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Q Recently, I exercised an option to purchase and put down a $5,000 deposit to buy a resale three-room HDB flat. I did not appoint an agent, but had agreed to pay the seller’s agent a 1 per cent commission.

Later, I was told by the seller’s agent that the resale application had not been approved by the HDB as the seller had not completed the minimum occupation period of five years.

This was due to a grant the seller had taken when the flat was bought under the Single Singapore Citizen Scheme in 2004. The agent claimed that the seller had earlier told her she had not taken any grant.

What legal recourse do I have against the seller and her agent?
A You have not mentioned whether you have in fact paid the agent her commission. I would assume that you have not, but will deal also with a situation in which you have paid it.

The agent’s commission is usually paid upon legal completion of a sale to ensure that she has done what is necessary under her commission agreement.

But there appear to be cases where agents ask for their commission or introductory fee immediately upon signing the Sale and Purchase Agreement, whether the sale is successful or not.

A lot thus depends on the agreement, whether spoken between the agent and yourself or written in a commission agreement.

If you have not paid the commission, you may not need do so as she did not help you secure the purchase of the new flat, unless you had agreed to pay something for an abortive deal.

If you have paid the commission, you are entitled to get a refund of either all of it, or half of it if you have signed an Agent’s Commission Agreement, which usually provides that the agent still be paid half the agreed commission if the sale is abortive through no fault of the agent.

If you have signed such a commission agreement, you should look at the specific terms governing abortive sales.

You have paid the $5,000 deposit to the flat owner. You are entitled to a refund if the sale does not materialise.

In the case of the flat owner, you have only a claim for damages resulting from this aborted sale.

However, your claim for damages is unlikely to be significant or assessable as the damages payable are what you would have lost out on had the contract been fulfilled as it should have been.

Lim Choi Ming
Partner
KhattarWong

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

Source : Sunday Times - 19 Oct 2008

Disclosing take-up rates will help buyers

I REFER to Tuesday’s report, ‘Robust demand for recent HDB launches’.

On the one hand, young Singaporeans are urged not to delay marriage and have more children to help solve our procreation problem.

On the other, new Housing Board five-room flats cost more than half a million dollars: $645,000 in Pinnacle@Duxton and about $700,000 in the two HDB Design, Build and Sell Scheme (DBSS) projects at City View@BoonKeng and Park Central@AMK.

Certainly one needs a five-room, 1,100 sq ft flat to house a family of two parents, three children and a maid comfortably.

Many young couples do not feel the immediate pinch of such pricey flats because up to 90 per cent of the cost can be financed by long-term debt stretching up to 30 years.

A recent Sunday Times editorial rightly advised prudence.

For a couple with a combined monthly income of $8,000, an HDB loan of $500,000 at the concessionary interest of 2.6 per cent and a monthly loan instalment of about $2,000 may appear affordable.

But at the end of the 30-year loan period, they would have coughed up some $800,000 in total capital and interest repayments.

Indeed, when young couples sink so much money into their HDB flat, how much will there be left to raise their children, and to provide for their health-care and retirement needs?

The first HDB DBSS project in Tampines was launched with publicity attesting to its success.

Despite similar publicity for the two DBSS projects in Boon Keng and Ang Mo Kio, both private developers have frequently advertised immediate walk-in selections.

For transparency and to help HDB buyers, the HDB should publicly disclose the actual take-up rates for the various types of flats in such DBSS projects, as well as Pinnacle@Duxton.

See Leong Kit

Pricing puzzle

‘After taking all such costs into account at the launch of Pinnacle@Duxton in 2004, the HDB went on to price leftover stock at $200,000 above the initial launch price.’

MR TAN KIM CHUAN: ‘I refer to the article on Tuesday, ‘New HDB flats below market value’. The HDB says it takes a market-based approach when pricing new flats and then sells them at a discount to the market value. However, on Aug 1, the HDB explained in a letter, ‘HDB flats: Low figure is building costs alone’, that ‘the total construction cost of flats includes other costs such as infrastructure, piling works, lift installation, consultancy and project management, financing and purchase of land’. That is, the total cost had already been taken into account and the prices subsidised before the flats offered to the public. Yet, after taking all such costs into account at the launch of the Pinnacle@Duxtondevelopment in 2004, the HDB went on to price its leftover stock of flats at $200,000 above the initial launch price. One can’t help but feel that the HDB is either over-pricing its flats or is profiteering from the property boom. I hope the authorities can shed some light on the discrepancy.’

Source : Straits Times - 18 Oct 2008

Two offerings of wide range of flats attract more than 10 applicants per unit

DEMAND has been red hot for two recent launches from the Housing Board, with over 10 times more applicants than flats available.

