Private properties edition- What happens after my lease is up?


Similar to HDB flats, the value of private properties will be a big fat $0 when the lease is up. The properties will be returned to the government and owners will not be given any sum of remuneration at all. In one of our previous articles, we shared about Selective En bloc Redevelopment Scheme (SERS), a selective scheme that upgrades HDB flats that are over 40 years old most of the time. However, SERS is not applicable to private properties.


What happens to private properties that are nearing the end of the 99 years lease is either (1) En Bloc sales or (2) topping up of lease. For either option, all owners of the private property have to collectively agree to it; it will not work out if owner A is agreeable but owner B isn’t.


En Bloc Sales

En Bloc refers to the sale of the whole development or estate to a single buyer, such as the government or property developers. Though the process of en bloc is longer (around 2 years) than the typical sale of a flat, the returns are generally higher than that of the market value. Developers tend to offer a higher price as they anticipate that the land will generate a higher return.


Process of En Bloc Sales

After crossing the mid-year mark for the lease, residents or a developer may initiate an en bloc sales. Following that, a committee, which is made up of property owners, will be set up to facilitate the whole process. They will be in-charge of getting the other owners to sign the Collective Sale Agreement.


For private properties that are less than 10 years old, en bloc will only take place if owners with more than 90% of share value agree to it. For properties that are 10 years and older, owners with 80% of share value will have to agree to it.


After attaining the required amount and owners have signed the Collective Sale Agreement, the committee will search for a developer (if it was not initiated by a developer). Interested developers will then place a bid for the private development.


Upon confirmation of the en bloc sale and the developer that is taking over the private development, home owners will start to relocate. Sales from en bloc will generally be credited after half a year of the sale.


Lease Top Up

The second option will be to top up the lease back to 99 years. This requires property owners to make an application to Singapore Land Authority (SLA)


For instance, the property is 60 years old. Property owners can top up the 60 years back to the lease by paying a premium. This amount will be determined by SLA’s Chief Valuer and is based on factors such as remaining leasehold, market value of the land, and future plans for the piece of land.


While topping up the lease is much simpler than an en bloc sale, the premium to top the lease back to 99 years might not be affordable for all.


Despite that, an en bloc sale or lease top up will always be better than watching the value of the private property drop to $0 after the lease is up. Before the expiration of the lease, owners should aim to have a plan in mind, be it to take on a mortgage loan for a new flat while waiting for the en bloc sale to be credited or to make an application to SLA to top up the lease.


Contact Mortgage Consultancy now to get the smartest financial bank loan advice specifically for your home. We are able to provide more than 100 loan packages from 16 banks for you to compare and choose from! Feel free to contact us at +65 8556 5271 so that we will be able to help you make an informed decision, suited to your needs.

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