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As there are not enough rental flats in Singapore, the government may tighten the eligibility criteria to ensure that rental units go to those who need them most, according to National Development Minister Mah Bow Tan.

He added that the Housing and Development Board (HDB) will also beef up the supply of rental flats over the next two years to meet rising demand.

There are over 40,000 rental flats in Singapore and most of the 1- and 2-room units are home to needy families with an average monthly household income of below S$1,500.

The monthly rental for a 1-room flat is about S$30, while a 2-room unit goes for about S$60.

HDB said the demand for such subsidised flats has risen over the years. Currently, over 3,000 applicants are on its waiting list and it could take between 5 and 11 months before they get a unit.

Touring new rental flats in Woodlands, Mr Mah said: “Theoretically, you could have sold your bungalow and join the queue for an HDB rental flat because you are a retiree - you have zero income so you meet the average household income criteria.

“But there may be other criteria that may not be tenable for you to join the HDB rental queue. These are some of the things that we need to look at. Currently, it’s a very straightforward income criteria.”

Mr Mah added that there has been an increase in the number of divorcees and elderly who want to monetise their assets and join the queue to rent flats.

But there are other options to unlock the value of their flats - one way is through the new Lease Buyback Scheme. Details of this initiative will be announced in March.

To ease the supply crunch, the HDB will also put out more rental flats. Its first batch of 180 newly converted rental flats in Woodlands is now ready to be allocated.

Built in 1987, the vacant block of 3- and 4-room flats was converted last April to house 1- and 2-room units.

The new rental flats are equipped with barrier-free access facilities like wheelchair-friendly lifts.

Moving around will be easier too, with ramps leading right to the doorstep. There are also low-lying switches and retrofitted toilets in the flats to cater to the disabled and the elderly.

The HDB will roll out another 748 rental flats in Boon Lay in March and 290 units in Redhill by early 2009.

In 2010, HDB is also expected to build 976 new rental flats in Choa Chu Kang, Sembawang and Yishun.

Source : ChannelNewsAsia - 2 Jan 2008

Buyers have to pay a premium of at least $7,000 cash for 3-room flat even in outlying areas

SHE wants to buy a house but is stuck with a real problem. Ms Lynn Manay does not have enough cash to pay for the cash-over-valuation (COV) amount her seller is demanding.

SHE wants to buy a house but is stuck with a real problem.

Ms Lynn Manay does not have enough cash to pay for the cash-over-valuation (COV) amount her seller is demanding.

That’s the cash difference between the property’s valuation and the asking price. It is the premium sellers ask for in a bouyant market.

And with the current booming HDB resale market, it means COV prices can now hit new highs, said industry watchers.

So for those in the market looking to buy a resale HDB flat, it is becoming a pretty frustrating affair.

Ms Manay, a cashier, who makes about $900 a month, can afford to buy and service the loan for a three-room HDB flat, but she’s unable to fork out the COV amount for that same flat.

Ms Manay, 25, was willing to pay about $150,000 for a three-room HDB resale flat in Bukit Batok, but the buyer wants about $20,000 above valuation for the flat.

This means the selling price for the flat is about $170,000.

Said Ms Manay: ‘How can I afford to pay $20,000 in cash for the flat?

‘I don’t have that kind of money. It’s very stressful looking for a flat these days.

‘I’ve been looking for three-room flats in the resale market in many areas and the sellers are asking for high top-up amounts.

‘I’ve calculated that I’ll need to top up at least $10,000 cash to buy a place now.’

BORROW FROM RELATIVES

Ms Manay, who is single, is planning to buy the flat with her mother.

The two of them do not qualify for a HDB subsidised flat, hence they have to look at the resale market.

Her mother, 54, has been separated from her husband for 19 years and they have not finalised their divorce.

Ms Manay said she doesn’t know where her father is now.

She’s currently living with her brother and his wife in a four-room HDB flat in Bukit Panjang.

