18 Feb 2011,
Wrong to base property tax on land size
MR GOH Ching Soon pointed out that landed property should be taxed according to the land area that the property occupied ("Make property tax more equitable"; Wednesday).
He gave an example of a bungalow that sits on a 10,000 sq m plot of land versus 40 three-room flats in the same plot area and concluded that the 40 three-room flat dwellers collectively pay a higher amount of tax than a landed property dweller.
However, properties are taxed based on their annual value, which is the estimated amount of rental they would fetch if they were to be rented out. How much rental a property can command depends on many factors, and size is just one of them.
A check on some property websites indicates that the estimated rental for bungalows of land areas up to 10,000 sq m is in the region of $30,000. The median rents of a three-room HDB flat in the fourth quarter of last year was $1,700, which means 40 flats would fetch $68,000 collectively in rental.
Clearly, it is not equitable to peg property tax according to land size.
Tan Yong Sang
Showing posts with label ST Forum. Show all posts
Showing posts with label ST Forum. Show all posts
Monday, February 21, 2011
ST Forum : Govt has legal option to tax based on land size
18 Feb 2011,
Govt has legal option to tax based on land size
I REFER to the letter from Mr Goh Ching Soon ("Make property tax more equitable"; Wednesday).
The current law gives the option to the authorities to tax the land if the situation calls for it.
Our Master Plan controls the plot ratio of lands, so a bungalow plot may not house that many apartments.
The Government introduced a progressive property tax regime which perhaps can address some of the issues raised by Mr Goh.
Patrick Sio
Govt has legal option to tax based on land size
I REFER to the letter from Mr Goh Ching Soon ("Make property tax more equitable"; Wednesday).
The current law gives the option to the authorities to tax the land if the situation calls for it.
Our Master Plan controls the plot ratio of lands, so a bungalow plot may not house that many apartments.
The Government introduced a progressive property tax regime which perhaps can address some of the issues raised by Mr Goh.
Patrick Sio
Thursday, February 17, 2011
ST Forum : Housing woes mar bundles of joy
16 Feb 2011,
Housing woes mar bundles of joy
MY HUSBAND and I welcomed our twin girls last year, and our brood doubled to four children, which forced us to hire a second maid.
Our 75 sq m flat, the smallest four-roomer in our area, could no longer accommodate what was effectively a family of eight, including the domestic help.
So we went through the usual HDB flat-hunting process, applying for build-to-order flats and balance flats, but we could not secure a ballot number.
We then went resale flat hunting, but the high cash-over-valuation and the lower loan amounts offered by the bank because of HDB's new rules meant that we had to fork out at least $80,000.
To meet the requirements of the new rules, we would have had to sell our current flat and move to a rental flat before we could go resale flat hunting. This would entail us moving house twice, with four young children in tow, in order to upgrade to a bigger flat. It proved too hard and we had to abandon the idea.
I then appealed to the HDB to sell us a flat on its list of leftover five-room flats in our vicinity, but it did not reply.
I sought the help of my MP to appeal on my family's behalf. After four letters of appeal, the Housing Board replied that it had only a limited number of returned five-room flats, and our case was not special enough to warrant HDB to look into it.
So while I would love to encourage Singaporeans to have more children, I am forced by my experience to advise them to think twice.
Our parents' generation enjoyed the possibility of upgrading to a bigger HDB flat to accommodate a bigger family.
That avenue does not appear to be available anymore for my husband and me, and our generation.
With limited supply of new flats and competition in the resale market, the HDB's priority is given to first-timers and not upgraders.
If we could have turned back the clock, my husband and I would have stopped at two, because having more children means less space at home.
Lim Yu Hong (Madam)
Housing woes mar bundles of joy
MY HUSBAND and I welcomed our twin girls last year, and our brood doubled to four children, which forced us to hire a second maid.
Our 75 sq m flat, the smallest four-roomer in our area, could no longer accommodate what was effectively a family of eight, including the domestic help.
So we went through the usual HDB flat-hunting process, applying for build-to-order flats and balance flats, but we could not secure a ballot number.
We then went resale flat hunting, but the high cash-over-valuation and the lower loan amounts offered by the bank because of HDB's new rules meant that we had to fork out at least $80,000.
To meet the requirements of the new rules, we would have had to sell our current flat and move to a rental flat before we could go resale flat hunting. This would entail us moving house twice, with four young children in tow, in order to upgrade to a bigger flat. It proved too hard and we had to abandon the idea.
I then appealed to the HDB to sell us a flat on its list of leftover five-room flats in our vicinity, but it did not reply.
I sought the help of my MP to appeal on my family's behalf. After four letters of appeal, the Housing Board replied that it had only a limited number of returned five-room flats, and our case was not special enough to warrant HDB to look into it.
So while I would love to encourage Singaporeans to have more children, I am forced by my experience to advise them to think twice.
Our parents' generation enjoyed the possibility of upgrading to a bigger HDB flat to accommodate a bigger family.
That avenue does not appear to be available anymore for my husband and me, and our generation.
With limited supply of new flats and competition in the resale market, the HDB's priority is given to first-timers and not upgraders.
If we could have turned back the clock, my husband and I would have stopped at two, because having more children means less space at home.
Lim Yu Hong (Madam)
ST Forum : Relook price benchmark for first flats
16 Feb 2011,
Three Budget wishes
Relook price benchmark for first flats
AS THE father of a daughter who will be entering the market for a flat with her fiance for the first time, I wonder if the issue of housing affordability can be addressed if the Housing Board changes the way it sets prices.
Currently, new HDB flat prices are benchmarked against resale transaction prices. This approach worked well in the past because it was aimed at solving a simpler situation reflecting organic population growth and housing upgrading.
Today, while the first-time home market segment remains as robust as it was previously, the resale market has been hammered by a demand shock from a very sizeable segment of permanent residents.
Given that the resale market and first-time segments have different dynamics, and as the prime policy concern is aimed at helping first-time buyers, should we now decouple the benchmarking of new HDB flat prices from resale prices?
There may be alternative ways to set prices that can strongly couple with affordability - for instance, prices can be indexed to a multiple of, say, average starting salaries, or salaries of a percentile of taxpayers in the 25 to 30 age group.
I am not sure if the idea is coloured by my daughter's dilemma, but many of my friends have also confided that they were forced to fork out hefty sums to help their children buy their first flats.
