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Developers will now have to include planter boxes, bay windows in GFA

Here’s some bad news for developers: a loophole that helped them sell in excess of the gross floor area (GFA) has been plugged.

Till now, bay windows and planter boxes, which often make up around 5 per cent of a condo’s saleable area, had been exempted from GFA calculations. But in providing them to buyers, developers had been charging buyers for them.

This exemption will no longer apply from Oct 7, according to a circular issued by the Urban Redevelopment Authority (URA) on Monday.

The exemption has led to ‘unintended and undesirable consequences’ and ‘unwittingly shifted market behaviours and negated the objective of the GFA exemptions for these building features’, URA said in explaining why bay windows and planter boxes will no longer be exempted from GFA.

Explaining the impact of the new rules on residential developers, a property industry player said: ‘Developers’ profit margins will be reduced because they will no longer enjoy this benefit of not counting bay windows and planter boxes as part of their GFA and yet selling this space to home buyers. If the developers want to have these features, they will have to pay the full price since these will be included as GFA.’

The new rules apply to all residential developments - landed and non- landed - and are expected to lead to a rush of new development applications, especially from developers who have bought land recently.

URA said bay windows have been ‘found to have contributed significantly to the building bulk, affect the design of buildings and generally do not encourage energy efficiency’. ‘Often the provision of bay windows is intended mainly to increase the saleable strata area,’ it noted.

Planter boxes were introduced to provide ‘vertical greenery’ in condos and create ‘visual relief to our high-density living environment’. However, feedback and URA’s investigations have revealed extensive unauthorised conversions of planter boxes within residential units for use as a balcony space or an extension of the living room instead. The planning authority said it has also received feedback that condo owners are unhappy that they are not allowed to convert planter boxes - which are part of their strata space and which they paid for when they bought their unit - to other uses.

‘URA will leave it to the developers and building owners to decide if they wish to continue to provide bay windows and planter boxes for their residential developments so long as these building features are counted as GFA. The industry will have a free hand to design and provide these building features based on their commercial considerations as there will no longer be restrictions on the size of bay windows and planter boxes,’ URA said.

Planter boxes within non-residential developments (like hotels and business parks), as well as those located within the common areas of residential developments like sky terraces, will continue to be exempted from GFA as these areas are typically well-planted and maintained by the management corporation for the benefit of all occupants in a development.

Only formal development applications (which exclude outline applications) with a valid provisional permission issued before Oct 7 will continue to be evaluated under the old GFA guidelines. For approved developments, bay windows and planters will remain GFA-exempted until the buildings are redeveloped, URA added.

Knight Frank managing director Tan Tiong Cheng had an alternative suggestion for URA. ‘Instead of just removing GFA exemption for bay windows and planters, URA could have let the exemption continue but require developers to specify and identify these features in their sales brochures so that buyers know exactly how much of their strata area is taken up by bay windows and planter boxes. Buyers can then decide whether these features are as attractive to them.’

DTZ executive director Ong Choon Fah observed that bay windows can be a useable area - for sitting, keeping books or displaying photo frames, for instance. ‘Planter boxes, on the other hand, often end up not being used for the purpose they were meant for,’ she added.

Summing up the change, a seasoned industry observer said: ‘This closes one loophole for developers. They’ve had a good run on it.’

Source : Business Times - 10 Jul 2008

THE Central Provident Fund Board yesterday said that the new minimum sum would be $106,000. The latest amount will apply to CPF members who turn 55 between July 1, 2008 and June 30, 2009.

‘Members who set aside the $106,000 cash savings in their retirement account will receive a monthly payout of $910 from age 64 for about 20 years,’ the board said.
 
The announcement follows the government’s plan in 2003 to raise the CPF minimum sum to $120,000 by 2013, through an annual increase of $4,000 from 2004. The $120,000 figure did not include inflation over the past five years.

The new increase in the minimum sum requirement was to ensure that Singaporeans will have more savings to tide them over retirement, as people were expected to live longer.

The minimum sum was adjusted to $106,000 from the $100,000 based on 2003 dollars.

This was calculated from the consumer price index published by the Department of Statistics, of 0.5 per cent, 1.7 per cent, 0.5 per cent, one per cent and 2.1 per cent respectively for the years 2003 to 2007.

The CPF board has also raised the lower and upper limits for members’ Medisave accounts by $1,000.

