Today Forum: Where do we stay in the meantime?

Where do we stay in the meantime?


Wednesday • January 2, 2008


Letter from LUCY HUANG


I thank Michael Chua Kheng Hwee and Tan Meng Lee for the advice in their respective letters, “Either buy a new condo or a new HDB flat” and “Make it mandatory — a one-for-one exchange”(Dec 28).


I was told by the Housing and Development Board (HDB) that I would have to wait two-and-a half years before I could apply for an HDB flat.


After applying, I would then have to wait an additional two to two-and-a-half years before being allocated a unit.


The developer who bought our estate has agreed to let us buy a unit when the project is completed. But this would only happen in one-and-a-half to three years.


So, buying a new condominium or HDB flat would leave us with no place to stay in the interim period.


Buying a new condominium that has just obtained its Temporary Occupation Permit (TOP) is also not feasible.


By the time the TOP has been obtained, all the units would have already been sold and those who bought them would ask for much higher prices.


These new developments would also not be ready by the time we have to move.


Furthermore, their rooms are extremely small and our beds would not even fit into the master bedroom.


It is a real problem. However, I do at least feel very happy that there are those in Singapore who are concerned enough about the plight of the displaced elderly, to try and offer helpful suggestions.

Source: Today Newspaper

ST Forum: HDB property tax should be cut, not increased

HDB property tax should be cut, not increased


I AGREE completely with Mr Ridzwan Abdullah, ‘Wrong time to raise property tax on HDB flats’ (ST, Dec 28).


It completes a trend of unreasonable price increases in Singapore. When you add up all the increases in 2007 – bus fares, taxi fares, GST, income tax, tax on utility bills, school bus fare hikes, bread prices and all the trigger effect – this property tax increase is insensitive.


HDB flats comprise basic housing for the people. That the property tax for private properties was raised is a lame excuse for the Government to do so for HDB flats.


In fact, judging from the problems we have in HDB estates that the authorities had not tackled satisfactorily – increased noise level, increased fire hazards, dengue problem, dumping of rubbish in corridors – there should be a decrease in property tax.


For the 35 per cent of us who pay income tax, there should be more rebates to cope with the increase cost of living.


Yum Shoen Liang

Source: Straits Times

Resale prices of HDB flats highest in 10 years

Resale prices of HDB flats highest in 10 years


By Jessica Cheam


IT’S official: HDB homes have enjoyed a spectacular bull run of 17.4 per cent in 2007 – the highest growth in a decade – but market watchers say a repeat is unlikely this year.


The Housing Board (HDB) on Wednesday released flash estimates for the fourth quarter ended Dec 31 which showed home prices rising 5.6 per cent compared to the previous quarter.


This is a dip from the 6.6 per cent gain in the third quarter last year and brings the total increase in HDB resale prices for 2007 to 17.4 per cent.


Housing anaylsts said this slowdown was expected due to various reasons, including a recent change in market sentiment to a more cautious mood.


Detailed figures for the quarter are not released yet, but analysts say the transaction volume in the fourth quarter have dipped significantly.


This is due to fewer property launches and quieter activity, and also unrealistic prices sellers are demanding. Experts say HDB prices are unlikely to soar too high, and will rise less than 10 per cent for 2008.


HDB also recently announced new flat supply in Punggol and Yishun under its Build-To-Order (BTO) programme, which builds flats only when a certain demand is reached.


It plans to offer about 4,800 new BTO flats in the first half of 2008.


It has also recently launched a plum site at Bishan for condo-style HDB homes to be built, with more such sites in Simei, Toa Payoh and Bedok to come.


The full data for the fourth quarter 2007 will be released at the end of the month, said HDB

Source: Straits Times

Housing, credit woes could still plague Wall St

Housing, credit woes could still plague Wall St


NEW YORK – THE United States’ housing meltdown and credit crunch, which brought an end to an investment bonanza early last year, are likely to give Wall Street a stiff hangover this year, market strategists say.


A flurry of private-equity-fuelled buyouts and corporate takeovers helped propel the Dow Jones Industrial Average to an all-time record high of 14,164.53 in early October, but the index has swooned since then as the housing downturn worsened.


Investment strategists said the housing slump, now almost two years old, and a related credit squeeze may temper stock market advances this year.


‘Growth has clearly slowed in the fourth quarter in the US,’ said Legg Mason Global Asset Allocation president Steve Bleiberg.


