En bloc threshold could fall to 70% for older developments, with tighter safeguards for minority owners

The Ministry of Law has proposed lowering the consent thresholds for older developments to secure a collective sale. The Land Titles (Strata) (Amendment) Bill, tabled in Parliament on Aug 4, proposes lowering the consent threshold from 80% to 70% for developments aged between 40 and 59 years, and to 65% for those aged 60 years and above.

The existing thresholds will remain unchanged for newer projects: 90% for developments below 10 years old and 80% for those aged between 10 and 39 years. The amendments have not yet become law and will be debated in Parliament before being put to a vote.

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The Ministry of Law (MinLaw) says the changes are intended to support the renewal of ageing estates. Singapore's collective sale regime was introduced in 1999, and many developments have since grown significantly older and may require substantial spending on maintenance, repairs and upgrading.

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Government records show that about 20,000 private non-landed residential units are more than 40 years old, compared with over 360,000 units below 40 years.

Over the decades, the share of ageing developments within Singapore's private housing stock has grown, and many of these sites are not used to their fullest potential and could be further intensified, particularly with more MRT lines and amenities built in their neighbourhood, says Kelvin Fong, CEO of PropNex. "Apart from urban renewal, it could potentially help to make better use of scarce land in Singapore via land use intensification."

About 150 developments between 40 and 59 years

Lee Sze Teck, senior director of data analytics at Huttons Asia, estimates that there are about 150 private non-landed developments aged between 40 and 59 years, and fewer than 10 that are at least 60 years old.

About 40% of the older developments are in prime Districts 9, 10 and 11, which could make them more attractive to developers given the limited supply of Government Land Sales (GLS) sites in those locations, says Lee.

Older developments also tend to face mounting maintenance issues involving lifts, water seepage, electrical systems and common areas, Huttons' Lee notes. Rising maintenance costs could require owners to contribute additional funds to replace ageing mechanical and electrical equipment.

Rejuvenating older neighbourhoods

PropNex points to several large-scale developments aged between 40 and 59 years that have made en bloc attempts in the past that have failed:

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• Braddell View (918 units, completed 1978) - could offer some 2,600 new homes if redeveloped;

• Laguna Park (516 units, completed 1981) - could potentially yield about 1,700 new units;

• Pine Grove (660 units, completed 1984) - may be redeveloped into a new development of over 2,000 new homes.

"A lower consent threshold could give ageing developments - which carry a rising maintenance burden - a shot at collective sale," says Fong.

In addition to the above, other developments that fall between the ages of 40 and 59 include Pandan Valley in District 21, a freehold condominium development with seven residential blocks and a total of 605 residential units, completed in 1978, and is 48 years old this year.

Sherwood Tower and Bukit Timah Plaza were both completed in 1980, which means the project is 46 years old this year. However, the lease started in 1976, which means it has a remaining term of 49 years. Sherwood Tower has two apartment blocks of 14- and 30-storeys with 269 units. The two blocks sit on top of Bukit Timah Plaza, a four-storey shopping centre.

Renewal of commercial, mixed-use developments in CBD, Orchard Road

Real Estate Developers Association of Singapore (REDAS) says the amendments support the rejuvenation of ageing commercial and mixed-use developments. “A more facilitative collective sale framework can encourage the timely renewal of older assets in established precincts such as the CBD and Orchard Road, helping keep Singapore's key commercial districts competitive and vibrant,” says a REDAS spokesperson in a statement.

One potential beneficiary along Orchard Road is Far East Shopping Centre, a 999-year leasehold strata-titled commercial complex with a lease commencing in 1871, built in 1974. It has a five-storey retail podium comprising 216 strata-titled shops, a 10-storey office block with 80 strata-titled office units, and two strata-titled basement parking levels.

Read also: People's Park Centre takes third stab at collective sale with $1.48 bil guide price

The owners mounted a collective sale in July 2023 with a reserve price of $928 million. Glory Property Development, an entity of mining and resources company Bright Ruby Resources, had emerged as the buyer at $908 million in September 2023. However, by April 2024, a circular was sent to owners stating that the en bloc deal had been rescinded. The owners could make another collective sale attempt, given the latest amendments.