This means that from July, members must set aside at least $29,500 in their Medisave accounts when they withdraw their CPF at or after the age of 55.

Their contributions must also be capped at $34,500. Excess funds will be channelled to the Special Account if the contributor is below 55 or to the Retirement account if the person is over 55 and the latter account has less than $106,000.

The interest rate for the Special, Medisave and Retirement accounts will continue to be pegged to the 12-month average yield of the 10-year Singapore Government Security, plus one per cent. The rate stands at 3.65 per cent for the period June 1, 2007 to May 31, 2008.

The government has said that it will maintain a floor rate of 4 per cent for two years if the pegged rate falls below 4 per cent. It will apply a 2.5 per cent rate for all CPF accounts after two years.

Source : Business Times - 17 Jun 2008

Members will have to keep $106k in retirement savings

CENTRAL Provident Fund (CPF) members who turn 55 between July 1 this year and June 30 next year will have to set aside a higher Minimum Sum of $106,000 in their Retirement Accounts.

The CPF Board said in a statement that these individuals will receive monthly payouts of $910 starting from the age of 64, for about 20 years.

The current CPF Minimum Sum that must be set aside in the accounts is $99,600. This provides members a monthly payout of $790 from the age of 64.

The higher requirement follows an announcement in 2003 that the amount which must be set aside in Retirement Accounts will be raised gradually to reach $120,000 in 2013.

The increase, which includes an adjustment for inflation, is to ensure that Singaporeans set aside sufficient savings for their retirement.

The changes to the requirements are in tandem with the previously announced national annuities programme, CPF Life, which gives participants an income every month - for life. Set to start in 2013, CPF Life will be compulsory for those with a minimum sum balance of at least $40,000 at age 55. Those with less can opt in.

Yesterday’s CPF Board statement also said that the Medisave Minimum Sum requirement will also be raised to $29,500 from July 1. It is currently $28,500.

The CPF Board said that members will have to set aside the new amount, or the actual Medisave balance - whichever is lower - when they withdraw their CPF savings at or after they turn 55.

The Medisave Contribution Ceiling also goes up to $34,500 from July 1. This is the maximum amount each member can have in his Medisave account.

Any amount above this ceiling will be transferred to the member’s Special Account if he is below 55, or to the Retirement Account if he is above 55. The current ceiling is $33,500.

These revisions, said the CPF Board, are to ensure that Singaporeans have enough savings for hospitalisation costs.

Another change is to the withdrawal rule when a member turns 55.

Now, members whose CPF balances are lower than the Minimum Sum at age 55 are allowed to withdraw $5,000 or 50 per cent of their savings - whichever is higher.

But from Jan 1 next year, the percentage of withdrawal will decrease from 50 per cent to 40 per cent. It will be reduced every year by 10 percentage points.

By 2013, members must meet the CPF and Medisave Minimum Sums first before they can withdraw their remaining balances from their Ordinary and Special Accounts at age 55.

But they can continue to withdraw the first $5,000 from these accounts if they do not have the full Minimum Sum amount.

The changes in withdrawal rules are aimed at helping members set aside more savings for their retirement, the board explained.

Source : Straits Times - 17 Jun 2008

The Minimum Sum for Central Provident Fund (CPF) members has breached the $100,000 mark for the first time.

CPF members who turn 55 from July 1 this year to June 30 next year will have to set aside $106,000 in cash savings in their Retirement Accounts, up from the current $99,600, the CPF Board said in an update yesterday. They will receive $910 every month after they turn 64 for about 20 years, up from $790 under the current Minimum Sum Scheme.

The new Minimum Sum follows the CPF Board’s announcements in Aug 2003 that the sum will be raised to reach $120,000 in 2013. The increase, which includes an adjustment for inflation, is to ensure Singaporeans set aside sufficient savings for their retirement, the board said.

Also, from July 1, the Medisave Minimum Sum will be revised upwards to $29,500 from the current $28,500. CPF members will have to set aside this sum or the actual Medisave balance, whichever is lower, in their Medisave Accounts, when they withdraw their CPF savings at age 55.

In addition, the Medisave Contribution Ceiling will be raised to $34,500 from $33,500. This is the maximum balance a CPF member may have in the Medisave Account, with any excess transferred to the member’s Special Account if he or she is below 55. For those above 55, the excess will be transferred to their Retirement Accounts if there is a shortfall in the Minimum Sum.