I cannot see how this can be sustainable for future generations when our children's children come knocking.
Chiang Shao Soong
Three Budget wishes
Relook price benchmark for first flats
AS THE father of a daughter who will be entering the market for a flat with her fiance for the first time, I wonder if the issue of housing affordability can be addressed if the Housing Board changes the way it sets prices.
Currently, new HDB flat prices are benchmarked against resale transaction prices. This approach worked well in the past because it was aimed at solving a simpler situation reflecting organic population growth and housing upgrading.
Today, while the first-time home market segment remains as robust as it was previously, the resale market has been hammered by a demand shock from a very sizeable segment of permanent residents.
Given that the resale market and first-time segments have different dynamics, and as the prime policy concern is aimed at helping first-time buyers, should we now decouple the benchmarking of new HDB flat prices from resale prices?
There may be alternative ways to set prices that can strongly couple with affordability - for instance, prices can be indexed to a multiple of, say, average starting salaries, or salaries of a percentile of taxpayers in the 25 to 30 age group.
I am not sure if the idea is coloured by my daughter's dilemma, but many of my friends have also confided that they were forced to fork out hefty sums to help their children buy their first flats.
I cannot see how this can be sustainable for future generations when our children's children come knocking.
Chiang Shao Soong
ST Forum : Make property tax more equitable
16 Feb 2011,
Make property tax more equitable
ACCORDING to Saturday's report ("Housing affordability of key concern"), the general sentiment is that the Government would be dishing out property, utility and service and conservancy rebates, upgrading old estates to increase the supply of HDB flats and providing larger housing grants for lower-income households in this year's Budget.
While these measures would be welcomed, they are just stop-gap measures and do not address the root of the problem: land scarcity in Singapore.
Land scarcity inevitably leads to high property prices as the supply of properties is insufficient to meet demand. Living in landed property is definitely a luxury and to ensure efficient and equitable allocation of resources, luxuries should be priced accordingly to reflect their scarcity. The current property tax policy in Singapore does not adhere to this principle of efficient allocation.
Currently, properties are taxed based on their annual value, which is the estimated amount of rental the properties would fetch if they were to be rented out. At first glance, one might be convinced that the landed property owner is paying a higher property tax and is thus paying a fair price for his luxury. However, the current tax rates fail to separate the concept of property from land.
Take, for example, a bungalow that sits on a 10,000 sq m plot of land could accommodate 40 three-room flats. Thus we can say that for the same size of land, HDB flat dwellers collectively pay a higher amount of tax than a landed property dweller.
Furthermore, the tax places a bigger financial burden on the lower-income group.
A property tax reform where the notions of land and property are separated is due. Property owners should still be taxed based on the estimated rental revenue, but at a lower rate. The balance should come from a land tax, where property owners are taxed based on the size of the plot they occupy and also the share of the plot which they occupy. Thus, the landed property owner would pay tax for the whole of his bungalow, while an HDB flat dweller living in a 20-storey block would pay 1/20 of the land tax. This new tax regime would be more equitable.
Goh Ching Soon
Make property tax more equitable
ACCORDING to Saturday's report ("Housing affordability of key concern"), the general sentiment is that the Government would be dishing out property, utility and service and conservancy rebates, upgrading old estates to increase the supply of HDB flats and providing larger housing grants for lower-income households in this year's Budget.
While these measures would be welcomed, they are just stop-gap measures and do not address the root of the problem: land scarcity in Singapore.
Land scarcity inevitably leads to high property prices as the supply of properties is insufficient to meet demand. Living in landed property is definitely a luxury and to ensure efficient and equitable allocation of resources, luxuries should be priced accordingly to reflect their scarcity. The current property tax policy in Singapore does not adhere to this principle of efficient allocation.
Currently, properties are taxed based on their annual value, which is the estimated amount of rental the properties would fetch if they were to be rented out. At first glance, one might be convinced that the landed property owner is paying a higher property tax and is thus paying a fair price for his luxury. However, the current tax rates fail to separate the concept of property from land.
Take, for example, a bungalow that sits on a 10,000 sq m plot of land could accommodate 40 three-room flats. Thus we can say that for the same size of land, HDB flat dwellers collectively pay a higher amount of tax than a landed property dweller.
Furthermore, the tax places a bigger financial burden on the lower-income group.
A property tax reform where the notions of land and property are separated is due. Property owners should still be taxed based on the estimated rental revenue, but at a lower rate. The balance should come from a land tax, where property owners are taxed based on the size of the plot they occupy and also the share of the plot which they occupy. Thus, the landed property owner would pay tax for the whole of his bungalow, while an HDB flat dweller living in a 20-storey block would pay 1/20 of the land tax. This new tax regime would be more equitable.
Goh Ching Soon
Wednesday, February 16, 2011
ST Forum : En bloc interest: Law requires conflict of interest declaration
15 Feb 2011,
En bloc interest: Law requires conflict of interest declaration
MS GRACE Francis suggested that those interested in running for office in an estate declare non-conflict of interest ("En bloc roadblocks"; last Thursday).
With the amendments to the Land Titles (Strata) Act in 2010, candidates standing for election to the collective sale committee (CSC) and any existing CSC members are required to declare any conflict of interest. This includes any direct or indirect interest in entities such as property developer and property consultant, and the extent of ownership they or persons connected to them (such as immediate family members) have in the strata development.
Ms Francis also commented that there are pro-en bloc residents who join the estate's management corporation (MC) council and oppose attempts to improve the estate.
Under the Building Maintenance and Strata Management Act, the MC council is duty-bound to ensure that the estate is well-maintained and kept in a state of good and serviceable repair.
Should the MC council fail to perform its duties, subsidiary proprietors/owners can seek redress through the Strata Titles Boards or the court to compel the MC council to perform its duties.
Chong Wan Yieng (Ms)
Director
Corporate Communications Division
Ministry of Law
En bloc interest: Law requires conflict of interest declaration
MS GRACE Francis suggested that those interested in running for office in an estate declare non-conflict of interest ("En bloc roadblocks"; last Thursday).
With the amendments to the Land Titles (Strata) Act in 2010, candidates standing for election to the collective sale committee (CSC) and any existing CSC members are required to declare any conflict of interest. This includes any direct or indirect interest in entities such as property developer and property consultant, and the extent of ownership they or persons connected to them (such as immediate family members) have in the strata development.
