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Interesting Facts about Enbloc

Did you know?

Interesting Fact #1

If the condo you recently bought gets enbloc, you may be liable for Sellers Stamp Duty (SSD), payable to IRAS. The stamp duty is due immediately after the tender is awarded to the winning bidder. You’ve about 2 weeks to make payment. This is because all stamp duties, amongst other matters, have to be settled before completion of sale can take place.

Note that this is months before you receive your payout, so some people may not have the money to pay this.

It’s possible to ask for a “Waiver of Penalty & Deferment on Seller’s Stamp Duty Payable” till Sales Order is issued. However, once Sales Order is issued, payment has to be made or “there will be imposition of late payment penalty of 5% per annum, computed on a daily basis on the outstanding amount if there is no payment made after the due date“.

Take Park West Condominium for example. If you didn’t have the funds to pay the SSD, you would owe 10 months of interest! That means for every $100,000 you owe, you could owe an additional $4k+ in interest.

And what if the enbloc falls through for some reason? If you have paid IRAS, it’ll be refunded back to you. Without interest though. Interest only goes one way.

Interesting Fact #2

Not all enblocs give owners a huge windfall.

Consider this scenario:

Tom buys a condo, and pays 15% additional buyer stamp duty (ABSD) because he’s a foreigner. Because more than 80% of the people in his condo agrees to the enbloc sale, he has to pay a Seller Stamp Duty (SSD) of 12%. With recent changes in property rules, he would further incur a 20% ABSD if he were to buy a replacement condo.

He might probably be better off renting for now.

Interesting Fact #3

Some owners oppose a collective sale because even though selling enbloc gives them a bigger payout than selling on the open market, with the payout, it is impossible to get a replacement condo with the same size. Thus these owners have no interest in selling in the first place.

Enbloc are usually only beneficial for people who are retiring, and wish to cash-out and downgrade to a smaller condo or a HDB.

Some condo owners own multiple properties, so buying a HDB is not an option as they would have to sell off their other property investments. On top of that, they would incur a ABSD on their replacement condo as that would be considered an additional property.

Interesting Fact #4

Developers have a 5 year timeline to sell all their units from the date of sale. Thus, upon completion of sale, it is in their interest to get every one out, demolish and build as fast as they can, and of course sell the units.

Owners are given a rent-free period of a few months after the completion of sale to look for a replacement property. In some cases, it can be as short as 6 months. Imagine having to search for your new home (approx 1m), wait a couple of months for all the paper work to be settled (approx 2-4m), renovate (approx 2-4m) and move in all within that time frame!

One Response to “Interesting Facts about Enbloc”

  1. Crux Says:

    Yep Fact #1 sucks. No doubt. SSD in en bloc is outrageously unfair. There is no debate and no argument. The government who imposes it should remove it as it has zero to do with the intent of the law with regard to SSD. It’s crazy.

    Fact #2 isn’t interesting at all. Yes a very small % of owners will be screwed by government imposed duties – because they are foreigners. However, SG is a democracy, and the government only does what the people want. Shrug. What to do?

    Fact #3 is odd. It isn’t “in some cases it can be as short as 6 months” – this is the market standard. I would say that “in some cases it can be as short as 4 months”, e.g. Normanton Park. With 6 months you have 3 months to find a place and 3 months to complete the sale. If you want to renovate (which, locally, this is apparently compulsory yet hugely wasteful and, frankly, in my opinion, incredibly stupid) then you need to find place sooner than 3 months.

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