CPF members will continue to earn 4-per-cent interest on their Special, Medisave and Retirement Accounts from July to September. This is the current floor rate set by the Government to help CPF members adjust to a floating rate pegged to the yield on the 10-year Singapore Government Security, which at present works out to 3.65 per cent.

Source : Today - 17 Jun 2008

Recent decisions show such extensions not a given as govt retains planning flexibility

The market used to assume that the government would top up leases for sites to 99 years as they came up for redevelopment. A series of recent decisions - in which the authorities either declined lease top-ups or allowed them, but for shorter tenures - have put a big question mark over that assumption.

Property players say these decisions could have an impact on investment sales of 99-year leasehold properties or at least the way such deals are structured.

In January, when the proposal for Market Street Car Park’s redevelopment into an office tower was made public, owner CapitaCommercial Trust revealed that the authorities declined to top up the lease for the site, which has another 65 years to run.

More recently, the market learnt that the former Crosby House site at 71 Robinson Road - which is being built into a new office block - had its lease topped up in April last year, not to the usual 99 years but 85 years and 10 months instead. This was apparently to match the remaining lease term of SIA Building next door.

BT understands that no lease top-up was granted for Marina House last year, which is proposed to be redeveloped, although HMC Building nearby (being developed into Lumiere condo) got a lease top-up to 99 years earlier. Sources say another building at Cecil Street has also had its lease top-up application rejected. Again, the Urban Redevelopment Authority (URA) may have plans for the streetblock where it is located.

In recent years, the government has topped up leases of nearby sites to the original 99-year term, including 1 Shenton Way (being redeveloped into One Shenton), NatWest Centre (being redeveloped into The Clift) and HMC Building.

The recent decisions appear to run contrary to the perception that the government would generally agree to top up leases of such sites to the original 99 years, so long as the planned redevelopment scheme is in sync with URA’s long-term vision for the area.

Instead, Singapore Land Authority (SLA) said: ‘The government will generally allow leases to expire, without extension.’ It noted that ‘the state generally sells land on leasehold to allow it the flexibility to reallocate land to meet socio-economic needs.’

‘However, the government has considered and allowed lease extensions based on whether the proposed redevelopment is in line with the government’s planning intention and long-term development plans, and factors such as whether there would be significant intensification, or greater optimisation in land use. That remains the government’s policy,’ SLA said.

SLA evaluates each application on its merits and in consultation with the relevant agencies. The specific circumstances of each development dictate whether it should be given a lease extension - and for how long.

Market Street Car Park’s lease was not topped up ‘as there is a need to retain planning flexibility over the future development of the site’, SLA said.

URA said it evaluates requests for topping up leases based on ‘a range of planning considerations in relation to the specific location and context of the area’. This approach gives ‘the state flexibility to review the longer-term plan for the area, as and when the existing leases expire or come in for extension in future, and to reconfigure the parcels, if required, to provide for better land utilisation’, it added.

In the Central Business District, for instance, the considerations may vary from streetblock to streetblock, URA said, when queried about the unusual lease top-up to 85 years and 10 months for 71 Robinson Road. ‘This lease period is sufficient to allow for the owner to redevelop the site to a new modern office building,’ URA added.

DTZ executive director Ong Choon Fah said: ‘In the past, the government may have been pretty liberal in topping up leases. Now, they’ve to think of Concept Plan 2011 and how to accommodate a long-term population of 6.5 million people.

‘So they have to be more creative and safeguard land for the future, by having a common lease expiry period.’

The head of a property consulting group said: ‘URA’s probably doing a housekeeping exercise of trying to coordinate lease expiries of buildings in the same streetblock, to give themselves some flexibility. So they may ask: ‘What’s the longest remaining lease in this block? Let’s now try, going forward, to have leases in this streetblock expire at the same time, so that in future, if we want to do anything, we’ll be able to do that.’

DTZ’s Mrs Ong observes: ‘There are many pencil buildings on tiny plots in the CBD. It would be more efficient if the government has common lease expiry periods for adjacent plots so that they may amalgamate them into bigger land parcels and resell them in future.

‘It’s more efficient to intensify land use for bigger land parcels. Globally too there’s a trend of mixed developments, with a live, work, play environment. It’s more environmentally friendly and reduces commuting time. For that too you need bigger sites.’

Source : Business Times - 04 Jun 2008