Ms Francis also commented that there are pro-en bloc residents who join the estate's management corporation (MC) council and oppose attempts to improve the estate.
Under the Building Maintenance and Strata Management Act, the MC council is duty-bound to ensure that the estate is well-maintained and kept in a state of good and serviceable repair.
Should the MC council fail to perform its duties, subsidiary proprietors/owners can seek redress through the Strata Titles Boards or the court to compel the MC council to perform its duties.
Chong Wan Yieng (Ms)
Director
Corporate Communications Division
Ministry of Law
Monday, February 14, 2011
ST Forum : An indicative valuation isn't the final word
12 Feb 2011,
An indicative valuation isn't the final word
TO START with, 'indicative valuation' is a term coined to reflect the indicative market value, which should not be interpreted as the proper valuation of a property ('Indicative valuations are a vital tool' by Ms Monika Fischer; Jan 26).
The aim of valuation or appraisal is to determine the market value of a particular interest in a property at a point in time for a specific purpose. Valuation is an opinion arrived at logically using established techniques and methodologies.
Ms Fischer expressed her concern that she obtained four 'indicative valuations' of the same property ranging from $3.2 million to $4 million.
This is to be expected as an 'indicative valuation' is carried out without any field inspection, detailed research and analysis.
While Ms Fischer finds that 'indicative valuations' are useful, they must not be relied upon for one's property investment decisions. The institute maintains that any form of endorsement by valuers on the figures stated as 'indicative valuations' (before proper valuations are carried out) is not a subscribed valuation practice.
Evelyn Chang (Ms)
Executive Director
Singapore Institute of Surveyors and Valuers
An indicative valuation isn't the final word
TO START with, 'indicative valuation' is a term coined to reflect the indicative market value, which should not be interpreted as the proper valuation of a property ('Indicative valuations are a vital tool' by Ms Monika Fischer; Jan 26).
The aim of valuation or appraisal is to determine the market value of a particular interest in a property at a point in time for a specific purpose. Valuation is an opinion arrived at logically using established techniques and methodologies.
Ms Fischer expressed her concern that she obtained four 'indicative valuations' of the same property ranging from $3.2 million to $4 million.
This is to be expected as an 'indicative valuation' is carried out without any field inspection, detailed research and analysis.
While Ms Fischer finds that 'indicative valuations' are useful, they must not be relied upon for one's property investment decisions. The institute maintains that any form of endorsement by valuers on the figures stated as 'indicative valuations' (before proper valuations are carried out) is not a subscribed valuation practice.
Evelyn Chang (Ms)
Executive Director
Singapore Institute of Surveyors and Valuers
Friday, February 11, 2011
ST Forum : En bloc roadblocks
10 Feb 2011,
WHEN ESTATE UPGRADING IS THWARTED BY...
En bloc roadblocks
IN RECALLING the en bloc saga of Gillman Heights, the chairman of its sales committee stated that the condominium had to be sold en bloc because it was old and falling into disrepair ('No regrets, despite dear memories of Gillman'; Sunday).
This is a view commonly held among pro-en bloc residents, and it should be addressed. If an estate is old, it can be upgraded using the sinking fund, or through a special one-time contribution by residents. Such upgrading is far cheaper than the potential loss for owners from a collective sale.
As many former Gillman Heights residents quoted in the special report ('For better or for worse'; Sunday) ended up paying more for their new homes - some in the hundreds of thousands of dollars - those who live in old estates worth preserving should learn from such experiences.
There are pro-en bloc residents who often obstruct the improvement of an estate because they wish to profit from an en bloc sale. They prefer to see the estate fall into disrepair so they can cite the high costs of replacing old pipes, water tanks, old tiles and lobby areas subsequently. Such en bloc proponents join management councils and oppose attempts to improve the estate.
While many may argue that the decision on such an issue is best left to subsidiary proprietors, the reality is that few are keen on running for office in any estate, and fewer still are willing to argue with loud neighbours who harbour an agenda.
So, this issue must be solved by a built-in safeguard, which should require residents who wish to run for office to declare that there is no conflict of interest. There should be an automatic opt-out clause for those who harbour an interest in organising an en bloc sale.
There must be a law spelling out a conflict of interest to prevent residents who intend to lobby for an en bloc sale from sitting on a management council or any other official body of the estate that may influence the en bloc process.
A management council, by definition, must work towards the good of preserving, repairing and enhancing the estate and if this is so, pro-en bloc residents should be ineligible for office.
Grace Francis (Ms)
WHEN ESTATE UPGRADING IS THWARTED BY...
En bloc roadblocks
IN RECALLING the en bloc saga of Gillman Heights, the chairman of its sales committee stated that the condominium had to be sold en bloc because it was old and falling into disrepair ('No regrets, despite dear memories of Gillman'; Sunday).
This is a view commonly held among pro-en bloc residents, and it should be addressed. If an estate is old, it can be upgraded using the sinking fund, or through a special one-time contribution by residents. Such upgrading is far cheaper than the potential loss for owners from a collective sale.
As many former Gillman Heights residents quoted in the special report ('For better or for worse'; Sunday) ended up paying more for their new homes - some in the hundreds of thousands of dollars - those who live in old estates worth preserving should learn from such experiences.
There are pro-en bloc residents who often obstruct the improvement of an estate because they wish to profit from an en bloc sale. They prefer to see the estate fall into disrepair so they can cite the high costs of replacing old pipes, water tanks, old tiles and lobby areas subsequently. Such en bloc proponents join management councils and oppose attempts to improve the estate.
While many may argue that the decision on such an issue is best left to subsidiary proprietors, the reality is that few are keen on running for office in any estate, and fewer still are willing to argue with loud neighbours who harbour an agenda.
So, this issue must be solved by a built-in safeguard, which should require residents who wish to run for office to declare that there is no conflict of interest. There should be an automatic opt-out clause for those who harbour an interest in organising an en bloc sale.
There must be a law spelling out a conflict of interest to prevent residents who intend to lobby for an en bloc sale from sitting on a management council or any other official body of the estate that may influence the en bloc process.
A management council, by definition, must work towards the good of preserving, repairing and enhancing the estate and if this is so, pro-en bloc residents should be ineligible for office.
