Commentary: Condo en bloc rules are changing, and neighbours will feel it first

SINGAPORE: A home owner had lived at her condominium for two years when her neighbours began asking her, almost every day, to sign the estate’s collective sale agreement. She gave in to the pressure despite the seller’s stamp duty she would face. Another home owner stopped going to the estate’s general meetings and avoided neighbours who wanted to sell. But owners pushing for a sale had their reasons too, whether to leave an ageing development or to right-size. These competing needs are why a collective sale, or en bloc, can become a source of tension among neighbours, as media articles have shown over the years. That tension is worth bearing in mind because the rules governing such sales are about to change. Parliament on Tuesday (Sep 8) passed the Land Titles (Strata) (Amendment) Bill , which lowers the share of home owners who must agree to a collective sale in older estates – from the current 80 per cent to 70 per cent for estates aged 40 to 59 years, and 65 per cent for those aged 60 years or more. This is done to support the renewal of ageing developments .

There are also stronger safeguards for owners who do not support a sale. At least 35 per cent of owners, counted by share value or by number of owners, will have to sign the request that calls the meeting to form a sale committee, up from 20 and 25 per cent today. The signature collection period will be shortened from 12 to six months. An estate that fails the collective sale bid will have to wait three years, instead of two, before a reattempt, while the cap on the extra money a court may award en bloc objectors will double. A SHORTER DEADLINE MAY NOT EASE THE PRESSURE The Ministry of Law said the halving of the timeline to obtain signatures is aimed at addressing the “prolonged pressure” on owners who do not want to sell. Speaking in parliament on Tuesday, Law Minister Edwin Tong said his ministry had received feedback about owners who refused to sign being named in social media and messaging chat groups, to pressure them into agreeing. Pressure has two parts: how long it lasts and how hard it comes. The shorter deadline cuts the first but leaves the second alone. Industry players have been reported as saying that a six-month signature collection period is "too short", especially for bigger projects. Addressing that, Mr Tong pointed to data that showed in developments of more than 100 units, most signatures are gathered in the first four months or within a concentrated window of one to two months. That is a fair answer to whether six months is workable. It is also a description of an intense campaign happening within a window the law is now shortening. Yet, nothing in the new rules touches the intensity. A higher bar to start a campaign and a longer wait after a failed one may also mean fewer campaigns, but neither eases the pressure once one is under way.

WHAT NON-CONSENTING OWNERS CAN ACTUALLY SAY Currently, the law lets the Strata Titles Boards and the court weigh only three things when they ask whether a sale was made in good faith: the price, the way the money is divided and any connection between the buyer and a home owner. An objection succeeds only where home owners get back less than they paid for their units, or where the money will not clear their mortgage. The only loss the court can recognise is financial. The courts have acknowledged the need to protect minority owners. Overturning the S$500 million en bloc sale of Horizon Towers in 2009, the Court of Appeal held that a sale committee acts for every owner in the estate and must hold an even hand between those who want to sell and those who do not. Objecting owners, it said, have to be “adequately protected from bullying and underhand tactics”. Yet, the duty is tested only later when a dispute reaches a courtroom, and only where a home owner can afford to object. Nothing tells a committee on the first day what it may do at a home owner’s door.

TWO PROPOSALS TO CONSIDER The government could consider writing a code of conduct for the signature campaign into the Act. The law already regulates how sale committees behave in other respects, and a code could go further to establish boundaries around how owners are approached. For example, sale committees could be required to name one person to deal with each household, and that person would be the only one who reaches out. An owner who wants the asking to stop could say so in writing, and the approaches would end for the rest of the campaign. The owner would continue receiving notices required by law, and could still change his or her mind. But the code means that a committee, or those working for it, that carried on regardless would have something to answer for. Home owners could also be given more time to rescind their agreement. Those who sign a collective sale agreement now have five working days to withdraw consent, once only, by signing a notice and delivering it by hand to the appointed lawyer. The new laws passed on Tuesday do not change that, even as it halves the campaign. The five days exist to make sure the owner's consent is informed and genuine, which was the government's reason for keeping them in 2010, when it turned down calls to scrap the cooling-off period altogether. A shorter campaign strengthens that case. In tandem, the government could allow the signed forms to be posted. Hand delivery sorts owners by who can reach a law office before 5pm on a working day, and the owner who is overseas, elderly or on shift work is the one it stops.

NOT A TRIAL RUN FOR VERS During the debate in parliament, several Members of Parliament (MPs) asked if changes to en bloc rules will have implications for the Voluntary Early Redevelopment Scheme (VERS) , which will allow owners of HDB flats aged 70 years or older to vote on whether the government can buy back their homes before the 99-year lease expires. Speaking in parliament in September last year, National Development Minister Chee Hong Tat said his ministry is still working out how the VERS vote will run . The latest changes should not be seen as a trial run for VERS, because the amendment Bill tabled expressly excludes any development on HDB land from the new class of collective sale it creates. There are other differences. An HDB flat carries no share value, so consent would be counted differently. The Ministry of National Development (MND) has also said VERS should not create a “lottery effect” and payouts will be lower than under the Selective En bloc Redevelopment Scheme because flats offered VERS will have shorter remaining leases. The government also holds one advantage no sale committee has. It can prepare replacement housing in advance and has said it will. That matters more than it sounds because a sale committee asks an owner for more than a price. It asks owners to trade a known home for a sum of money and a hope. The ones who say no most often cannot picture the other side of the move. For all those differences, the similarity lies in what happens between neighbours. In his reply to MPs, Mr Tong said the issue of VERS goes beyond the scope of the Bill, but accepted there are learning points between the public and private markets and said his ministry would share its experience of the collective sale regime with MND. As the rules are developed, the experience of private residential en bloc sales can offer a useful lesson. There is a need to support renewal efforts of ageing estates, but the process of seeking consensus and reaching a collective decision without dividing a community also matters. Gabriel Kor is Associate Professor and Deputy Head (Academic) at the Department of the Built Environment, College of Design and Engineering, National University of Singapore (NUS). The opinions expressed are those of the writer and do not represent the views and opinions of NUS.