But the brother has sold his flat because of financial difficulties and will be moving in with his in-laws by February next year.

Added Ms Manay: ‘I’ve been calling property agents for the last three months and they said that I’ve to top up cash if I want to buy a place.

‘I can only pay at most $5,000 cash and even that, I’ve to borrow from friends and relatives.

‘Even if I want to rent a place from HDB, I’ve to wait for at least a few months and I need a place urgently.’

While she can always rent a place first, the market rental rate for a three-room flat at about $1,200 per month is a big deterrent.

She said: ‘I’ll rather use that money to pay for a mortgage for a place. To pay about $1,000 for rental is not cheap, and that doesn’t include utilities and furniture.’

The current high COV prices is reminiscent of the property bull-run in the mid-1990s, when buyers have to pay a huge premium over the valuation for HDB flats.

Executive apartments in Bishan, for instance, routinely found buyers who were willing to pay more than $100,000 above their valuation, according to a Straits Times report in 1995.

Today, be prepared to pay a premium of at least $7,000 cash for a three-room flat in outlying Choa Chu Kang and similarly for a five-room flat in Yishun, according to HDB’s third quarter median COV figures for resale flats.

And that’s just for flats in the outlying areas.

The highest COV paid last quarter was a whopping $91,500 for a five-room flat in the central area.

The executive director of HSR Property Group, Mr Eric Cheng said that his firm has received letters from the public asking if they are selling flats with just a $5,000 premium or no upfront cash.He said: ‘I’ve to tell them that I don’t have such flats at the moment.

‘For those buying a resale flat today, they have to pay upfront cash above valuation. The property market has strengthened, the economy is doing well and it’s a sellers market now.

‘You can’t buy a resale flat now if you don’t have money. It’s not just the COV, you’ve to think about paying for property tax, agent’s fee and renovation too.’

He advised Ms Manay to rent if she can’t afford a place now.

The limited HDB flat supply is expected to improve with over 7,000 new flats to be launched in the next seven months.

This means that the COV situation will improve, said Mr Cheng.

He added: ‘Those who want to buy resale flats but can’t pay the COV can perhaps wait for next year when a lot of HDB flats will be launched.

‘By then, the COV should be more reasonable.’

 Source : New Paper - 2 Jan 2008

BUSINESS AND REPUTATION

SMALL law firms are hurting from big crimes committed by rogue lawyers.

SMALL law firms are hurting from big crimes committed by rogue lawyers.

Some say potential clients are now giving them a miss and banks are reluctant to deal with them.

Generally, a small firm is one with fewer than six lawyers.

A medium-sized firm is a firm with six to 25 lawyers.

Any firm with more than 25 lawyers is considered a big firm.

A lawyer, who declined to be named, used to run a medium-sized firm before he gave up the business to pursue other interests.

He said following the bad publicity, banks and clients have lost faith in one-man firms in handling their money in conveyancing work.

He said it all started with rogue lawyer David Rasif.

The fugitive lawyer was the sole proprietor of David Rasif & Partners and made off in June last year with $11 million of his clients’ money.

He is still at large.

To make matters worse, Rasif wasn’t the only rogue lawyer to make the news.

The lawyer said: ‘Anecdotal evidence suggests many small law firms and one-man firms are getting less conveyancing work.

‘They are also not chosen to act for property clients.

‘The reason is because they have to hold their clients’ money and these clients are now more reluctant to let them do that.’

He explained that in conveyancing, the buyer of a property will pay a certain percentage of the sale price, usually 9 per cent, to the lawyer of the seller.

That lawyer will then bank that cheque into his client’s account and will hold this money until the completion of the sale of the property, which is usually after three months.

TEMPTATION

This is where the problem arises when lawyers get tempted and spend the money.

The Law Society of Singapore has introduced measures to prevent such theft. (See report at bottom right).

But it is little comfort when your reputation has been hit, say some.

