En bloc Sales for Dummies – What Happens when a Property goes En bloc

6 min read

En bloc sales are all the rage right now, but do you understand what actually happens when your property goes up for it? Here are the steps involved:

  • Starting the en bloc sales process
  • Pro-tem committee to rally interest
  • Engaging a property consultant or law firm
  • Getting the majority vote
  • Sale by tender

1. There are three ways an en bloc process gets started:

  • The owners collectively decide to sell en bloc, rather than sell their own units individually (common in older properties, where the residents are worried about the lease running down)
  • A company, such as a asset management fund, approaches the owners with an en bloc offer
  • A developer (or group of developers working together) approach the owners with an en bloc offer
    enbloc sales
    enbloc sales

Once this occurs, the following steps kick in:

2. Pro-tem committee to rally interest

Owners who want to sell will form a pro-tem committee with the aim of rallying support for the en bloc sale.

Note that a pro-tem committee is not the same as the Collective Sale Committee (CSC), which has to represent the en bloc to the Strata Titles Board later. The CSC has three or more representatives, but no more than 14. 

The pro-tem committee, besides rallying others to sell, also puts out feelers to see how likely a collective sale is. This usually means hosting an extraordinary general meeting (EGM) to see if they can reach the 80 or 90 per cent agreement to the en bloc sale (see below).

3. Engaging a property consultant and law firm

If there is sufficient interest to go ahead, the pro-tem committee will select a property consultant and a law firm. The main job of the property consultant is to market the property, working with a valuation from an independent valuer. The law firm’s job is to draft all legal documentation involved.

Property lawyer Singapore choose

With advice from these professionals, the pro-tem committee will then provide details such as:

  • Method of Apportionment (MOA) that is fair to all sellers, and explains the distribution of proceeds
  • Date to deliver vacant possession (when you’d need to leave the property)
  • Timelines associated with the en bloc process

It’s important to pay attention to these details. For example, if there’s going to be a whole year between selling the house and getting the sales proceeds, you must put in place plans for interim accommodation if the en bloc happens.

4. Getting the majority to say yes

This is the most difficult part. If the property is less than 10 years old, the en bloc will only proceed if 90 per cent of the owners (in both share value and strata value) agree to the sale. If the property is more than 10 years old, the required majority falls to 80 per cent or otherwise.

Note that the required majority is determined by share value, not the literal number of owners. Those who own a bigger share of the property have more votes. It’s possible for a handful of owners to outvote many times their number (e.g. a single owner with seven units and a penthouse may outvote 10 other owners).

 en bloc sale vote

You can check how your share values are determined here.

In general, the most vocal protests will come from owners who have bought the property within the past three years. Note that from March 2017, you must still pay the Seller’s Stamp Duty (SSD) for selling the property within three years of your purchase, even if it occurs as an en bloc (before March 2017, SSD must be paid for properties bought within four years).

The SSD is an added tax of 12 per cent of the property value in the first year, eight per cent in the second year, and four per cent on the third year (before March 2017, SSD was payable over four years at 16 per cent, 12 per cent, eight per cent and four per cent). Owners in this situation will almost certainly demand higher sales proceeds to cover such costs.

Recent owners who have spent significant amounts on renovation and have yet to recoup the cost (such as through rental), may also demand a higher pay out before agreeing.

5. If the owners initiated the en bloc, the property consultant then handles the sale by tender

Unless there’s already an interested buyer, the property then has to be marketed to prospective buyers. The property consultant will handle this phase, which typically takes about three to four months (it really depends on the state of the property market).

Cross your fingers and hope the bids are high.

6. Application to the Strata Titles Board (if there’s no 100 per cent agreement to sell)

Unless there’s a unanimous (100 per cent) decision to sell, an application must be made to the Strata Titles Board by the CSC. At this point, the owners who are still objecting get to present their case to the Board. The Board will then evaluate if these owners are going to suffer a financial loss.

A financial loss is defined as receiving sales proceeds less than what you initially paid for the unit, after deducting related costs. A financial loss does not include making less money than other owners.

planning finances home

For example, if you bought the unit for $2 million, and the sales proceeds are $1.8 million, that’s a financial loss. If you bought the unit for $2 million, and your sales proceeds are $2.2 million whereas everyone else is getting $2.5 million (after costs), that’s not a financial loss.

