Functioning of En Bloc Sales

In Singapore, the collective sale of homes or properties to the government is called en bloc sales.

En blocs happen so that people do not sell off public properties for instant profit.

When a group of residents decides to sell their properties to a buyer simultaneously, it can be termed as En Bloc sales.

A flat owner who wants to sell his property wishes to be a part of the En Bloc sales because it fetches him more money than a standard property sale.

The buyers are willing to pay more than the standard price for a choice site.

So, it is common to see people wanting to be a part of the En Bloc sale.

For Singaporeans, the developers have to pay an additional 35% as a penalty if they cannot sell off the properties from the purchase date to the date of the strata title board sale order.

If you wish to purchase a second and third property in Singapore, the buyer must pay the Additional Buyer’s Stamp Duties.

The ABSD has been increased to 5% and 10% for second and third properties, respectively.

However, there is no increase for Singaporeans in the ABSD for the initial residential property, staying at 0%.

It has been raised to 30% for the first residential property and beyond for foreigners.

En Bloc sales are made by buying a set of properties together, belonging to a group of residents at the same time.

The residents have to agree with one another to sell off their properties.

They are offered a golden handshake when the majority of owners agree to put up their property for sale collectively.

Not all owners will agree to sell their properties, so the Golden Handshake scheme has been introduced.

Once the majority of the subsidiary proprietors agree to sell the housing units, everybody gets a golden handshake regardless of those few owners that may not want to sell.

En Bloc sales are highly profitable since the demand for specific housing sites is high so that the property owners will get paid more than the regular price of a property in Singapore.

There are specific ways in which an En Bloc sale happens.

The owners can come together and mutually decide to sell their properties because selling them individually fetches them less than selling them together.

How to identify En Bloc

Firstly, a buyer needs to work out any land space’s En Bloc sales process.

Find an en-bloc sale site that has the information on all indicative land rate of the en-bloc sales that are happening in Singapore.

If you are looking for a sale proposal or someone looking to sell property, you can keep yourself updated by following those sites.

You will find all the information required on these sites – like tipping property owners, tender for sale, sale predictions, etc.

Top Condos with En Bloc Potential in 2022

The En Bloc sales proceeds in Singapore command so much money because it requires the residents to give up their homes so that the developers can build new buildings and housing projects, which will earn them more profit.

This is why the development owners offer astronomical amounts of money to purchase these properties in the hopes that the property owners will take a big payout.

The En Bloc sales process is also long and tedious, which can motivate the property owners to demand more money from the potential and genuine buyers.

For instance, if you have old profitable land with far spaced blocks, you can process sale proceeds and ask a developer to buy the property and demolish the blocks and build a conserved building.

Furthermore, the developer can build commercial towers and put up a public tender for sale for each unit.

However, the developer has to convince the residents to sign a collective sale agreement before commencing the completion of sale and proceeds of sale schedule.

Additionally, the developer will have to offer the property share values or a significant portion of the sale proceeds to the residents.

Despite enjoying a successful run of the housing development or Strata title board, property cooling measures levied by the Singaporean government impacted the proposed en-bloc sale application in the country.

Measures like LTV, seller stamp duty, land register rules, and TDSR affected en bloc sales.

The cooling measures could also lead to a rise in property prices as buyers will have to pay more ABSD rates within the limited time period.

Furthermore, the new cooling measures will affect a loan package procured by a potential buyer as En bloc prices may become harder to negotiate.

In short, buyers will have to be more selective when choosing properties, where property details like the meter of land, schedule of owners, and distribution of sales proceeds might affect the final price.

The Rationale of En bloc

With Singapore pressing in new property cooling measures, the grounds of En block have taken a new turn.

For instance, the cooling measures have forced a price hike in various properties due to a rise in ABSD and LTV rates.

Since developers will have to pay higher ABSD rates (if they fail to comply with the new purchase and distribution rules), property prices will also witness a spike.

However, commercial projects will not be impacted by ABSD like the Tanglin Shopping Centre and Sixth Avenue Centre.

Here are the indicators if a property has an en bloc potential:

Sharp rise in property prices

If the area near your property has an upcoming MRT station, property prices rise automatically due to the commercial value of the area.

Since developers are always on the hunt for these kinds of properties, you can assume that your property has an en bloc potential.

Free open spaces

If your property has free, open spaces, developers will have a keen interest in purchasing and developing it into a profitable avenue.

Since properties with large common areas offer more options to developers, they can plan anything on your property to reap lucrative benefits.

After a developer considers your property profitable, he can offer you a deal to purchase your property at a higher rate.

In short, you can sign an en-bloc sale application written in official languages and agree for up to a 12-month period before initiating the process.

So how much can you make? Since en bloc takes a shorter time to process, sellers can reap more benefits than a normal sale.

For instance, developers often pay higher values than resale market value as the developer believes that the property will offer him higher gains.

In short, you can make more money from an en bloc than normal sales.