Another potential collective sale is People's Park Complex, a 31-storey mixed-use development located in Chinatown, right at the edge of the CBD. It was completed in 1972, and is 54 years old. It has a six-storey podium block with strata shops occupying the first to fifth floors, a multi-storey carpark spanning the third to sixth floors and a 31-storey apartment block on top. The project has a 99-year lease from 1968, which means a remaining lease of 41 years.

The owners of People's Park Complex had attempted a collective sale in 2018 for $1.3 billion, but failed to secure the 80% consent needed to go ahead. URA is also said to be studying the building for conservation as it's regarded as a modernist icon.

However, Marcus Chu, CEO of ERA Singapore, says "realistic price expectations, market conditions and developers' appetite for redevelopment sites" will remain the main determinants of whether a sale succeeds.

Restrictions to safeguard non-consenting owners

Other amendments proposed include strengthening safeguards for non-consenting owners, and expanding the collective sale regime for non-strata-titled private residential developments where the flat owners own long leases in their units, but do not own the underlying land.

For instance, the support required to convene a general meeting to form a collective sale committee will be raised to 35%, measured either by share value or the number of units. Currently, such a meeting can be called with the support of owners holding at least 20% of the share value or 25% of the units in a development.

Collective sale committees will have six months, instead of 12 months, to secure the necessary signatures for the collective sale agreement. "The reduced timeframe will pose a challenge for lawyers and consultants trying to engage owners and secure their signatures, especially in larger developments with more than a few hundred units," says Lee Liat Yeang, senior partner in Dentons Rodyk's Real Estate practice group.

The restriction period following an unsuccessful collective sale attempt will also be extended from two years to three years. During this period, any renewed attempt to form a collective sale committee will be subject to higher requisition thresholds. The change is intended to discourage repeated attempts where there is insufficient support and reduce prolonged pressure on owners opposed to a sale.

In addition, the pool of proceeds that may be awarded to objecting owners will be increased. The cap on additional proceeds awarded for each unit will rise to 0.5% of its sale proceeds or $2,000, whichever is higher, from the present 0.25% or $2,000.

Regime extended to some non-strata developments

Another significant amendment will extend the collective sale framework to certain non-strata-titled private residential developments. In such projects, flat owners may hold long leases over their individual units but do not own the underlying land.

A sale currently requires unanimous agreement between the flat owners and the landowner.

Under the proposed framework, such developments will be allowed to proceed through a majority-consent collective sale, subject to safeguards for the landowner.

"There are very few of such developments today," says Dentons' Lee.

Complementary policy changes

The proposed amendments follow two housing policy changes announced on July 28: longer Additional Buyer's Stamp Duty (ABSD) remission timelines for developers undertaking large collective sale redevelopments, and the removal of the 15-month wait-out period for private homeowners seeking to buy non-subsidised HDB resale flats.

Under the revised ABSD rules, collective sale sites yielding between 700 and 1,399 units will have up to six years to complete and sell all their units, up from 5.5 years. Projects yielding at least 1,400 homes will be given up to seven years, although they must sell at least half their units within six years. The revisions apply to residential land acquired from July 29.

"Collectively, these moves look to be complementary," notes PropNex's Fong. "In our view, they work in the same direction by encouraging the renewal of ageing estates, providing a viable route to redevelopment for older developments, and opening an exit valve for private homeowners who wish to right-size into an HDB resale flat."

What happens next

If the Bill is passed, most amendments will apply to ongoing collective sale exercises where the first signature to the collective sale agreement has not been obtained by the date the new rules take effect. Exercises where the first signature has already been secured will generally remain under the existing framework.

For collective sale committees that are still gathering signatures when the new rules take effect, the Bill provides a transition option: these committees may convene a general meeting to decide whether to terminate their existing collective sale agreement and approve terms for a new one under the enhanced regime. Should they choose to do so, they will have seven months from the commencement date to secure the consent threshold required for the new agreement.

These proposed changes could mark a turning point in the collective sale market, says ERA's Chu. Whether it would herald another en bloc wave remains to be seen. The last collective sale boom was in 2017-2018, when 28 deals worth a combined $8.7 billion were completed in 2017, followed by another 38 deals totalling $10.8 billion in 1H2018, before the government imposed cooling measures in July 2018.

"We could potentially see a few more developments testing the collective sale market, but we are not anticipating an en bloc frenzy," says Fong. "Developers remain disciplined, and pricing will continue to be a key determinant of whether deals materialise."

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