Grace Francis (Ms)
ST Forum : Why Iras should review formula for property tax
09 Feb 2011,
Why Iras should review formula for property tax
MR PAUL Chan ('Adopt fairer tax system for owner-occupiers'; Jan 23) is right in advocating a new and fairer formula for property tax.
The current method of tagging market value to rental value is grossly unfair to owner-occupiers, and my personal experience is a good example.
When we experienced the worst year of economic growth in 2009, the property tax went down by only 23.5 per cent from that in the preceding, pre-crisis year.
Yet the same tax shot up by a whopping 98 per cent last year, which meant the property tax paid in 2010 was 50 per cent higher than that in the 2008 pre-crisis year.
And the economy has not even recovered to pre-crisis levels.
There were also four adjustments made between 2007 and last year, three of which were increases and one, a decrease.
Is there a need for such frequent adjustments in tax rates?
All the above reinforces the view that when times are bad, the Inland Revenue Authority of Singapore (Iras) returns less than it should, but when times are good, it takes back a lot more than it deserves.
The efforts by Iras to introduce adjustments and inform taxpayers could have been saved if a different formula is used.
As an owner-occupier, I do not lose or benefit from economic changes or changes in rental value, so why is my property tax not reflecting that?
Thian Tai Chew
Why Iras should review formula for property tax
MR PAUL Chan ('Adopt fairer tax system for owner-occupiers'; Jan 23) is right in advocating a new and fairer formula for property tax.
The current method of tagging market value to rental value is grossly unfair to owner-occupiers, and my personal experience is a good example.
When we experienced the worst year of economic growth in 2009, the property tax went down by only 23.5 per cent from that in the preceding, pre-crisis year.
Yet the same tax shot up by a whopping 98 per cent last year, which meant the property tax paid in 2010 was 50 per cent higher than that in the 2008 pre-crisis year.
And the economy has not even recovered to pre-crisis levels.
There were also four adjustments made between 2007 and last year, three of which were increases and one, a decrease.
Is there a need for such frequent adjustments in tax rates?
All the above reinforces the view that when times are bad, the Inland Revenue Authority of Singapore (Iras) returns less than it should, but when times are good, it takes back a lot more than it deserves.
The efforts by Iras to introduce adjustments and inform taxpayers could have been saved if a different formula is used.
As an owner-occupier, I do not lose or benefit from economic changes or changes in rental value, so why is my property tax not reflecting that?
Thian Tai Chew
Monday, February 7, 2011
ST Forum : New measures help more first-time buyers to own flats
26 JAN 2011,
New measures help more first-time buyers to own flats
THE measures introduced in August last year and this month aim to stabilise the property market ('Genuine buyer's problems' by Mr Adam Reutens-Tan; Jan 18).
Together with the increased supply of housing units, they help more first-time buyers to own their homes.
The lower loan-to-value (LTV) limit of 60 per cent is meant to encourage financial prudence and reduce non- urgent housing demand.
Only buyers who take bank loans to buy a second property, while they have an existing loan for their current property, are affected.
Households earning up to $8,000 that wish to upgrade or downsize to another flat are not affected if they are eligible for an HDB concessionary loan. They may apply for an HDB loan of up to 90 per cent LTV, subject to credit assessment.
We urge flat sellers to carry out financial planning and consider their housing arrangements before committing to buy another property.
If they do not have sufficient cash or Central Provident Fund savings to pay the down payment for their next property due to the lower LTV limit, they should reconsider their decision to avoid overstretching themselves.
Alternatively, they can discharge their outstanding housing loan or sell their existing property before buying another.
Otherwise, when interest rates eventually rise, those who have over-extended themselves in property purchases may be severely affected.
Although the measures may inconvenience some home owners, they will help foster a more stable and sustainable property market, which will be beneficial to all stakeholders in the long run.
HDB will also continue to monitor the market closely to ensure that there is enough flat supply to meet demand.
Chan-Wong Jee Choo Lily (Mrs)
Deputy Director (Policy & Property)
Housing & Development Board
New measures help more first-time buyers to own flats
THE measures introduced in August last year and this month aim to stabilise the property market ('Genuine buyer's problems' by Mr Adam Reutens-Tan; Jan 18).
Together with the increased supply of housing units, they help more first-time buyers to own their homes.
The lower loan-to-value (LTV) limit of 60 per cent is meant to encourage financial prudence and reduce non- urgent housing demand.
Only buyers who take bank loans to buy a second property, while they have an existing loan for their current property, are affected.
Households earning up to $8,000 that wish to upgrade or downsize to another flat are not affected if they are eligible for an HDB concessionary loan. They may apply for an HDB loan of up to 90 per cent LTV, subject to credit assessment.
We urge flat sellers to carry out financial planning and consider their housing arrangements before committing to buy another property.
If they do not have sufficient cash or Central Provident Fund savings to pay the down payment for their next property due to the lower LTV limit, they should reconsider their decision to avoid overstretching themselves.
Alternatively, they can discharge their outstanding housing loan or sell their existing property before buying another.
Otherwise, when interest rates eventually rise, those who have over-extended themselves in property purchases may be severely affected.
Although the measures may inconvenience some home owners, they will help foster a more stable and sustainable property market, which will be beneficial to all stakeholders in the long run.
HDB will also continue to monitor the market closely to ensure that there is enough flat supply to meet demand.
Chan-Wong Jee Choo Lily (Mrs)
Deputy Director (Policy & Property)
Housing & Development Board
ST Forum : Indicative valuations are a vital tool
26 JAN 2011,
Indicative valuations are a vital tool
INDICATIVE valuations are a daily part of the property business ('Don't rely on indicative valuations' by the Singapore Institute of Surveyors and Valuers; Monday).
For every sale or purchase, clients want to know the 'bank valuation'. Buyers need the bank to lend them money. Would a purchaser's bank be bound by a professional valuation done by the Singapore Institute of Surveyors and Valuers, or would the bank still send their valuers, who might arrive at a different value?
If the latter, what is the point of getting a professional valuation from a valuer and not through a bank?
I am in the real estate business and I always ask a few bankers from different banks for an indicative valuation of a unit. The most blatant answer for a unit valuation in an established condo was a range of $3.2 million to $4 million involving four different valuations from three banks. So where is the real value?