Mr Mark Goh, 40, has been running his one-man firm for 13 years. He handles criminal, litigation and civil cases.

He said: ‘I have met clients of more than 10 years who will jokingly remind me about stories of lawyers who have taken their clients’ money.

‘They stop short at that.

‘But an astute person will know that they are hinting to me, ‘Don’t do this to me’, ‘Can I trust you?’

‘It hurts me because lawyers trade on their reputation.’

He said lawyers set up one-man firms because it allows them to be more independent and they can also choose the kind of cases they want to work on.

He said he has heard from banks that they will not go to one-man operations because they don’t trust them any more.

Mr Goh said that, now when he wins a civil case, he will ask the losing party to pay his client directly.

But Mr Goh said he has never been tempted when handling money.

Said Mr Goh: ‘It’s my rice bowl. And I don’t fancy living the life of a fugitive, where you are on the run all the time.

A sole proprietor, who declined to be named, said he has been running his firm for 10 years.

He said: ‘Banks now don’t appoint you on their panel to act for them.

‘Previously, they used to appoint small firms but, possibly because of the bad publicity, they now go for the bigger firms.

‘But this can affect any firm, even medium- and bigger-sized ones.

‘It all boils down to your values system. Whether you value honesty, integrity and hard work.’

For Mr An Kanagavijayan, 50, who has run his own one-man firm for 10 years, things have not changed.

He said because he doesn’t stick to one area of law, he has not been affected by the changes or the publicity.

He handles divorce, criminal, litigious and civil cases.

NOT AFFECTED

The father of two children, one in junior college and the other in secondary school, said: ‘There has been no impact on me because my clients trust me very much.

‘I work hard for my living. As long as a lawyer does that, he does not have to worry.

‘Besides, I am a father. Where can I run to?’

ROGUE LAWYERS
David Rasif

Disappeared with $11m of clients’ money in June last year.

Still at large.
Zulkifli Amin

Took $6m of clients’ money and disappeared in November.

Still at large.
David Khong Siak Meng

Disappeared in August with $68,000 of client’s money.

Still at large.
Victor Tan

Disappeared with $32,000 of clients’ money in September.

Still at large.

LAW SOCIETY’S CHANGES

No withdrawal of client funds from ATM machines

Can’t draw such monies in cash cheques or bearer cheques without leave from a High Court judge

Cheque amounts exceeding $30,000 require two signatures

Lawyer with fewer than three years’ experience can’t sign cheque to withdraw monies
 
Source : New Paper - 2 Jan 2008

But IRAS files appeal with High Court against tax review board’s ruling.

In a landmark decision, the Income Tax Board of Review has ruled that a serviced apartment operator’s rental income should be treated as normal recurrent business income, and not as income from property investments.

This means that serviced apartment operators can claim deductions on expenses and capital allowances beyond the actual income for the year.

The Dec 14 ruling came after the company, believed to be part of the Frasers Centrepoint group, appealed against an earlier ruling of the Inland Revenue Authority of Singapore (IRAS). The latest ruling will have significant implications for not just serviced apartment operators, but also for the operators of the future integrated resorts.

Earlier, IRAS had contended that serviced apartment owners and operators were merely in a business of letting property, and in a ‘business of making investment’ under Section 10E of the Income Tax Act.

Section 10E says that a business which makes investments, including the ‘letting of immovable property’, cannot claim deductions on expenses and capital allowances beyond the actual income for the year.

The tax implication is that any losses sustained for one year will not be allowed to be carried into the following year, as is the case for an ordinary trade or business where losses are generally allowed to be carried forward.

The Board rejected IRAS’ contention that the serviced apartments and the retail mall businesses are businesses of making investments under Section 10E.

Unlike serviced apartment, hotels in Singapore are allowed to carry forward losses.

Industry insiders say the ‘Section 10E’ treatment has troubled the industry for a long time.

