Break the Law, loose  your flat!

Tough Love from HDB, but this is really for the greater good. Many may not see it that way, especially when you at the receiving end of compulsory acquisition by Singapore’s Largest Property Developer.  4 HDB owners that had their flats repossessed were found to be illegally subletting their HDB Flat without prior written approval from HDB.

Tenants renting should take note that HDB’s regulation governing Renting a  Flat states that:

“An HDB owner can rent out his whole flat only after he has obtained a written approval from HDB. Hence, you may request the flat owner to show you a copy of the approval letter to rent out their flat, as obtained from HDB.”

Yes quoted word for word (including the grammatical error). Hence tenants that wish to rent unapproved flats will run the risk of being evicted at short notice.

What Qualifies you as a HDB owner to Rent your HDB Apartment?

To sublet the entire flat, you need to satisfy the condition of a 3-year or 5-year Minimum Occupation Period (MOP).

You are allowed to sublet your whole flat if you have occupied your:

• Non-subsidised flat (flat purchased from the open market without a CPF housing grant) for at least 3 years, or
• Subsidised flat (flat purchased directly from HDB or from the open market with a CPF housing grant) for at least 5 years

So if you are still unsure about room rental or renting out your HDB flat, please contact us to advise you (no obligations), to prevent you from being caught on the wrong side of the law.

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For many of us it is like a heave of relief and statements of “its about time” seems to be much of the main thread of sentiments to this piece of news.

Our beloved HDB has purchased slightly more than 4,300 solar panels from Norwegian energy firm Renewable Energy Corporation. This is the largest solar panel procurement in Singapore to date. And I know you aren’t impressed by this piece of news.

But where will it be installed and what and how do I benefit from all this “green technology” seems to be the immediate questions that pop up.

Where will it be installed?

I hope that you’ll be pleased (or terribly disappointed) to know that these panels will be installed by Q4 2010 in Ang Mo Kio, Bishan, Aljunied, Jalan Besar, Telok Blangah and Jurong. (Is your township in here?). But its not enough to cover the entire estate, so only about a total of 30 slab blocks in these various regions will be installed.

What does this mean to you?

Sadly for those of you who (like me), secretly wish that the installation will help lower your electricity bill, you seriously got to be joking, because since all of this is paid for by HDB, its to go to lowering the electricity usage of all common facilities – like common area lighting and lifts (and it claims to be able to produce enough power to power all this for an entire day). The savings of electricity usage will lower the electricity bill for the Town Councils and therefore, should see lowering of conservancy charges (hopefully soon).

Many buy properties in expectation of making a profit when it goes for en bloc. But this may not necessarily be the case when you are dealing with a HDB en bloc. Recently a few blocks at Bukit Merah View, blk 113 and 114 have been ear-marked for Selective En Block and Redevelopment Scheme (SERs), however this have the retail shop owners in these 2 blocks unhappy with the new terms that they are offered.

It happens that the new shops that HDB have allocated are only one-third of the size of current shop space, and with only a 30 year lease term (as opposed to their current shops which still have 60 year lease term left).

Very frequently many clients that do ask about buying of HDB shops – ask about the viability of HDB shops in the long term, with limited tenure left on the shop, purchasing a HDB Shop is no safeguard against the raw end of the deal should it be ear-marked for SERs.  And in deed the Bukit Merah View is a classical case. Out of the 31 shop owners, only 7 are willing to take up units at the new premises.

Compensation ranging from S$486,000 to S$780,000 was being offered by HDB to affected shopowners, but they said it is not enough. According to HDB (quoted from their website) -

Eligible flat owners are compensated for their flats.

• The compensation is based on the prevailing market value as at the date of publication of gazette notification.
• Reasonable expenses will also be paid.

As the dateline to accept the HDB offer draws near, and with limited number of acceptance by the shop owners, HDB has extended the dateline to allow these shop owners additional time to consider the offer. However I feel that they may be at the end of the road with further options from HDB, and the clock is still ticking.

Chua Mui Hoong from reported from SPH in her article – Do something drastic or do nothing?

In the article wrote about there being 2 camps – One wanting something drastic to be done to curb the runaway prices. The other championed by REDAS chairman – Simon Cheong want Nothing To Be Done.

