Dillon Loi also shares:
- How to find properties with en bloc potential
- Top reasons why most en bloc deals fail
- The economic conditions needed for the en bloc market to take off
- How changes in legislation will affect the prospects for an en bloc sale
- Where the next wave of en bloc is likely to happen
- Are commercial properties attractive en bloc targets?
- Real estate versus other investment products
- His outlook on the Singapore property market
Is this a good time to buy a property to stay and buying a office to rent up to collect rental?