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Q MY HOME, a two-bedroom private apartment, is owned 40 per cent by my sister and the rest by myself. She is having difficulty paying the mortgage since she got married because she already owns another property with her husband.

To lighten her burden, I’d like to buy her share at the market rate and have 100 per cent ownership of the house.

Since we are not selling the property but merely changing the owner’s name to just my name, will there be any stamp duty or legal fees and if so, how much and what is the cheapest way to settle them? Can I pay these fees with my Central Provident Fund (CPF) savings?

A A TRANSFER of an interest in an immovable property is chargeable with stamp duty, regardless of whether the interest transferred amounts to 100 per cent share in the property or less.

Your plan involves a sale of 40 per cent of the property from your sister to you.

The stamp duty payable on such transfer would be based on either the purchase price or the market value of the 40 per cent share, whichever is the higher, at the following rates:

For the first $180,000 in value or consideration - 1 per cent.

For the next $180,000 in value or consideration - 2 per cent.

Thereafter, for the value or consideration in excess of the first $360,000 - 3 per cent.

For example, if the market price of the property is $500,000 and you buy your sister’s 40 per cent share at $200,000 (40 per cent of $500,000), the stamp duty would be calculated in the following manner:

For the first $180,000, it is $1,800.

For the next $20,000, it is $400.

Total stamp fee payable is $2,200.

CPF funds and mortgage loans can be arranged to finance up to 95 per cent of the purchase price of the 40 per cent share.

CPF funds can also be used to pay the stamp fee and the legal fee payable by you as the purchaser. Your total CPF withdrawals will be subject to a housing withdrawal limit.

To determine the limit applicable to you, you may refer to the explanatory notes at www.cpf .gov.sg

But CPF funds cannot be used to pay legal fees incurred by your sister as the seller. The legal procedures involved in the whole transaction include the:

Sale by your sister of her 40 per cent share to you;

Purchase, charge and/or mortgage of the 40 per cent share by you; and

Refinancing of 60 per cent of the outstanding mortgage. This is necessary because there is a change of mortgagors from two names to one.

This means the mortgage of your 60 per cent share also has to be redeemed and re-mortgaged simultaneously.

There are no fixed costs to govern how much lawyers would charge. You can check with lawyers on their fees before you engage them. As a guide, the Law Society’s recommended fees are:

For sale - 0.15 per cent of the sale price subject to a minimum of $900;

For purchase and mortgage - 0.4 per cent of the purchase price subject to a minimum of $2,500; and

For refinancing - 0.4 per cent of the loan refinanced subject to a minimum of $2,500.

So to sum up, the costs involved in the transfer cannot be avoided. Only your sister’s legal fees in the sale and 5 per cent of the purchase price have to be paid by cash.

The rest of the costs can be paid from your CPF funds and the mortgage. You will have to get quotes yourself from financial institutions and legal firms to establish their rates.

Lie Chin ChinPartnerLie Kee Pong Partnership

Q I AM a retiree of about 60 and a Singapore permanent resident (PR). I want to make a simple will. My wife is Singaporean but a Malaysian PR.

I have three assets in Malaysia: a half-share of a shop lot, a half-share of a condomi-nium unit and a restaurant business.

If I make a will in Singapore, will it be valid in Malaysia? How much will it roughly cost to make the will?

What are the things I need to prepare? Do I have to make a will in the presence of a lawyer?

A THERE should not be any problem with recognition of your Singapore will in Malaysia if it is properly drafted and executed. The formal requirements for legal validity are similar in both countries and based on English law.

However, because you own real estate and a business in Malaysia, it would be worthwhile to get a Malaysian lawyer to look at the will as well, to see if he has any advice in relation to Malaysian law relating to land and business.

You need to agree on the legal costs with your lawyer. The cost of a simple family will may be only a few hundred dollars each for you and your wife.

If your requirements are more complex, it could cost more, depending on how much time your lawyer needs to spend on it.

You may want to call a few law firms to compare prices and the services offered.

There will be additional costs if you also employ a Malaysian lawyer.

You will need to send your lawyer a copy of your identity card and copies of your title deeds, business certificates and other documents if requested.

You will also need to give some thought to the appointment of executors to carry out your wishes after you die, guardians for any children who are minors and, of course, to whom you want to leave your wealth.

Some lawyers may ask you to complete a fairly simple form, so that they can get some relevant information about you and an idea of what you want to say in your will, before meeting you or producing a first draft.

This form is usually designed to help you direct your thoughts on the matters in the will-making process that are most important to you.

You could probably find a sample will in the National Library. But I do not recommend that you just copy it and hope that it will work for you.

Once you are gone, it is too late to do anything about mistakes or misunderstandings in your will. The best thing is to ask for legal assistance to make sure that your will eventually does what you want it to do with the minimum of fuss.

Your lawyer will probably also have some suggestions for you to enhance your will and could offer advice and assistance with CPF nominations and certain types of insurance nominations that cannot be covered by your will.