In the article it was said “The majority would be better off if the Government judiciously steps in to ‘Do Something Selectively’ now and then to keep the market on a relatively even keel.”

Which I beg to differ. The buyers want the government to step in. The sellers on the other hand want status quo. Why, because if there were controls put in place, they won’t be able to get inflated prices on their property.

Humans by nature are greedy, and hence although we gripe about high COVs, and high launch prices of property, many are drawn like moths to the flame to buy at prices determined by the developers.

If the demand is not there, do you think developers would be able to price at that level?

Developers understand the market and what are the demands. Do you think that Siglap V if priced at $1400psf would be outpricing itself, and setting a benchmark in that area, but it still sold many units despite the premium price.

Market demand is not just local demand, but foreign demand and interest in investment in Singapore. Our country welcomes foreign investment with open arms. Which as a result have seen some astronomic prices paid by PRs for a HDB at Bain Street (Bras Basah Complex), which nationalistic individuals would rally to the clarion call to drive out foreigners and foreign direct investment(FDI).

Such activities would do the country no good.
Because FDI boosts the economy. The recent activities in revaluing the S$ was an indication that our government is trying to control some of this inflows, by making it less attractive to FDI.

Our dear ST reporter says “True, there is currently a mismatch between supply and demand, with queues for new HDB flats and at popular condo launches. This is likely to be a short-term glitch.”

I do not think that it is a short term glitch. Our MND Minister, the esteemed Mr Mah, had stated that he will not be in eager hurry to build new HDBs, and will continue on the BTO path. Many new first timers, will have to contend with what HDB rolls out under BTO. However, they refuse to accept this, and hence look to purchasing from the secondary market. Hence until there is acceptance that this will be the trend of the future – this “short term glitch” will remain, and people will still have to settle for high COVs in popular mature estates.

One near-lucky family was close to tasting victory, when they got an unbelievable offer of $950K for their top-floor Maisonette unit at Queenstown, located at Strathmore Avenue, but the deal fell through. No fault of the owner, as the buyer was not able to secure the bank loan. A sad day for the owner as well as the agent, but they got some press coverage, making front cover news on The Sunday Times. Free advertising you might say, but truth be told, units that are highly sought after will draw unbelievable bids.

Yes we think things will still continue to get hotter, as we have more immigrants wanting to settle into a country that has a good secure environment for building a family. With global unrest on the rise, Singapore is a haven.

Tougher rules and taxes could possibly frighten some property speculators, especially those that truly do not have the appetite for such a risky business. Truth be told, a 3 % isn’t truly going to turn away true blue property investors and those that have been investing and flipping for a long time. Any investor would tell you that if the profits that have deducted the cost of funds, any legal expenses, GST and now Stamp Duty, some of them will tell you it is worth the while when the profits are right.

Of course in such risky business, there are times when bad decisions are made, sums calculated wrongly and losses are part of the territory. Such costly mistakes do not only hurt the individuals or groups that go into such business, but the economy and society as a whole. Artificially inflating the market to achieve personal gains are what speculators do, and that is why for the general health of the real estate market and the economy as a whole the government has to step in to cool the buoyant property market, which started to move again in January this year.

The tightened rules on the mortgage loans only allowing 80% of the purchase price doesn’t have such a great impact on the speculators, but rather hitting some marginalised (and genuine) buyers. I truly disagree with this move. As it really hurts those that are not trying to artificially inflate the market, but buyers who are looking to buy for their own, especially those that are wanting to start a family. The impact won’t be that great on sales figures though. Buyers will just have to stick to buying property which they can truly afford, and not try to over-stretch themselves.

The global economy is recovering, US economic data shows improvement, and hence our Singapore government is concerned that the global economic recovery will cause an overheating of the property market, and the risky global economic factors may hurt many should the market correct itself. I seriously doubt so. Its a little far fetched, but as usual, in Singapore, we’re all Kiasu, so its better to be prepared then not to be.

Well this doesn’t seem to come as a surprise, our public housing is touted as one of the best in the world. Many other countries come research Singapore’s success in public housing. Despite it being public housing, our HDB estates in no manner whatsoever look drab, badly managed, dirty and smelly. As a matter of fact, some look so good that you may think that they’re private developments, with manicured bushes, clean common areas.