He said the overriding concern for US investors in the coming 12 months would likely be the health of the credit markets and whether companies would be able to tap fresh capital.


Credit flows have tightened because big banks have lost billions of dollars in mortgage-related investments, which has forced them to curtail lending and triggered efforts by central banks to boost liquidity.


Some analysts believe the housing and credit woes could destabilise the US economy, or even trigger a recession, which would further depress Wall Street sentiment.


‘A recession in 2008 is a possibility, but the stock market always faces unknowns and unknowables. Consumers are feeling worse about economic conditions and future prospects,’ said Mr Al Goldman, chief market strategist at AG Edwards.


US investors are on tenterhooks awaiting to see if big retailers’ earnings will be clipped over the crucial Christmas holiday shopping period by consumers reining in their spending.


Strategists do not expect a mortgage rescue plan, essentially for Americans with patchy credit holding sub- prime home loans and backed by US President George W. Bush, to significantly bolster Wall Street.


Some analysts believe the plan may just delay further property foreclosures.


US economic momentum held up well for much of last year, but the Federal Reserve trimmed its growth forecasts for this year in late November to a range of 1.8 to 2.5 per cent. The central bank previously predicted gross domestic product (GDP) growth of up to 2.75 per cent.


As such, many analysts are cautiously predicting single-digit gains for the Dow and the broader Standard and Poor’s (S&P) 500 Index.


US major stock indexes closed the year on Monday in retreat, with the blue-chip Dow posting a three-digit loss, trimming last year’s gain to 6.4 per cent, compared with 16.2 per cent in 2006.


The tech-rich Nasdaq Composite Index jumped 9.8 per cent in the year and the broad-market S&P 500 climbed 3.5 per cent.


Back-to-back interest rate cuts in the last three months – a combined one-percentage-point reduction – have helped shore up confidence, and some analysts say the Fed may have to slash borrowing costs further this year to reassure nervous investors.


Analysts at Goldman Sachs foresee slower GDP growth and cooler profits on the horizon: ‘We have recently revised down our estimates for S&P 500 earnings per share in both 2007 and 2008, catalysed by the disappointments in the third quarter of 2007 and the expectation that sharp financial sector write-downs will continue in the fourth quarter of 2007.’

Source: Straits Times

He flew to Philippines and billed his firm



He flew to Philippines and billed his firm


Lawyer may have also used part of missing $6m to pay costs of delayed property deals


By K.C. Vijayan


RUNAWAY lawyer Zulkifli Amin bolted to the Philippines on an air ticket he did not pay for. It was billed to his law firm.


As more details surface from efforts to trace more than $6 million that went missing when he vanished in November, it has also emerged that he may have used some of the money to settle costs incurred from delayed property deals.


Mr Zulkifli, 33, a lawyer for about seven years, was one of three partners in law firm Sadique Marican and ZM Amin. His partners alerted the authorities when he disappeared and a police probe is ongoing.


He headed the firm’s conveyancing and real estate department. The Straits Times understands that as the property market took off last year, he took on more work than he could handle.


He had more than a dozen secretaries who processed and handled clients’ matters, said a staff member who resigned recently. Typically, a lawyer would have up to five assistants to cope with similar property-related work.


It is believed that some of Mr Zulkifli’s transactions stalled when he could not complete his work on time and there were penalties to pay for the delays.


One such transaction is believed to have led to a $200,000 penalty for a property valued at $700,000, after a delay caused the seller to offer the property to another buyer at $900,000.


A property seller who lost money on a deposit due to him from Mr Zulkifli alleged that the lawyer dipped into some other client’s monies in the firm’s account to fork out the difference and make the original deal stick. Such payments are not allowed and as his troubles piled up, they may have snowballed.


The current rules are that two lawyers must sign cheques to withdraw money from a client’s account for any amount exceeding $30,000, among other things. It appears that Mr Zulkifli acted alone and may have forged the second signature or perpetrated some other fraud.


It is believed the $6 million disappeared as he kept ‘rolling’ money to pay penalties, but it is unclear how much he kept for himself before he fled.


More than a dozen people have reported that their deposits with the firm’s conveyancing section went missing.


It is understood investigators are now trying to establish the extent of unauthorised payoffs he made, and attempts are expected to be made to reclaim these monies.


Meanwhile, the firm remains open for business at its premises at the HDB Hub in Toa Payoh Central. Only the conveyancing section was affected by Mr Zulkifli’s disappearance.


‘We’ve secured the interests of all the affected clients and our other work is going on,’ partner Sadique Marican said, when contacted by The Straits Times.