An offering of 150 smaller flats - studios to three-roomers - was swamped with 2,426 applications in the space of just a week.

And, last Friday, the half-yearly sale of three-room premium, four-room and bigger flats achieved an extraordinary response: 7,036 applications have been submitted for 683 units, yet the offer runs until Thursday.

The launch of the smaller units featured three-roomers, two-roomers and studios in estates across the island, including Bukit Merah, Geylang, Jurong East, Sengkang, Ang Mo Kio and Marine Parade.

There were 582 applications for studios and 1,844 for two- and three-roomers combined in the offer from Oct 2 to 8.

Studio prices range from $62,900 to $116,400. A two-roomer goes for $74,000 to $106,300, while a three-room flat will set you back $134,500 to $275,200.

PropNex chief executive Mohamed Ismail was not surprised at the robust demand. He said: ‘HDB prices, although subsidised, have gone up. Lower-income households are left with not much choice but to turn to three-room flats as a starting platform.’

Three-roomers also provide the highest rental yields in the long term, he added, making them profitable for buyers.

Such flats are offered to lower-income households. Studio applicants must be 55 or older and their gross monthly household income must not exceed $8,000.

The gross monthly household income for applicants for three-room flats must not exceed $3,000. The limit for those hunting for a new two-roomer is $2,000 .

This month’s launch shows some changes from the previous small-flat offering held in July. Then, 103 two-room flats and 97 three-roomers were offered, attracting 1,809 applications.

Two-roomers were priced from $72,800 to $99,800 while three-room flats went for $99,000 to $211,000, far lower than this month’s offering.

Demand is also robust for HDB flats at the other end of the price spectrum.

A total of 9,083 applications came in for 992 homes offered in a balloting exercise held between Sept 26 and Oct 9.

Four-roomers at the Pinnacle@Duxton, for example, are priced from $457,000 to $555,000 and attracted 2,291 applicants; 825 people applied to buy five-room units at the same development priced from $545,000 to $646,000.

Source : Straits Times - 14 Oct 2008

I REFER to Mr Gilbert Goh’s letter, ‘Shouldn’t new HDB flats be priced less than market rate?’ (Sept 30). New HDB flats are indeed priced below their market value. The HDB takes a market-based approach when pricing new flats so as to reflect the true subsidy to buyers. To determine the market value, HDB takes into account the actual selling price of similar flats in the vicinity, bearing in mind variations in location, design, internal finishes and other attributes. The flat is then sold at a discount to this price.

The Pinnacle@Duxton is an iconic public housing project. It is situated in a prime location with easy access to Tanjong Pagar and Outram Park MRT stations. This special project has an international-award winning design, with unique features such as sky gardens and bridges linking its seven tower blocks, and planters, balconies and bay windows. The relatively high prices of these flats are a reflection of the premium attributes and prime location. However, they are still priced below the resale prices of similar flats in the vicinity. As of last Friday, the subscription rate was already over seven times the supply offered. This high demand shows the flats are attractively priced.

The Government is committed to providing affordable public housing, and offers a range of subsidised flats to meet the needs of flat buyers with different incomes. First-timers who bought new flats from the HDB last year used, on average, about 20 per cent of their monthly household income to service their housing loans, and most flat buyers (at least 70 per cent) could service their housing loans entirely from their CPF contributions.

The minimum occupation period is imposed to prevent speculative purchases of HDB flats. The current five-year period provides a good balance between the need to prevent speculation, and giving flat owners the flexibility in selling their flats after a reasonable period of occupation.

We thank Mr Goh for his feedback and suggestions.

Ignatius Lourdesamy
Acting Deputy Director (Marketing & Projects)
Housing & Development Board

Source : Straits Times - 14 Oct 2008

The Housing Board (HDB) yesterday launched 683 flats in Punggol, Sengkang, Jurong West and other estates in its half-yearly sale of units which were not taken up in previous launches.

By 5pm, its website showed 2,626 applications for the flats, which range from three-room premium to executive units.

The biggest share of 288 flats is in Sengkang, while 153 are in Punggol, 77 are in Jurong West and the remainder are in various estates.

This year, the HDB also plans to launch another 8,400 units under the build-to-order scheme.

Prices for units launched yesterday range from $160,000 for a four-room flat in Woodlands, to $565,000 for a five-room flat in Bukit Merah.

Households with a gross monthly income of up to $8,000 are eligible to apply. They can submit their applications online at the HDB website, www.hdb.gov.sg, or at the HDB hub or branch offices. Applications close next Thursday.

Source : Straits Times - 11 Oct 2008