He can also advise you on the all-important choice of executors, trustees and guardians.

Your lawyer will probably want to witness your will to ensure it is signed in compliance with the proper formalities. But there is no legal requirement in Singapore that your will be witnessed by a lawyer.

If you make a will yourself, you have to get it signed in the presence of two competent witnesses, each of whom is neither a beneficiary nor the spouse of any beneficiary of your will.

However, your DIY will may not achieve everything you want, or cover certain technical points you may not have thought about. A lawyer with experience in probate work, trusts and estate planning would be in a better position to guide you.

Simon Trevethick AssociateColin Ng & Partners

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Source : Sunday Times - 14 May 2006

More sites are up for sale, with prices likely to rise by 10% to 15% from last year’s levels

THE market for Singapore’s most coveted homes - good class bungalows (GCBs) - is still going strong, with more sites coming onstream to meet rising demand.

This week, two freehold GCBs were offered for sale at Bukit Tunggal Road, off Chancery Lane, with a combined price tag of $24 million.

With a total land area of 48,543 sq ft, the price works out to about $494 per sq ft (psf) - a tad higher than the current average GCB price of about $476 psf as of mid-February.

This compares with $394 psf in the second half of last year and $375 psf for the whole of 2005, according to a report by Jones Lang LaSalle (JLL) in March.

Over the last month, another three sites have been put on the market at even higher unit land prices.

A 26,514 sq ft GCB at Astrid Hill is up for sale with an asking price of about $530 psf, while a 17,475 sq ft GCB at Cluny Park and a 15,884 sq ft site at Gallop Road have guidance prices of between $600 psf and $650 psf.

And prices are set to climb even further, said Savills Prestige Homes’ director, Mr Steven Ming, who expects prices to rise by 10 to 15 per cent from last year’s levels.

‘(This would be) for the very prime sites, such as Nassim Road and Cluny Hill, and I believe prices can cross $650 psf by the end of this year,’ he added.

Pointing out that a benchmark price of $580 psf was set in December last year, he observed that GCB buyers are becoming more bullish in their bids to secure these exclusive homes.

GCBs - which must sit on plots of at least 1,400 sq m, or 15,070 sq ft, in size - are located only in the 39 areas set aside for their construction. These include Nassim Road, Jervois Hill and Chatsworth Park.

‘Buyers are recognising the scarcity of good stock and seeing very strong growth potential for Singapore,’ said Mr Ming.

‘They are prepared to be aggressive for the sites, especially those on really choice plots.’

But given the shortage of such sites, the demand for GCBs will probably filter down into the less prime locations, said JLL’s regional director and head of investments, Mr Lui Seng Fatt. ‘The demand for GCBs in choice locations and exceptional GCB plots with favourable characteristics will remain robust,’ he said.

‘However, with the limited supply of these GCB plots and coupled with increasing land values, it is expected that there will be a spillover effect on demand for GCBs that are located further away from the city limits.’

This year alone, about 15 GCBs have been sold as of March 2, with a total value of more than $128 million. A 15,108 sq ft site in Ladyhill Road was sold in January for $10 million, hitting a high of $662 psf, said JLL.

And this is coming off a record 104 GCB deals last year worth almost $845 million, which overtook the previous peak in 1999 when 73 GCBs were sold to the tune of $600 million, according to a recent report by property consultancy Savills Singapore.

fiochan@sph.com.sg

Strong interest

THE bungalows - which must sit on plots of at least 1,400 sq m, or 15,070 sq ft, in size - are located only in the 39 areas set aside for their construction. These include Nassim Road, Jervois Hill and Chatsworth Park.

‘Buyers are recognising the scarcity of good stock and seeing very strong growth potential for Singapore,’ said Mr Ming.

‘They are prepared to be aggressive for the sites, especially those on really choice plots.’

Source : Sunday Times - 14 May 2006

SILVER Tower in Cairnhill is the latest collective sale site to go on the market, with the owners asking for $168 million or $1,138 per square foot, per plot ratio (psfppr), one of the highest asking prices for a collective sale site this year.

Steven Ming of Savills Singapore, which is marketing the collective sale of Silver Mansion, believes developers are ‘bullish’ about the high-end property market.

He believes that Silver Mansion’s location demands a premium. ‘Silver Tower is possibly one of very few residential sites that have been put up for sale this year that is located this close to Orchard Road,’ he said.

The 57,241 sq ft site has a plot ratio of 2.8, so about 80 apartments of approximately 2,000 sq ft can be built. The height restriction is 20-storeys.

There are two other collective sale sites in Cairnhill already on the market, and their asking prices are lower. The owners of Horizon View and the owners of 16 terraced houses are seeking about $951 psfppr.

Recent transactions include the current benchmark of $1,218 psfppr price paid in March for Eng Lok Mansion.

Hilltops Apartments in Cairnhill sold for $951 psfppr, Paterson Tower sold for $1,064, and Skyline Angullia off Tomlinson Road sold for $1,073 psfppr.

