5 Ways the En-Bloc Process in Singapore is Still Unfair

Not everyone enjoys having to find a new house and move out (just take a look at all your stuff). And it’s twice as bad if you’re elderly, or just forked out $30,000 in renovations.  But the en-bloc machine just does not care:

Our en-bloc process is in serious need of fixing

Our unfair en-bloc process: it’s not just the proverbial elephant in the room anymore – the elephants have mated and now there’s a whole herd we’re trying to ignore. Here are some of the glaring problems we just can’t seem to get around to fixing:

• The Method of Apportionment needs to be studied and standardised
• Legal representation is tougher for those don’t want to sell
• Sellers get stealth mode
• The SSD rules are absurd when it comes to en-bloc sales
• Unequal distribution of information

1. The Method of Apportionment needs to be studied and standardised

The Method of Apportionment (MOA) determines how the sales proceeds are distributed. Till today, the MOA is not standardised for all en-bloc sales. You just need to trust the evaluation. But did that valuation involve anyone coming to your unit to check? We bet it never happened.

Most of the time, it’s a gross generalisation. No one is taking into account the state of your unit, the facing, recent renovations, etc.

And perhaps the most absurd aspect – the use of share value – is still going on. As we’ve mentioned in previous articles, share value was never designed as a way to divide sales proceeds; it’s just a way to decide who pays more for maintenance. In other words, it’s a measurement system for a whole different thing. Using share value for sales proceeds is like Grab trying to use your dental records to work out fare prices.

For example: the share value of a 50 square meter shoebox unit is five. The share value of a 200 square meter unit, which you may notice is four times bigger, is eight. Because share value doesn’t grow in proportion, the bigger your unit the worse off you are in terms of overall value. Even the late Soviet Union wasn’t that communist.

2. Legal representation is tougher for those don’t want to sell

Want to take the pro-sales committee to court for some reason? Well it’s expensive, and you’re going to have to pay out of pocket. On the other hand, the pro-sales committee are working as a coherent group, and can easily raise the funds for their own defence. The legal attacks by those opposed to the sale tend to be sporadic, individual cases against a well-equipped group.

Also, the legal costs for the pro-sales committee are basically covered for them if they win (it comes out of the sales proceeds of the en-bloc goes through). There isn’t any compensation for those who sue to prevent the en-bloc.

As such, you can expect that people opposed to the en-bloc would rather roll, over than suffer a $100,000+ bill on top of losing their home.

3. Sellers get stealth mode

The plan for an en-bloc happens in silence, with interested sellers subtly exchanging emails and deciding on terms. This may go on for years, before they make their move. The other home owners in the development are typically unaware of what’s happening, until the Extraordinary General Meeting is called.

Those opposed to the sale then have a limited time to mobilise and object to the sale; they don’t get the luxury of being able to prepare for it years ahead. And if you’ve tried to oppose an en-bloc before, you’ll know how absurdly time consuming it is – from going door to door to collect names, to explaining the situation to neutral owners. Unless some of the opposed owners are going to make it a full-time job, any opposition to the sale is often fragmented and ineffective.

One side (the pro-sale) has the advantage of coherent, collective action due to preparation. The other has the coherence of a badly trained school band, who just bought their trombones last Tuesday and are going on stage in two minutes.

4. The SSD rules are absurd when it comes to en-bloc sales

We’ve railed about this often, and it hasn’t changed. The Sellers Stamp Duty (SSD) on selling your house is 12 per cent if you sell on the first year, eight per cent in the second year, and four per cent on the third year.

This is great for the general housing market, as it stops house flipping and keeps prices reasonable. But when it comes to en-bloc sales, it’s just downright unfair.

For those who purchased the property within the past three years, they’re forced to pay the SSD even if they vote against the en-bloc sale. And there’s really no reason for this, as they weren’t trying to engage in any sort of resale for profit; it’s just a tax on bad luck. Having to pay the SSD compounds issues like renovation costs, which are often already ignored (See point 1).

There’s also the issue of having to find a new house again, when they’ve just paid the moving costs to settle in (this involves more than money; the cost is also emotional, and in the time invested to move).

4. Unequal distribution of information

The pro-sale committee tends to consists of two types of people: the ones who have been brainwashed and educated (over time) into supporting the en-bloc, and those who deliberately buy and instigate en-blocs (you can think of them as professional development killers). They tend to be better informed, have all the right contacts and resources, and know what they’re doing – it’s probably not their first en-bloc.

On the other hand, the average home owner has probably never experienced an en-bloc before. They don’t know what they’re supposed to ask, even if they do go to the meetings. They also don’t have a clear understanding of the process, or what they can do about it. If you tell some of them magical elves can be bribed into blocking the sale, you’d probably find cookies left on doorsteps at midnight.

And they have a very short amount of time to get organised, compared to the already-prepared pro-sale team.

It’s about time we review the process

We understand the government doesn’t want to be too heavy-handed; but more regulation is needed given that people’s homes are involved. It’s about time we took steps to better standardise the en-bloc process, and make it fair for both sides.

Do you think the en-bloc process is fair? Voice your thoughts in our comments section or on our Facebook community page.

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