The Sample Household Survey (SHS) 2008 – which polled almost 8,000 households – found that 85.8 per cent of residents considered their flats worthwhile. HDB said yesterday that this was mainly because of ‘the appreciation in flat value, good location, proximity to facilities, and affordability’.

And what is there not to be pleased about your HDB flat? Singaporeans are a pragmatic group of people. It all comes down to – what am I going to get when I sell this place, how much money am I going to stand to profit from the sale. If it ain’t enough, I ain’t selling – seems to be the response of some individuals (about 15 of them, aged between 35 – 50s).

Then I asked, would you pay more for your HDB flat if it was an upgraded estate or a non-upgraded estate, you’ll surprisingly find that the response comes back mixed. ‘Its outside my flat, so why do I care’ was one response. Many estate upgrading projects to provide more aesthetic features such as landscaped parks and gardens, modern playgrounds for the kids, bbq pits and improved walkways with ramps and hand rails is lost on some.

But truly, no one likes living in a run down neighbourhood. Behind the facade of nonchalance, HDB dwellers are proud and happy with what they’ve got.

Its an alarming trend for new home buyers, but the tills are ringing, and HDB upgraders are rubbing their palms with glee. Not a sight which the government wants to see. But we must realise that Singapore’s population is increasing and not decreasing. Our birthrate may be dropping, but we’ve got more and more expats, converting their PR statuses to citizenship. And a very valid reason – to benefit from childcare and childsupport tax benefits, and of course the subsidized public housing (that doesn’t look one bit like public housing).

Our public housing project in Singapore has received kudos and awards, and architects around the world have applauded us in being able to build public housing for our citizens that are seriously out of this world! And anything that has been given such a label does come with a price. The price of which has been heading skywards recently and does not seem to loose any forward momentum.

According to The Business Times, which reported that “The median Cash-Over-Valuation (COV) amount among all resale flat transactions jumped to $12,000 in Q3 2009 – from a median COV of $3,000 in Q2 this year.”

Perhaps the MND would soon rein in this runaway lamb that refuses to comply. MND could let loose the herding dogs that snap and nip at the legs of the lambs and sheep. That would be a sight to behold.

Many expatriates are now downsizing and moving from Condos to HDBs. Its now a common sight to find a Caucasian family living in the same HDB block. Savings from rental is not their only singular consideration. Many expatriates such as one of our clients – Mr Thomas Cole, a South African who decided to move from a studio apartment in Tanjong Rhu to living in a 4 room flat in Aljunied. He says that he never knew that HDB flats were so much more convenient than living in a Condo. With eateries located just in the adjacent block, a supermarket a few blocks away and MRT a 10-minute walk away.

Thomas is now a HDB-convert, and has even suggested to several of his expat friends to consider moving into HDB flats and live like ‘a local’.

One of the HDB rentals that we are presently offering are located in Toa Payoh, where newly renovated HDB flats are available. Situated along Toa Payoh Lorong 5, approved HDB rental units, these 3 room flats (2 bedroom apartments), are fitted with new furniture, fittings and air conditioning units.

Other approved HDB flats in other areas are also available:

- Ang Mo Kio, Bishan

- Aljunied & Kallang

Call us to find out how you can save.

Picky Polly cannot pick her perfect HDB flat, well that’s too bad says HDB, as they have revised the application process to weed out “Picky Polly” or HDB applicants who have rejected their chance to select a flat under their Build-To-Order and Balloting Exercise modes of sales.

According to HDB’s press release

“In the last 4 BTO exercises where selection has been completed, about 50% – 70% of the applicants did not select a flat despite the high number of applications received. At Coral Spring for example, over 200 units or 30% of the 4-room flats were not selected after all the applicants had been called up for selection. Among the invited applicants who did not select a flat in recent BTO exercises, up to 23% of them had given up their chances to select twice. Up to another 12% of the applicants had rejected their chances to select more than twice. The figures indicate that a significant number of applicants tried repeatedly but did not select when given a chance at successive sales exercises.”

However, most of the BTO exercises received overwhelming applications, in fact gave the impression to the property market that there may not be enough new flats to meet public housing needs. HDB wants to change this to ensure that the flats get allocated to those that are less picky about the unit they are offered.

We believe that with the revision of the application process starting with the May BTO application, we would either see less applicants or less Picky applicants. Those that are little particular about their sanctuary, there is always the resale market.