Two victims said they would give the firm more time to settle the outstanding amounts owed.


Mail company manager John Sasayiah, who lost some $26,000 in deposits, said: ‘We want to be fair to them but, at the same time, I hope to see some closure by this month.’


Mr Zulkifli, a bachelor, lived at his family home in Chai Chee until about two years ago. He and his younger sister moved out after their mother died of cancer in 2005. Their father had died earlier.

‘The family kept to themselves and hardly mixed with anyone,’ said a neighbour who had lived in his block in Chai Chee Street for more than 20 years.


‘Even when their mother died, we did not know.’

Source: Straits Times


Ruling on rental income cheers serviced apartment operators

But IRAS files appeal with High Court against tax review board’s ruling




(SINGAPORE) In a landmark decision, the Income Tax Board of Review has ruled that a serviced apartment operator’s rental income should be treated as normal recurrent business income, and not as income from property investments.


This means that serviced apartment operators can claim deductions on expenses and capital allowances beyond the actual income for the year.


The Dec 14 ruling came after the company, believed to be part of the Frasers Centrepoint group, appealed against an earlier ruling of the Inland Revenue Authority of Singapore (IRAS). The latest ruling will have significant implications for not just serviced apartment operators, but also for the operators of the future integrated resorts.


Earlier, IRAS had contended that serviced apartment owners and operators were merely in a business of letting property, and in a ‘business of making investment’ under Section 10E of the Income Tax Act.


Section 10E says that a business which makes investments, including the ‘letting of immovable property’, cannot claim deductions on expenses and capital allowances beyond the actual income for the year.


The tax implication is that any losses sustained for one year will not be allowed to be carried into the following year, as is the case for an ordinary trade or business where losses are generally allowed to be carried forward.


The Board rejected IRAS’ contention that the serviced apartments and the retail mall businesses are businesses of making investments under Section 10E.


Unlike serviced apartment, hotels in Singapore are allowed to carry forward losses.


Industry insiders say the ‘Section 10E’ treatment has troubled the industry for a long time.


As the range and sophistication of services have increased over the years with top-end serviced apartments offering a myriad of products and services, this unequal treatment has become increasingly untenable, they say.


Not surprisingly, many see this as a test case for the industry.


The Board of Review’s decision will also no doubt be welcomed by serviced apartment operators, who argue that it is the correct approach in looking at serviced apartments as a ‘multi-factorial’ one.


The appellants’ counsel, tax lawyer Ong Sim Ho, successfully argued that whether a business was one of making investment had to be determined in the light of all the surrounding facts, including evidence of the intention of the enterprise in embarking on the venture.


He said that where the letting of property was a mere but necessary platform from which business operations are carried out, Section 10E should not be applicable if those business operations constituted the real business of the taxpayer. He urged the Board to consider the wide range of hospitality services provided to the apartment guests.


The Board agreed that the serviced apartment- cum-shopping mall business should be looked at as an integrated whole.


The decision is likely to cause a re-examination of the approach to taxation of serviced apartments generally.


The IRAS has filed an appeal against the decision to the High Court.

Source: Business Times








Buyers have to pay a premium of at least $7,000 cash for 3-room flat even in outlying areas


SHE wants to buy a house but is stuck with a real problem. Ms Lynn Manay does not have enough cash to pay for the cash-over-valuation (COV) amount her seller is demanding.


By Desmond Ng



02 January 2008


SHE wants to buy a house but is stuck with a real problem.


Ms Lynn Manay does not have enough cash to pay for the cash-over-valuation (COV) amount her seller is demanding.


That’s the cash difference between the property’s valuation and the asking price. It is the premium sellers ask for in a bouyant market.


And with the current booming HDB resale market, it means COV prices can now hit new highs, said industry watchers.


So for those in the market looking to buy a resale HDB flat, it is becoming a pretty frustrating affair.


Ms Manay, a cashier, who makes about $900 a month, can afford to buy and service the loan for a three-room HDB flat, but she’s unable to fork out the COV amount for that same flat.


Ms Manay, 25, was willing to pay about $150,000 for a three-room HDB resale flat in Bukit Batok, but the buyer wants about $20,000 above valuation for the flat.


This means the selling price for the flat is about $170,000.


Said Ms Manay: ‘How can I afford to pay $20,000 in cash for the flat?


‘I don’t have that kind of money. It’s very stressful looking for a flat these days.


