Resale options for ageing condos

May 16, 2011 - PropertyGuru.com.sg

 

For private property owners, the 60-year mark is considered a major milestone — they could either watch their properties depreciate in value or opt for a collective sale.

Although banks are generally reluctant to lend to owners of older properties, things are not as bad as they seem since there are still some banks that are flexible with mortgages on older properties, and there is the Central Provident Fund (CPF) that can accommodate purchasers eyeing mature properties.

Last month, the plight of owners of ageing properties made the headlines, as the Singapore Land Authority (SLA) rejected the application of The Arcadia condo for a lease top-up despite obtaining 100 percent support from the owners.

SLA’s decision has also turned the spotlight on other ageing condos like Lutheran Towers, One Tree Hill Mansions and Hollandswood Court.

Meanwhile, The Peace Centre and Peace Mansions complex, which has 58 years left in its lease period, has been released into the en bloc sale market, but other properties like Hillcrest Arcadia have resisted that option.

While collective sales became the main option for owners to unlock their home value, experts said there are other ways to curtail the value of homes.

Mr. Ong Kah Seng, Senior Manager of Asia-Pacific Research at Cushman & Wakefield, said owners who want to preserve their home should keep it in good condition, especially when it has historic features that boost its value and make it good for preservation.

He noted that there are still other options to resale the property even if a lease top-up request is denied, just make sure the property is well maintained and the amenities and infrastructure are well enhanced.

“Owners of some aged prime developments may be able to expect better buying interest from purchasers who are cash-rich and do not require home loans,” he said.

Mr. Colin Tan, Research and Consultancy Director at Chesterton Suntec International, said owner-occupiers are typically less concerned about leases.

“When the green movement gets stronger, we might also see fewer en blocs. Instead of tearing down older buildings, which is blatant wastage, they can be refurbished like in other countries,” he said.

In an interview with The Straits Times, Mr. Tan said that banks can also help out. Despite their reluctance to fund older properties, some factors like the borrower's profile, tenor of the loan and the property’s location are also taken into consideration.

Ms. Lui Su Kian, Managing Director and Head of Deposits and Secured Lending at DBS, said that while most banks do not finance homes with less than 30 years left on the leasehold period, applications are reviewed on a case-by-case basis.

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