It was a four-year-old condo with all parameters known to the bankers and their valuers.
A desktop valuation should be very much possible in a case like this. Units like this have been traded before, all figures are there to be seen by agents, so I assume the valuers have similar tools.
The indicative valuations for condo apartments that I receive from bankers (who get them from their valuers) usually differ by between $50,000 and $200,000.
Monika Fischer (Ms)
Indicative valuations are a vital tool
INDICATIVE valuations are a daily part of the property business ('Don't rely on indicative valuations' by the Singapore Institute of Surveyors and Valuers; Monday).
For every sale or purchase, clients want to know the 'bank valuation'. Buyers need the bank to lend them money. Would a purchaser's bank be bound by a professional valuation done by the Singapore Institute of Surveyors and Valuers, or would the bank still send their valuers, who might arrive at a different value?
If the latter, what is the point of getting a professional valuation from a valuer and not through a bank?
I am in the real estate business and I always ask a few bankers from different banks for an indicative valuation of a unit. The most blatant answer for a unit valuation in an established condo was a range of $3.2 million to $4 million involving four different valuations from three banks. So where is the real value?
It was a four-year-old condo with all parameters known to the bankers and their valuers.
A desktop valuation should be very much possible in a case like this. Units like this have been traded before, all figures are there to be seen by agents, so I assume the valuers have similar tools.
The indicative valuations for condo apartments that I receive from bankers (who get them from their valuers) usually differ by between $50,000 and $200,000.
Monika Fischer (Ms)
ST Forum : Let singles own HDB flats at 25
24 JAN 2011,
Let singles own HDB flats at 25
WHILE it is gratifying to read that the Housing Board is reviewing the rule governing co-sharing of flats by siblings ('HDB to review rule on siblings'; Jan 18), the HDB should also lower the age for flat ownership by single citizens by a decade to 25 years of age.
As Singaporeans adopt a more urbanised Western attitude, it would make sense to accommodate their obvious desire to live on their own.
Such a move should not be seen as a lack of filial concern for their parents. My two children do not live with me, yet we have healthy relationships.
Staying out enables young people to grow up and be more independent. It prepares them to be better partners and parents in the future.
Many parents in our Asian culture still mother their adult children and make decisions for them. Many even impose curfew hours for their single adult children when the latter are well into their early 30s.
We can encourage these young single people to get married by providing generous incentives when they upgrade their flats to get married.
Young adult citizens at an early stage of their careers form a large proportion of the group of Singaporeans who face the middle-income squeeze and they would certainly welcome assistance, given the stiff property prices.
Dr Lau Geok Theng
Let singles own HDB flats at 25
WHILE it is gratifying to read that the Housing Board is reviewing the rule governing co-sharing of flats by siblings ('HDB to review rule on siblings'; Jan 18), the HDB should also lower the age for flat ownership by single citizens by a decade to 25 years of age.
As Singaporeans adopt a more urbanised Western attitude, it would make sense to accommodate their obvious desire to live on their own.
Such a move should not be seen as a lack of filial concern for their parents. My two children do not live with me, yet we have healthy relationships.
Staying out enables young people to grow up and be more independent. It prepares them to be better partners and parents in the future.
Many parents in our Asian culture still mother their adult children and make decisions for them. Many even impose curfew hours for their single adult children when the latter are well into their early 30s.
We can encourage these young single people to get married by providing generous incentives when they upgrade their flats to get married.
Young adult citizens at an early stage of their careers form a large proportion of the group of Singaporeans who face the middle-income squeeze and they would certainly welcome assistance, given the stiff property prices.
Dr Lau Geok Theng
ST Forum : Don't rely on indicative valuations
24 JAN 2011,
Don't rely on indicative valuations
VALUATION is indeed based on detailed research and analysis and not on sentiments (Ms Yvonne Lee-Lek Siew Ling, 'Same bank, same property but... Valuations differed by $200,000.'; last Tuesday).
Indicative valuations provided via agents or banks (if obtained from valuers) are rough estimates as they are given without field inspections, in-depth analysis and data.
They should not be relied upon when making decisions on property investment or divestment.
We caution against relying on such indications, and urge buyers or sellers to obtain proper valuation reports from licensed appraisers if they need to ascertain the market values of their properties.
They will thus avoid getting a wide $200,000 difference in estimate of the same property given by agents or banks.
Desktop valuations are not a subscribed practice and should not be treated as proper valuations.
Ms Lee cited her experience about receiving assurances from agents and bank officers that they could offer valuations to match the asking price.
We seek Ms Lee's assistance to provide us with more details to help us address the problem.
Evelyn Chang (Ms)
Executive Director
Singapore Institute of Surveyors and Valuers
Don't rely on indicative valuations
VALUATION is indeed based on detailed research and analysis and not on sentiments (Ms Yvonne Lee-Lek Siew Ling, 'Same bank, same property but... Valuations differed by $200,000.'; last Tuesday).
Indicative valuations provided via agents or banks (if obtained from valuers) are rough estimates as they are given without field inspections, in-depth analysis and data.
They should not be relied upon when making decisions on property investment or divestment.
We caution against relying on such indications, and urge buyers or sellers to obtain proper valuation reports from licensed appraisers if they need to ascertain the market values of their properties.
They will thus avoid getting a wide $200,000 difference in estimate of the same property given by agents or banks.
Desktop valuations are not a subscribed practice and should not be treated as proper valuations.
Ms Lee cited her experience about receiving assurances from agents and bank officers that they could offer valuations to match the asking price.
We seek Ms Lee's assistance to provide us with more details to help us address the problem.
Evelyn Chang (Ms)
Executive Director
Singapore Institute of Surveyors and Valuers
Friday, January 28, 2011
ST Forum : Real estate agents need protection too
20 JAN 2011,
Real estate agents need protection too
I APPLAUD the Government's efforts to clean up the real estate industry with the formation of the Council for Estate Agencies. At the same time, I also sympathise with the realtors.
We need to keep in mind that unethical dealings can come from both buyers and sellers. I have been in the real estate business since 1992 and have experienced all sorts of unethical clients.
Some move out of their property and disappear upon completion of the sale without paying commission to the agency. Others have made unreasonable deductions or even refuse to pay the commission.
