How to Spot En Bloc Potential in Singapore in 2018

fixed deposit linked home loans singapore en bloc

So you’ve bought your dream home. It’s located in a nice area that doesn’t require you to spend hours on public transport to get to work. You have a nice view from a high floor. There’s enough space for you and your household to keep your bathroom habits private. But you know what would really make it a dream? If the government would take it off your hands in an en bloc sale a few years from now.

Since the majority of residential property, including all HDB flats, is on 99 year leases, there’s a time limit on your dream home—especially if you buy resale property whose lease might run out during your lifetime. Recent news coverage has left people wondering what will happen if their lease runs out before they die.

In the past, purchasers of old HDB flats didn’t worry too much about this, with many assuming their flats would eventually be eligible for SERS (Selective En Bloc Redevelopment Scheme) and they’d be paid a tidy sum of money to relocate to a brand new home.

But the government has now warned against assuming your home will eventually be acquired through SERS—this is a clear sign that the authorities intend to let some flats run the full course of their leases, before acquiring them at $0.

Given the possibility that you could one day lose your home, it becomes even more pressing to know just how much en-bloc potential your home really has. While there’s no magic formula, here are some factors that can raise your chances.


Rising land and property values in your area

One of the catalysts for an en-bloc sale is when the land value rises above the value of your property.

For example, many of those people who’ve bought old HDB flats in the Tiong Bahru estate are no doubt hoping they’ll be eligible for SERS in a few decades, since Tiong Bahru has been given a new lease of life thanks to the hipster cafe explosion.

One big hint you might be able to benefit from en bloc is if your area is undergoing a huge transformation. For instance, in 2014 it was announced that $31 million would be spent to develop Woodlands  into a high-traffic zone, with six blocks being relocated under the SERS scheme in the process.

Obviously, centrally-located areas with good public transport links have a higher chance of experiencing more en-bloc sales. You have a higher chance of your place going en bloc if you live in River Valley or Redhill than, say, Yishun.


Your property isn’t using the land space efficiently

It’s no surprise that condo units and HDB flats have been shrinking over the years, while the number of floors in each block has risen. It makes sense for developers, as they earn more out of every square metre of land they buy and sell.

Old blocks or condos that use space inefficiently could be prime candidates for redevelopment.

For instance, if your block has only four or five floors when the developer could build a block of 30-floors in its place, it’s a good candidate for an en-bloc sale.


There is a wide availability of alternative housing in the area

When a building gets acquired in an en bloc sale, like stray cats, all the residents have to be relocated. The availability of suitable housing in the area makes it more likely that a successful en bloc exercise can be carried out.

If you live in a condo and an en bloc sale is proposed, it will only be carried out if at least 80% of the residents vote in favour of the sale (or 90% if the development is less than 10 years old). They’re more likely to vote yes if they know they can move elsewhere in the same area.

When it comes to HDB property, the government has the final say, but one of the factors they consider is the availability of suitable sites in the area to move residents to.


The property market is strong

An en-bloc sale will only happen if developers or the government feel that they can get even more value out of the land by buying and redeveloping it.

For private property dwellers, that means that the performance of the property market will influence how often and how aggressively developers bid for new sites.

For HDB property, one of the factors that will be taken into account is the economic viability of the en bloc sale, which basically means the same thing.

So far, we have not gotten to the stage where the oldest residential HDB leases have started to expire. But based on the messages the government has been sending out, it’s best not to assume your place will be selected for SERS, even if it satisfies all of the above criteria.

Have you or has anyone you know ever had their home acquired under SERS or an en bloc scheme? Share your stories in the comments!