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101 GUIDE TO EN BLOC INFORMATION
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En Bloc sales basically refers to collective sales of typically an older development where residents
sell their homes to developers or even the government.
What is EN BLOC?
According to Collins Dictionary, En Bloc refers to a group of people doing something together and at the same time. If a group of people or things are considered En Bloc, they are considered as a group rather than separate.
In Singapore Property context, this commonly refers to the collective sale of a housing development to a common buyer which is most commonly referred to as the property developer. Most of the time in Singapore,
This also translates to the existing property owners being able to let go of their homes at a substantial profit. The sales proceeds are then divided among the owners.
How EN BLOC Starts?
The development does not simply go En Bloc the moment the tenure is up though. There is basically a series of processes that must occur before the development is successfully drafted for sales. Three ways how an En Bloc gets started is outlined below:
- Owners collectively decided to sell their units En Bloc rather than individually which can be quite common for older properties and housings.
- An investment firm such as an asset management fund approach the owner with En Bloc offer.
- Joint property developers or a developer starts extending an En Bloc offer to the property owners.
When any of the above happens, the next step that happens is the formation of a pro-term committee with the aim of getting consensus from rest of the property owners to support the En Bloc sales. Each development selected for En Bloc is privy to only one committee by law. Once the committee is formed, all owners will sign a Collective Sale Agreement (CSA) as a legal indication of their consent.
PERCENTAGE OF CONSENT REQUIRED FOR PROPERTY AGE
- Developments that are less than 10 years old must have 90% overall vote in favour of the sale.
- Developments that are 10 years and older must have at least 80% overall vote in favour of the sale.
The committee must follow the procedures as stated by law.
If majority consent is given, the sale committee must then find a buyer through a public tender exercise unless there is already an interested buyer.
Application to Strata Titles Board
Once the buyer and sale are agreed upon, an application will then be made to the Strata Titles Board (STB) unless there’s a unanimous 100 percent decision to sell. The STB will be the final decision maker on whether the sale goes through.
Owners whom did not consent to the sale but were out voted can now raise objections to STB. The board is required by law to consider these objections before making a final decision regarding the sale. The board will not accept the En Bloc application if any of the protesting owners would suffer a financial loss.
Should STB decide in favour of the sale, disgruntled parties can dispute the decision through the court appeal system.
*Also read Singapore Land Titles (Strata) Act which governs the requirements and process for an En Bloc sale by majority consent.
En Bloc Timeline
If the application is approved by STB (Strata Title Board), En Bloc will take place according to the stipulated timeline.
Generally, what happens in this case is that most owners will be given a certain amount of time to vacate the premises. Sales proceeds payment will be in accordance with the agreed timeline. Since bridging loans offered by the banks is only up to a validity of 6 months, ex-property owners may need to find accommodation before receiving the sales proceeds.
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Date of Exclusive Property Previews and new Property launch will always be frequently updated
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EARLY BIRD DISCOUNT (HOW TO GET A GOOD DEAL)
Due to rising property prices in Singapore, early investors most of the time get the best early bird discount prices during
a Property Preview / Soft Launch. To a lot of buyers, this comes as an added benefit since it helps to offset Additional
Buyer Stamp Duty before Formal Launch where prices will normally be introduced at a premium. As real estate projects
are developed in phases, property developers sometimes even start Marketing projects to Singapore real estate agencies
and buyers before basic approvals are in place. This is what we called soft launch in industry parlance.
How Much Discount Will You Get?
To attract investors, property developers typically offer a 5 to 10 percent early bird discount at soft launch which may sometimes goes as high as 15 percent. Developers use soft launches to start generating cash flow. Usually, they begin by inviting bookings from ex-property owners from En Bloc Sites and Property Agents. The discount is for limited bookings and a short period. In Singapore context, Property Preview/Soft Launches duration typically range for approximately 2 weeks. Soft launches also help property developers to gauge market response before the formal launch.
Senior-level management is also more actively involved during the pre-launch phase, making it easier for buyers to interact with promoters.
When Will New Development Price Increase?
Developers normally raise prices after development begins and the number of buyers increases.
Typically, property developers raise prices based on sales. If the phase that is up for sale gets bookings for 20-30 per cent units in the first few months, this means response is hot and the property developer will increase prices.
When Will New Development Price Increase?
Developers normally raise prices after development begins and the number of buyers increases.
Typically, property developers raise prices based on sales. If the phase that is up for sale gets bookings for 20-30 per cent units in the first few months, this means response is hot and the property developer will increase prices.
SOME FACTORS TO CONSIDER FOR PRICE INCREASE
Price increase is determined by prices of competing projects in the vicinity which is especially true for Singapore being such a small
country. The extent is higher if property sales are brisk or the price difference with a competing project is large. Investors and
Property Owners must remember that price increase is always based on demand, the value perceived by the buyers and
their appetite to pay more for the project’s advanced stages.
Most property developers revise rates after they sell a fixed number of units. Usually, property developers keep starting prices
low to sell 20-25 per cent units in a project on a rate-to-rate basis to start cash flow. They then charge extra
for the remaining units to recover cost or the profit margin lost during the initial sales.
SHOULD YOU BUY AFTER MISSING OUT ON EARLY BIRD DISCOUNT?
Higher prices should not be the sole reason for striking out a property from your list. If the demand for a project is robust, it makes
sense to clinch the deal even after prices have been increased. Another point to note is that risks associated with such
projects are also reduced in later stages.
The end-consumer should not be worried about price increases especially if the aim is to
own a good property for living.