As the range and sophistication of services have increased over the years with top-end serviced apartments offering a myriad of products and services, this unequal treatment has become increasingly untenable, they say.

Not surprisingly, many see this as a test case for the industry.

The Board of Review’s decision will also no doubt be welcomed by serviced apartment operators, who argue that it is the correct approach in looking at serviced apartments as a ‘multi-factorial’ one.

The appellants’ counsel, tax lawyer Ong Sim Ho, successfully argued that whether a business was one of making investment had to be determined in the light of all the surrounding facts, including evidence of the intention of the enterprise in embarking on the venture.

He said that where the letting of property was a mere but necessary platform from which business operations are carried out, Section 10E should not be applicable if those business operations constituted the real business of the taxpayer. He urged the Board to consider the wide range of hospitality services provided to the apartment guests.

The Board agreed that the serviced apartment- cum-shopping mall business should be looked at as an integrated whole.

The decision is likely to cause a re-examination of the approach to taxation of serviced apartments generally.

The IRAS has filed an appeal against the decision to the High Court.

Source : Business Times - 2 Jan 2008

Lawyer may have also used part of missing $6m to pay costs of delayed property deals.

RUNAWAY lawyer Zulkifli Amin bolted to the Philippines on an air ticket he did not pay for. It was billed to his law firm.

As more details surface from efforts to trace more than $6 million that went missing when he vanished in November, it has also emerged that he may have used some of the money to settle costs incurred from delayed property deals.

Mr Zulkifli, 33, a lawyer for about seven years, was one of three partners in law firm Sadique Marican and ZM Amin. His partners alerted the authorities when he disappeared and a police probe is ongoing.

He headed the firm’s conveyancing and real estate department. The Straits Times understands that as the property market took off last year, he took on more work than he could handle.

He had more than a dozen secretaries who processed and handled clients’ matters, said a staff member who resigned recently. Typically, a lawyer would have up to five assistants to cope with similar property-related work.

It is believed that some of Mr Zulkifli’s transactions stalled when he could not complete his work on time and there were penalties to pay for the delays.

One such transaction is believed to have led to a $200,000 penalty for a property valued at $700,000, after a delay caused the seller to offer the property to another buyer at $900,000.

A property seller who lost money on a deposit due to him from Mr Zulkifli alleged that the lawyer dipped into some other client’s monies in the firm’s account to fork out the difference and make the original deal stick. Such payments are not allowed and as his troubles piled up, they may have snowballed.

The current rules are that two lawyers must sign cheques to withdraw money from a client’s account for any amount exceeding $30,000, among other things. It appears that Mr Zulkifli acted alone and may have forged the second signature or perpetrated some other fraud.

It is believed the $6 million disappeared as he kept ‘rolling’ money to pay penalties, but it is unclear how much he kept for himself before he fled.

More than a dozen people have reported that their deposits with the firm’s conveyancing section went missing.

It is understood investigators are now trying to establish the extent of unauthorised payoffs he made, and attempts are expected to be made to reclaim these monies.

Meanwhile, the firm remains open for business at its premises at the HDB Hub in Toa Payoh Central. Only the conveyancing section was affected by Mr Zulkifli’s disappearance.

‘We’ve secured the interests of all the affected clients and our other work is going on,’ partner Sadique Marican said, when contacted by The Straits Times.

Two victims said they would give the firm more time to settle the outstanding amounts owed.

Mail company manager John Sasayiah, who lost some $26,000 in deposits, said: ‘We want to be fair to them but, at the same time, I hope to see some closure by this month.’

Mr Zulkifli, a bachelor, lived at his family home in Chai Chee until about two years ago. He and his younger sister moved out after their mother died of cancer in 2005. Their father had died earlier.

‘The family kept to themselves and hardly mixed with anyone,’ said a neighbour who had lived in his block in Chai Chee Street for more than 20 years.

‘Even when their mother died, we did not know.’

Source : Straits Times - 2 Jan 2008