Bringing unethical clients to court is a long, tedious and costly process. Realtors seem to be at the mercy of clients, especially when they refuse to pay or make unreasonable deductions after a transaction has been completed. Is there anybody we can lodge a complaint with without having to drag the clients to court?
Perhaps we should introduce the practice of having clients pay 50 per cent of the commission when the 'option to purchase' is signed, with the remainder to be paid upon completion of the sale.
Until there is a proper benchmark procedure to deal with such clients, we will not see less of them any time soon.
Alexs Chua
Real estate agents need protection too
I APPLAUD the Government's efforts to clean up the real estate industry with the formation of the Council for Estate Agencies. At the same time, I also sympathise with the realtors.
We need to keep in mind that unethical dealings can come from both buyers and sellers. I have been in the real estate business since 1992 and have experienced all sorts of unethical clients.
Some move out of their property and disappear upon completion of the sale without paying commission to the agency. Others have made unreasonable deductions or even refuse to pay the commission.
Bringing unethical clients to court is a long, tedious and costly process. Realtors seem to be at the mercy of clients, especially when they refuse to pay or make unreasonable deductions after a transaction has been completed. Is there anybody we can lodge a complaint with without having to drag the clients to court?
Perhaps we should introduce the practice of having clients pay 50 per cent of the commission when the 'option to purchase' is signed, with the remainder to be paid upon completion of the sale.
Until there is a proper benchmark procedure to deal with such clients, we will not see less of them any time soon.
Alexs Chua
ST Forum : Uncertainties buyers must navigate
20 JAN 2011,
NEW PROPERTY MEASURES
Uncertainties buyers must navigate
THE measures aimed at cooling the property market have introduced an element of uncertainty for home buyers ('New measures to curb property speculation'; last Friday).
The measures will increase a seller's stamp duty, payable for up to four years from the date of purchase of the property. This will effectively reduce the amount available to the owner to settle the bank loan and have a surplus.
Although the Government may consider waiving the stamp duty in hardship cases, especially if they are health-related, a waiver is unlikely if a forced sale is precipitated by the owner's loss of job, inability to rent or increased interest costs.
For example, an owner who must sell his property in the first year of purchase must deduct the seller's stamp duty of 16 per cent from the proceeds. If he had obtained a loan of 80 per cent of the purchase price, he would have only enough to pay off the housing loan. His equity would be almost wiped out.
The new rules also imply another aspect to an owner's uncertainty. A loan-to-valuation ratio of 80 per cent does not mean the bank has a 20 per cent security margin during the first four years of the loan.
The seller's stamp duty will force banks to live with a razor-thin margin of 4 per cent for the first year, and the hope that property prices remain buoyant enough to improve the margin over four years.
But such an uncomfortable margin may affect a bank's willingness to lend as it will not enjoy the usual security buffer, as it did previously in the initial four-year loan period.
Currently, the valuation of properties is very close to the purchase price, but banks may well turn conservative if prices are expected to soften.
Apart from a lower valuation, banks could insist on a bigger margin to preserve their security margin.
Banks could also become stricter and more cautious in approving borrowers, to avoid potential default during the initial loan period. So marginal borrowers could be weeded out or be unable to obtain a loan at the desired amount.
The net result: Buyers may be asked to fork out more cash upfront to make up for the difference in valuation and purchase price and to enhance the bank's security margin.
So it is vital for buyers to do their sums scrupulously to ascertain their debt-servicing ability. They should seek a firm commitment from the bank on the loan quantum, to avoid nasty surprises arising from the valuation of the property offered as security and the margin of financing.
Kuo How Nam
President
Credit Counselling Singapore
NEW PROPERTY MEASURES
Uncertainties buyers must navigate
THE measures aimed at cooling the property market have introduced an element of uncertainty for home buyers ('New measures to curb property speculation'; last Friday).
The measures will increase a seller's stamp duty, payable for up to four years from the date of purchase of the property. This will effectively reduce the amount available to the owner to settle the bank loan and have a surplus.
Although the Government may consider waiving the stamp duty in hardship cases, especially if they are health-related, a waiver is unlikely if a forced sale is precipitated by the owner's loss of job, inability to rent or increased interest costs.
For example, an owner who must sell his property in the first year of purchase must deduct the seller's stamp duty of 16 per cent from the proceeds. If he had obtained a loan of 80 per cent of the purchase price, he would have only enough to pay off the housing loan. His equity would be almost wiped out.
The new rules also imply another aspect to an owner's uncertainty. A loan-to-valuation ratio of 80 per cent does not mean the bank has a 20 per cent security margin during the first four years of the loan.
The seller's stamp duty will force banks to live with a razor-thin margin of 4 per cent for the first year, and the hope that property prices remain buoyant enough to improve the margin over four years.
But such an uncomfortable margin may affect a bank's willingness to lend as it will not enjoy the usual security buffer, as it did previously in the initial four-year loan period.
Currently, the valuation of properties is very close to the purchase price, but banks may well turn conservative if prices are expected to soften.
Apart from a lower valuation, banks could insist on a bigger margin to preserve their security margin.
Banks could also become stricter and more cautious in approving borrowers, to avoid potential default during the initial loan period. So marginal borrowers could be weeded out or be unable to obtain a loan at the desired amount.
The net result: Buyers may be asked to fork out more cash upfront to make up for the difference in valuation and purchase price and to enhance the bank's security margin.
So it is vital for buyers to do their sums scrupulously to ascertain their debt-servicing ability. They should seek a firm commitment from the bank on the loan quantum, to avoid nasty surprises arising from the valuation of the property offered as security and the margin of financing.
Kuo How Nam
President
Credit Counselling Singapore
ST Forum : Genuine buyer's problems
18 JAN 2011,
NEW PROPERTY MEASURES
Genuine buyer's problems
WHILE I appreciate the rationale for implementing additional curbs to speculative investments, thereby freeing more supply for genuine home buyers, the reduced loan-to-value limit of 60 per cent will further impede genuine upgraders who need a larger HDB flat or move into private property (' New measures to curb property speculation'; last Friday).
If the Government's aim is to increase public housing supply for first-time owners, that would come from more build-to-order (BTO) flats as well as facilitating more vacant three-room and four-room resale flats, which would be more affordable for younger couples.