The Board won’t accept the en bloc application, if any of the protesting owners would suffer a financial loss.

7. If the application is approved by the Strata Title Board, the en bloc takes place according to an agreed-upon timeline

In most cases, owners are given a certain amount of time to vacate the property. Note that if you have tenants, this could mean prematurely terminating their lease and compensating them.

You will get the sales proceeds at the agreed-upon time. Bank bridging loans only span six months. You may need temporary accommodation if it takes longer than that to get your sale proceeds (unless, of course, you can afford to buy another house even before the proceeds come in).

If you found this article interesting, you may want to read more about having your burning questions about en bloc answered and En Bloc Sales – how does it work.

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*Note: This article was updated on 9 December 2017 for greater clarity, based on feedback from our readers. 

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Reader Interactions

Comments

    • Rudy

      Hi Ryan.
      Thanks for posting this article. Couple questions that I have (a newbie to homes in SG):
      1) I’ve read a few articles and comments where homeowners that have agreed upon “en bloc” have suffered after their units are sold (i.e. new homes cost more, further location, etc). These happened even after they received financial proceeds from en bloc. Do homeowners really get educated on all the tax dues and final (Net) proceeds of the en bloc? Or is it more of doing your own analysis before agreeing to en bloc?
      2) For new buyers in the en bloc property, are they subjected to the special tax for not holding on the property for 5 years?
      Thanks

    • Ryan Ong

      Hi Rudy,

      1) Although it’s left to each homeowner to do their homework, the pro-tem committee usually maintains an open channel for any questions. Check the bulletin boards in the lift lobbies. The en bloc notice will remain posted there for the duration, and there’s usually a contact number / email for any questions. Failing that, contact the management committee directly, to find out who to direct questions to.

      2) If you mean the Sellers Stamp Duty (SSD), it is three years (SSD was recently changed). Unfortunately, you are still liable to pay the SSD, if the property goes en bloc within the first three years of your buying it.

      Regards,
      Ryan

    • Rudy

      Thanks for the detailed explanations ?

    • vin

      Hi Ryan,
      Point 6 mentions about demonstrating financial loss, and you’ve mentioned that one way is if the selling price is lower than the enbloc price. Is that the only criteria? How about things like renovation costs, buyer’s and seller’s stamp duty (of the existing unit), buyer’s stamp duty (of the new replacement unit). Will all of these ‘net-net’ costs be included into the consideration of financial loss due to the enbloc price?

      • Ryan Ong

        Hi Vin,
        Yes, all these costs will be taken into consideration, if they ultimately result in the selling price being lower than the original purchase price.
        Regards,
        Ryan

    • Loh

      Hi Ryan,
      If I’m not able to attend the EGM of appointing collective sales committee, any obligation or impact as an owner? Is it a must to attend EGM?
      Any recommendations where can search for more about official information (SOPs and rights as an owner) re en-bloc.
      Thanks
      Loh

      • Ryan

        Hi Loh,

        It’s not necessary to attend the EGM, but if you are not present you would be surrendering your vote on the relevant issues. As an alternative to going, a condo-owner can appoint a proxy, to cast a vote on their behalf.

        For reference, note pages 16 – 18 in this BCA guide, as well as pages 28 to 30:

        https://www.bca.gov.sg/bmsm/others/strata_living.pdf

        Hope this helps!

        Regards,
        Ryan

    • Jessie Chong

      Hi Ryan,

      For the SSD for the owners, may I know at which point it will be determined? When the tender is closed or upon the judgment from Strata Title Board? Thanks!

    • Ryan

      Hi Jessie,

      The SSD is due within 14 days from the contract of sale to the developer.

      Best regards,
      Ryan

    • SUNIL GULIANI

      I have an apartment which I bought for about 2 M about 15 years ago. I got it renovated in 2019l for spending about 200K. The condo is now going enbloc & I am projected to get 4.8M. Will I get any compensation for my renovation ?

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