What Makes a Successful En Bloc Sale?

Definition of an en bloc sale

En bloc sale, also known as collective sale, is a sale of two or more property units to a single common purchaser.

What is a successful En Bloc Sales?

Under the Strata Titles (Strata) Act, to achieve a successful collective sale exercise:

• Developments less than 10 years old will require 90% consent by share value and strata area
• Developments older than 10 years old will require 80% by share value and strata area

The age of a development is determined from the date when the development obtains its temporary occupation permit (TOP), or from the date of the Certificate of Statutory Completion (CSC) if no TOP was issued.

General Procedure of the En bloc Sale Process

What if an En Bloc fails?

Owners of developments which had failed in the earlier round of collective sales in Singapore need to wait 2 years before re-starting the whole process by obtaining a higher threshold of 50% of share values or 50% of the subsidiary proprietors’ votes before calling for an Extra-ordinary General Meeting (EOGM).

Considerations when determining the reserve price for an En Bloc

• Plot Ratio utilization of the development
• Age of development
• Development Charge for land use intensification which the developer has to pay
• Surrounding estate and developments’ price trend
• URA masterplan and future potential developments of that area
• Construction cost, labour and ability of developers to price the properties

Is it always good to go through an En Bloc?

Pros

• The proceeds from a collective sale can be huge and handy for the next property purchase or investment
• Savings of costly maintenance upkeep; Funds can be used for higher yielding assets
• Funds can be used for retirement planning
• More efficient land use due to utilization of plot ratio [e.g. more units can be built on more Gross Floor Area (GFA)]

Cons

• Memories and nostalgia of living in one’s family home
• New homeowners of the En Bloc development have to bear the costs of additional stamp duties for selling their units prematurely
• Potential increase in land prices due to owners asking for higher payout and reserve price. This situation will bring up the prices of the surround lands, developments and upcoming new launches
• Stress and chore of finding a similar replacement home

An En Bloc sale can be a blessing or a pain for some homeowners depending on their situation and circumstances. It could be a financial windfall for some or an infringement of private property rights to others.

Nevertheless, instead of hoping for a development to get En Bloc, property purchase and investment should be one based on research and solid fundamentals. Anything else should be seen as a bonus.

Keen to find out more? Contact me for a non obligatory discussion on your plans and options.