More BTO flats are being built. But for HDB dwellers who need a larger flat or aspire to make the leap to owning private property, the new 70 per cent loan-to-value limit imposed last August was already an insurmountable financial obstacle.
The new limit will only force more families to stay put in their smaller flats, withholding supply. The reason: Families cannot get a second bank loan at 80 per cent unless they have HDB's approval letter (which comes within two weeks from the first appointment of their flat's sale) and a document from the bank holding their existing mortgage, which can be discharged only upon a sale.
If upgraders take this route, they must find temporary shelter for about two months, and move house twice, which will add to their costs.
The alternative, to ensure a new home upon vacating their old one, is to take that second mortgage at a 60 per cent loan-to-value, which will mean forking out more cash upfront.
Many lower-to-middle income HDB dwellers simply do not have that kind of spare cash, even after factoring in their Central Provident Fund money after the sale of their flat.
The Government should impose a staggered loan-to-value ratio for differing household incomes.
For instance, maintain the 80 per cent ratio for households earning a monthly total of $4,000 or less, 70 per cent for households earning $4,001 to $6,000, and 60 per cent from $6,000 up. Staggering the ratio will not penalise the lower-income groups together with the cash-rich investor.
Adam Reutens-Tan
NEW PROPERTY MEASURES
Genuine buyer's problems
WHILE I appreciate the rationale for implementing additional curbs to speculative investments, thereby freeing more supply for genuine home buyers, the reduced loan-to-value limit of 60 per cent will further impede genuine upgraders who need a larger HDB flat or move into private property (' New measures to curb property speculation'; last Friday).
If the Government's aim is to increase public housing supply for first-time owners, that would come from more build-to-order (BTO) flats as well as facilitating more vacant three-room and four-room resale flats, which would be more affordable for younger couples.
More BTO flats are being built. But for HDB dwellers who need a larger flat or aspire to make the leap to owning private property, the new 70 per cent loan-to-value limit imposed last August was already an insurmountable financial obstacle.
The new limit will only force more families to stay put in their smaller flats, withholding supply. The reason: Families cannot get a second bank loan at 80 per cent unless they have HDB's approval letter (which comes within two weeks from the first appointment of their flat's sale) and a document from the bank holding their existing mortgage, which can be discharged only upon a sale.
If upgraders take this route, they must find temporary shelter for about two months, and move house twice, which will add to their costs.
The alternative, to ensure a new home upon vacating their old one, is to take that second mortgage at a 60 per cent loan-to-value, which will mean forking out more cash upfront.
Many lower-to-middle income HDB dwellers simply do not have that kind of spare cash, even after factoring in their Central Provident Fund money after the sale of their flat.
The Government should impose a staggered loan-to-value ratio for differing household incomes.
For instance, maintain the 80 per cent ratio for households earning a monthly total of $4,000 or less, 70 per cent for households earning $4,001 to $6,000, and 60 per cent from $6,000 up. Staggering the ratio will not penalise the lower-income groups together with the cash-rich investor.
Adam Reutens-Tan
ST Forum : Same bank, same property but...
Jan 18, 2011
Same bank, same property but...
'Valuations differed by $200,000. Shouldn't valuations be based on fundamentals, rather than sentiment?'
MS YVONNE LEE-LEK SIEW LING: 'There is a need to legislate how desktop valuations are produced ('New measures to curb property speculation'; last Friday) as buyers and sellers rely on them to negotiate a price. Recently, I received two valuations from the same bank for the same property which differed by $200,000, or 15 per cent of the asking price. What was more disconcerting was that I kept receiving assurances from agents and bank officers that they could offer valuations to match the asking price. Shouldn't property valuations be based on fundamentals, rather than sentiment?'
Singaporean-friendly
'Restrict properties selling for below $1.2 million to citizens.'
MR ALBERT TYE: 'I applaud the Government's decisive move although there may be a loophole ('New measures to curb property speculation'; last Friday). The current market is flushed with liquidity and there is nothing to stop the money from flowing into the property market if prices fall. Shouldn't some restriction be placed on foreigners who have deep pockets to take advantage of the situation? Perhaps the Government could restrict properties selling for below $1.5 million or even $1.2 million to citizens and perhaps permanent residents. Otherwise, the current antidote of measures may be rendered ineffective as well.'
Same bank, same property but...
'Valuations differed by $200,000. Shouldn't valuations be based on fundamentals, rather than sentiment?'
MS YVONNE LEE-LEK SIEW LING: 'There is a need to legislate how desktop valuations are produced ('New measures to curb property speculation'; last Friday) as buyers and sellers rely on them to negotiate a price. Recently, I received two valuations from the same bank for the same property which differed by $200,000, or 15 per cent of the asking price. What was more disconcerting was that I kept receiving assurances from agents and bank officers that they could offer valuations to match the asking price. Shouldn't property valuations be based on fundamentals, rather than sentiment?'
Singaporean-friendly
'Restrict properties selling for below $1.2 million to citizens.'
MR ALBERT TYE: 'I applaud the Government's decisive move although there may be a loophole ('New measures to curb property speculation'; last Friday). The current market is flushed with liquidity and there is nothing to stop the money from flowing into the property market if prices fall. Shouldn't some restriction be placed on foreigners who have deep pockets to take advantage of the situation? Perhaps the Government could restrict properties selling for below $1.5 million or even $1.2 million to citizens and perhaps permanent residents. Otherwise, the current antidote of measures may be rendered ineffective as well.'
Monday, October 4, 2010
ST Forum : Hard to spot home loan changes
Oct 2, 2010
Hard to spot home loan changes
IN MARCH 2004, I refinanced my HDB home loan with HSBC's Smartmortage package, which offered an interest offset feature with a linked current account.
I meticulously checked the loan terms with the bank officer and asked her why the agreement gave the bank a unilateral right to vary any condition, thereby defeating the purpose of signing a contract. Her reply was that it was industry practice.
Early last month, I wrote in to redeem the loan as I had sold my house. Later, I was puzzled to see interest debit costs charged to my account in my latest statement.
The bank replied that there was a standard term that allowed interest to be levied during the three-month redemption notice. I could not find such a condition in my loan agreement. On Wednesday, HSBC indicated where it was: in a few sentences included in several monthly statements in 2008, stating an amendment.
When a customer receives a monthly statement, his focus will be on checking the accuracy of the figures. Now he must check for amendments to the loan agreement as well.
