By The Folks (guest contributor)
The wife and I came across an article in the Forum page of our de facto English newspaper (“So many questions, so few answers”) from a certain Mr. Tan who happens to be an enthusiastic first-time home buyer. He claimed that the numerous doubts and anomalies he had noticed after viewing several new and completed projects could not be explained clearly even by experienced real estate agents. He went on to list the questions he is stilling seeking answers to.
While maintaining that we are not real estate experts (and thus not dispensing professional advice here), we like to have a crack at Mr. Tan’s questions:
1. What constitutes part of total floor area and what does not?
Technically speaking, everything that is shown on the floor plan of an apartment/house will form a part of the total floor area. The obvious ones are open roof terraces and private enclosed spaces. But areas labeled as “RC ledge”, “A/C ledge”, “void”, “void over staircases”, “flat roof of houses (no access except for maintenance)” etc are generally included as part of the total floor area as well. The wife and I have previously come across a new project in the Holland area (recently TOPed) where a planter box located on the outer wall of the master bathroom toilet was included as part of the total area, despite the fact that one has no access whatsoever to this planter box!
The areas that generally do not constitute part of the total area are what we term “common areas”, e.g. the walkway outside your apartment, the lift landings (unless your apartment has a private lift, in which case the lift landing is also part of your total area) etc.
2. Is it true that unusable space constitutes 20% to 35% of a unit’s total floor area (jumbo penthouses excluded)?
Although this differs between projects, 10% to 20% of unusable space is a realistic ballpark.
3. Why are secondary market units valued at a hefty discount to primary market ones?
The can be due to various factors: age and condition of the older development, pedigree of older development versus new, and in some cases, the perception of owners in the older development as to how much they can move prices of their units up vis-a-vis the price of neighboring new development.
But the primary reason is due to the obscene bids that developers have made for land parcels over the last two to three years, coupled with increase in construction costs. As such, their break-even price is much higher now resulting in higher selling prices for new projects.
4. Can small office, home office (SOHO) units with commercial titles like those at Southbank and The Central be purchased for residential use? Is office-cum-residential use allowed?
This is best explained by URA on their website, which has this to say:
Increasingly, we are seeing more developments marketed as “SOHO” in the property market. “SOHO” is essentially a marketing term used by property developments to refer to Small Office, Home Office. Many would-be buyers are unsure whether “SOHO” units are approved for office or home use, or both.
URA does not recognize “SOHO” as a planning term and does not specifically approve a development for “SOHO” use. Rather, developments being marketed as SOHO today are approved either as Office or Residential but not for both uses.
We have noticed that some office developments are being marketed as residential apartments by calling themselves “SOHO”. This is misleading and inappropriate as the office development may not fully meet the guidelines and various technical agencies’ requirements for Residential use (eg. provision of sufficient parking facilities). Similarly, home buyers should not be misled by the term ‘SOHO’ to think that they can convert the residential unit to a pure office.
Residential homeowners or tenants who want to conduct selected small-scale businesses from homes can make use of the existing Home Office Scheme. This is not to be confused with “SOHO” as these units under the Home Office Scheme are still approved and used primarily for Residential purposes. To ensure that the home office uses do not disturb the neighbors, applicants under the Home Office Scheme must meet the stipulated conditions and performance criteria. For example, there is a limit on the number of employees and type of business uses that can be conducted within the homes. More details on the Home Office Scheme can be found at http://edanet.ura.gov.sg/dcd/homeoffice/HOMainPage/HOindex.jsp.
Would-be property buyers should be cautious and are advised to check the approved use of the property before committing to any purchases.
5. Some formerly freehold estates that went en bloc are now being sold as new 99-year leasehold condos. Are there any implications to buyers – legal or otherwise?
We are talking about the likes of The Shore Residences in Katong (formerly Rose Garden), which is sold on a 103-year lease but resides on a freehold site.
Realistically speaking, this is no difference to buying a leasehold property. The only major implication to buyers (that the wife and I can think of) is that, at the end of the 103-year lease, the land owner can rightfully “take back” the land and do whatever with it as they please, with the buyers/owners having little/no recourse. This is the same right the government has over owners of units in 99-year leasehold developments when the lease is up.
6. Why are new developments prohibited from enclosing balconies and having covered structures built on top of open roof terraces whereas old estates aren’t?
This has to do with not changing the facade of the estate. Imagine what a brand new development will look like if every owner decides to have their own way with their balconies and roof terraces? So a rule is generally put in place at new developments prohibiting any additions/alterations that will alter the facade of the estate. But these rules will generally be relaxed as the estate gets older, although we are unsure if there is a stipulated number of years before this happens.
7. What is the difference between unit size, gross floor area and strata floor area?
This is one that we are not exactly sure (so we stand corrected) but we believe the terms are used interchangeably these days to mean one and the same thing. However, Gross Floor Area is typically referred to in formal and legal documents while Strata Floor Area is used when determining share-values of the unit concerned.
8. Why is photography disallowed in showflats?
This question is best left to the developers, but we reckon they do not want people to just go to their showflats to “steal ideas” without the slightest intention of buying.
There you have it! So if Mr. Tan happens to read our blog, hope the above helped in some small ways towards explaining your numerous doubts and anomalies…
By The Folks, who blog about Singapore property at SG PropTalk.