‘I’ve been looking for three-room flats in the resale market in many areas and the sellers are asking for high top-up amounts.


‘I’ve calculated that I’ll need to top up at least $10,000 cash to buy a place now.’




Ms Manay, who is single, is planning to buy the flat with her mother.


The two of them do not qualify for a HDB subsidised flat, hence they have to look at the resale market.


Her mother, 54, has been separated from her husband for 19 years and they have not finalised their divorce.


Ms Manay said she doesn’t know where her father is now.


She’s currently living with her brother and his wife in a four-room HDB flat in Bukit Panjang.


But the brother has sold his flat because of financial difficulties and will be moving in with his in-laws by February next year.


Added Ms Manay: ‘I’ve been calling property agents for the last three months and they said that I’ve to top up cash if I want to buy a place.


‘I can only pay at most $5,000 cash and even that, I’ve to borrow from friends and relatives.


‘Even if I want to rent a place from HDB, I’ve to wait for at least a few months and I need a place urgently.’


While she can always rent a place first, the market rental rate for a three-room flat at about $1,200 per month is a big deterrent.


She said: ‘I’ll rather use that money to pay for a mortgage for a place. To pay about $1,000 for rental is not cheap, and that doesn’t include utilities and furniture.’


The current high COV prices is reminiscent of the property bull-run in the mid-1990s, when buyers have to pay a huge premium over the valuation for HDB flats.


Executive apartments in Bishan, for instance, routinely found buyers who were willing to pay more than $100,000 above their valuation, according to a Straits Times report in 1995.


Today, be prepared to pay a premium of at least $7,000 cash for a three-room flat in outlying Choa Chu Kang and similarly for a five-room flat in Yishun, according to HDB’s third quarter median COV figures for resale flats.


And that’s just for flats in the outlying areas.


The highest COV paid last quarter was a whopping $91,500 for a five-room flat in the central area.


The executive director of HSR Property Group, Mr Eric Cheng said that his firm has received letters from the public asking if they are selling flats with just a $5,000 premium or no upfront cash.He said: ‘I’ve to tell them that I don’t have such flats at the moment.


‘For those buying a resale flat today, they have to pay upfront cash above valuation. The property market has strengthened, the economy is doing well and it’s a sellers market now.


‘You can’t buy a resale flat now if you don’t have money. It’s not just the COV, you’ve to think about paying for property tax, agent’s fee and renovation too.’


He advised Ms Manay to rent if she can’t afford a place now.


The limited HDB flat supply is expected to improve with over 7,000 new flats to be launched in the next seven months.


This means that the COV situation will improve, said Mr Cheng.


He added: ‘Those who want to buy resale flats but can’t pay the COV can perhaps wait for next year when a lot of HDB flats will be launched.


‘By then, the COV should be more reasonable.’


Source: The New Paper

S’pore private home prices cool off in Q4

It rose 6.6 per cent, compared to 8.3 per the previous quarter. -ST Wed, Jan 02, 2008
The Straits Times


PRICES of Singapore private homes cooled off in the fourth quarter, rising at a slower pace of 6.6 per cent.

Reflecting the hiatus in the property market, the gain was lower than the 8.3 per cent recorded for July-September, after the government moved to cool the red-hot property sector.

For the year 2007 as a whole, the price index rose 31 per cent, according to flash estimates of the price index for private residential property released by the Urban Renewal Authority (URA) on Wednesday.

Prices of non-landed private residential properties increased by 7 per cent in the Core Central Region, 7.3 per cent in Rest of Central Region and 7.5% in Outside Central Region in the last quarter.

In comparison with the third quarter, prices of non-landed private residential properties rose by 8.3 per cent in the core central region, and 7.9 per cent respectively in the other two regions.

The flash estimates are compiled based on transaction prices given in caveats lodged during the first ten weeks of the quarter supplemented by information on the number of new units sold.

The statistics will be updated four weeks later when URA releases the full 4th quarter 2007 real estate statistics, when more data on the caveats lodged and the take-up of new projects are captured.

On the supply side, there are about 65,400 private residential units in the pipeline, of which about 41,600 new private housing units are expected to be completed between 2008 and 2010.

About 38,000 units of the supply in the pipeline (or 58 per cent) have not been sold by developers yet.

This does not take into account new sites that will be made available for development through the Government Land Sales (GLS) programme.

URA said the Government will continue to monitor prices closely and release relevant price sensitive information in a timely manner.

Source: News at AsiaOne