Signing a long-term loan, such as a home loan, with a bank seems like signing a blank sheet of paper where the bank can change the conditions unilaterally at any time.
Mohamed Rafiq Hamjah
Hard to spot home loan changes
IN MARCH 2004, I refinanced my HDB home loan with HSBC's Smartmortage package, which offered an interest offset feature with a linked current account.
I meticulously checked the loan terms with the bank officer and asked her why the agreement gave the bank a unilateral right to vary any condition, thereby defeating the purpose of signing a contract. Her reply was that it was industry practice.
Early last month, I wrote in to redeem the loan as I had sold my house. Later, I was puzzled to see interest debit costs charged to my account in my latest statement.
The bank replied that there was a standard term that allowed interest to be levied during the three-month redemption notice. I could not find such a condition in my loan agreement. On Wednesday, HSBC indicated where it was: in a few sentences included in several monthly statements in 2008, stating an amendment.
When a customer receives a monthly statement, his focus will be on checking the accuracy of the figures. Now he must check for amendments to the loan agreement as well.
Signing a long-term loan, such as a home loan, with a bank seems like signing a blank sheet of paper where the bank can change the conditions unilaterally at any time.
Mohamed Rafiq Hamjah
ST Forum : Market will fix commission rates
Oct 2, 2010
Market will fix commission rates
WE THANK Miss Koh Wee Leng for her feedback ('Confused over stand on fixed commission rates'; Sept 18). The Council for Estate Agencies, when it is set up, will not prescribe commission rates, but will instead allow them to be determined by market forces. Estate agents will then have the right incentive to price their services competitively, and consumers can negotiate the best rates.
In general, the Competition Act prohibits market players from fixing prices. The Competition Commission of Singapore ruled earlier that the Institute of Estate Agents' guidelines for professional fees, commission for estate agents and salespersons would likely infringe the Act, and advised that estate agents and salespersons set their fees and fee structures independently.
Although the guidelines are non-binding, they may still discourage price competition below the recommended rate and facilitate price coordination. More efficient estate agents, who can charge lower rates, would then have little incentive to do so. The institute voluntarily withdrew the guidelines shortly after the ruling.
Consumers should compare fees and services before deciding on their choice of agent and negotiate fees and terms to facilitate and encourage competition. To let consumers make informed choices, agents can provide a breakdown of their fees vis-a-vis the level of services and options they provide.
Cheryl Lim (Ms)
Deputy Director
(Regulatory Control)
Ministry of National Development
Market will fix commission rates
WE THANK Miss Koh Wee Leng for her feedback ('Confused over stand on fixed commission rates'; Sept 18). The Council for Estate Agencies, when it is set up, will not prescribe commission rates, but will instead allow them to be determined by market forces. Estate agents will then have the right incentive to price their services competitively, and consumers can negotiate the best rates.
In general, the Competition Act prohibits market players from fixing prices. The Competition Commission of Singapore ruled earlier that the Institute of Estate Agents' guidelines for professional fees, commission for estate agents and salespersons would likely infringe the Act, and advised that estate agents and salespersons set their fees and fee structures independently.
Although the guidelines are non-binding, they may still discourage price competition below the recommended rate and facilitate price coordination. More efficient estate agents, who can charge lower rates, would then have little incentive to do so. The institute voluntarily withdrew the guidelines shortly after the ruling.
Consumers should compare fees and services before deciding on their choice of agent and negotiate fees and terms to facilitate and encourage competition. To let consumers make informed choices, agents can provide a breakdown of their fees vis-a-vis the level of services and options they provide.
Cheryl Lim (Ms)
Deputy Director
(Regulatory Control)
Ministry of National Development
Tuesday, September 28, 2010
ST Forum : The other story - rogue clients
Sep 28, 2010
The other story - rogue clients
I REFER to the article ("Do your checks before signing the cheques"; Aug 22) and Miss Koh Wee Leng's letter on Sunday ("It can be tough for property agents").
The reality of the business is that it is far from easy to be a successful property agent. Besides needing the skills and tenacity to edge out competition in this highly competitive industry, there are also rogue clients to deal with.
We often hear complaints about rogue agents, yet the total number of complaints is only about 1 to 2 per cent, based on the Consumers Association of Singapore's complaints against the number of HDB transactions.
What people do not often hear about are the clients who make life even more difficult for agents. Those who refuse to pay commission after the deal, not just those who delay payment.
Those who try to renegotiate the commission after the transaction is complete.
Those who engage multiple agents to begin multiple deals, none of which can, therefore, be completed.
Those who take advantage of agents by asking for personal loans to settle their outstanding service and conservancy charges so their flat can be sold, and so on.
The Ministry of National Development is regulating the real estate industry, and rightly so. If only there was a way to regulate those rogue consumers as well.
Adam Tan
Corporate Communications Manager
PropNex Realty
The other story - rogue clients
I REFER to the article ("Do your checks before signing the cheques"; Aug 22) and Miss Koh Wee Leng's letter on Sunday ("It can be tough for property agents").
The reality of the business is that it is far from easy to be a successful property agent. Besides needing the skills and tenacity to edge out competition in this highly competitive industry, there are also rogue clients to deal with.
We often hear complaints about rogue agents, yet the total number of complaints is only about 1 to 2 per cent, based on the Consumers Association of Singapore's complaints against the number of HDB transactions.
What people do not often hear about are the clients who make life even more difficult for agents. Those who refuse to pay commission after the deal, not just those who delay payment.
Those who try to renegotiate the commission after the transaction is complete.
Those who engage multiple agents to begin multiple deals, none of which can, therefore, be completed.
Those who take advantage of agents by asking for personal loans to settle their outstanding service and conservancy charges so their flat can be sold, and so on.
The Ministry of National Development is regulating the real estate industry, and rightly so. If only there was a way to regulate those rogue consumers as well.
Adam Tan
Corporate Communications Manager
PropNex Realty
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In business for over 30 years, success in providing real estate investment opportunities to clients around the world is a simple, yet effective separation of roles and responsibilites. The four pillars of strength guide the land from the research and acquisition, through to the exit, including the distribution of proceeds to our clients ......
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To know more how this is really work for you and your clients....
Please contact me Terence Tay @ (+65) 9387-5896 or email : terencetay.kh@gmail.com
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