Because of expressions-of-interest from overseas developers for Singapore sites, Savills will also be marketing Silver Tower in Hong Kong, China, Japan, Europe and the UK.

On Shelford Road, PMC Services is marketing a smaller collective sale site called Shelford Residences.

Formerly called Beng’s Lodge, the 21,831 sq ft site has a plot ratio of 1.4 and the asking price is $15 million-$16 million, or $534-$567 psfppr.

Source : Business Times - 10 May 2006

PRIME office rents in Singapore are rising rapidly. Rents which at present work out at $5 per square foot (psf) per month could go up by as much as 60 per cent by the end of next year, says a new research report from UBS bank.

By 2010, office rents could even test the previous peak of $10 psf per month seen in the mid-1990s, the report says.

Charles Neo, the bank’s co-head of Asian real estate research, says: ‘The demand for office space is underpinned by limited supply and strong demand from the financial services sector.’

Mr Neo notes that offices are cheaper in Singapore than elsewhere in the region.

Rents here have been going down for 10 years, although there has been five years of growth in the financial services sector.

UBS sees rent levels for offices at Six Battery Road increasing from the present $5.10 psf per month to $6.70 psf per month by the second half of 2009, while rents at Capital Tower go up from $4.50 psf per month to $6.20.

The bank has a ‘buy’ rating on the owner of the two office buildings, CapitaCommercial Trust, which it sees as providing exposure to the cyclical upswing in rent levels.

Mr Neo likes real estate investment trusts (Reits) with exposure to the prime office and retail sectors in Singapore, arguing that ‘both retail and office sectors offer organic growth that could compensate rising inflation’.

UBS says that although there may be more ‘destination’ shopping malls over the next few years, this is likely to affect only poorly managed and over-rented malls.

Mr Neo expects ‘record visitor arrivals, sustained low unemployment and increased residential property prices over the coming years’ to help sustain economic momentum.

The market capitalisation of Singapore’s Reits has grown from US$1 billion to US$8 billion in the past two years and UBS sees this figure doubling in the next 12 months to US$16 billion.

In a separate announcement yesterday, UBS said Regina Lim has joined its real estate research team, reporting to Mr Neo.

Ms Lim joined UBS from the Urban Redevelopment Authority of Singapore where she led the commercial property research team responsible for analysing the Singapore office and retail markets.

Source : Business Times - 9 May 2006

Demand driven by companies, with some even looking to expand offices

THE occupancy rate for prime office space island-wide rose in the first quarter of this year.

According to a report by DTZ Debenham Tie Leung (DTZ), the Raffles Place area registered the highest percentage point gain of 2.8, to hit 91.6 per cent. This area also had a quarter-on-quarter rental increase of 8.6 per cent, with rents reaching an average of $6.10 per square foot (psf) per month.

This is 23 per cent off the last peak of $7.90 psf per month in 2001.

Rents asked for One Raffles Quay and Republic Plaza I are higher at $8.50 psf per month.

DTZ executive director Ong Choon Fah says demand is driven by financial institutions, with some even looking to expand their existing offices. ‘When these companies first come here, they don’t set up a big office immediately,’ she notes.

The office space market is, however, volatile as there is little supply to meet demand. DTZ says rents will continue to soar over the next four years with an average new supply of 1.1 million sq ft per annum versus average annual demand of 1.9 million sq ft in the past decade.

This could change when the new Business & Financial Centre opens in 2010. But Ms Ong believes older properties will be rejuvenated and the market ’should take care of itself’.

Interestingly, the highest quarter-on-quarter rental increase was for property on the city-fringe.

The Novena Belt registered an increase of 17 per cent to $5.50 psf per month, while HarbourFront rents increased 11.7 per cent to $4.30 psf per month. ‘Offices that don’t need to be in the financial centre have moved to these areas,’ says Ms Ong.

This trend is also noted by CB Richard Ellis (CBRE) executive director (office services) Moray Armstrong, who says: ‘The decentralised office markets have proven to be an attractive alternative to the CBD, particularly for companies or operations that are more sensitive to real estate costs.’

He says examples of these tenants include the back-office or infrastructure operations of banks, IT support centres and some tenants in the energy sector.

Noting the popularity of HarbourFront, he adds: ‘Improved access following the opening of North-East Line has helped, but the related developments of quality retail at VivoCity and entertainment space has also been an important factor in attracting tenants.’

CBRE figures show that in some decentralised areas - such as Tampines Regional Centre, Jurong East Regional Centre and Thomson/Novena - vacancies hovered around 2 per cent in Q1 2006.

The trend to split office operations is a regional one. Jones Lang LaSalle head of research (Asia-Pacific) Jane Murray say: ‘As vacancy rates in most Asian cities continued to fall, some corporate occupiers were opting for secondary locations to support their expansion and defray costs.

‘However, this trend is unlikely to impact on CBD rents given the prominence of such choice locations.’

Source : Business Times - 9 May 2006