Saturday, March 10, 2012

99-year leasehold homes on freehold sites harder to en bloc

Residential units with a leasehold period of 99 years and built on a freehold site could be harder to sell in the collective sales market, according to experts.
They noted that a collective sale for such property can only be attained through an agreement with the land owner, as the freehold rights of the estate are not held by either the homeowners or the government.

Experts said that the land owner has the power to decide whether to sell the freehold rights to the estate or have the lease tenure of the property topped up.

For a 99-year leasehold project on land owned by the government, developers redeveloping the site through a collective sale tender pay the government to have the leasehold period renewed to 99 years. However, this is not applicable when a non-government owner is involved.

The owner of the property can either buy back the land, grant a lease top-up, sell the freehold tenure or do nothing.

Nicholas Mak, Research Head at SLP International, said that while a collective sale is still possible, the price for a lease top-up will be set by the land owner, who could ask for a higher payout.

“Homeowners might be caught in a bind in the future... The land owner can seek an exorbitant price, to the extent that it is unattractive to other developers, and in the end, as the lease runs out and the property loses its resale value, it will be sold back to the land owner instead.”

Meanwhile, Karamjit Singh, Managing Director at Credo Real Estate, said a collective sale is only possible “if the land owner says 'yes', and they can't be forced to do so.”

“If the land owner wishes to repossess the land upon the expiration of the lease, the (homeowners) would not be able to en bloc it and would have to see out the remainder of their lease.”

View the original article here

Source From Property Guru

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