The rules for collective sales need a re-examination and could do with some tweaking so that owners can be spared much trouble and stress from needless exercises.
Once a development starts the process for a collective sale, the flats there are no longer put up for sale as sellers hope for a windfall from an en bloc sale, and buyers fear incurring the seller's stamp duty should they purchase a flat and a collective sale happens.
Properties have thus become unavailable in many older developments since the onset of the collective sale mania, and this could cause a serious dislocation in the property market.
This problem of virtually thousands of flats exiting from commercial circulation could be corrected with some adjustments to the rules, including the following:
• More owners should support selling en bloc before a collective sale committee is formed to kick-start the process. If the law requires that at least 80 per cent of owners must consent to sell en bloc, why should the process start on the back of only 25 per cent interest? Why not require 50 per cent or 60 per cent? And, why are voices against a sale not counted? If more than 20 per cent register disapproval at this stage, why even start the process?
• The meetings to start the collective sale process require a quorum of owners holding 30 per cent of share value, and just a simple majority to pass the resolution. This means that all it takes is about 17 per cent of share value holders to get the collective sale process going, thus effectively taking the development off the market.
• The collection of signatures currently extends to 12 months. If there was majority support for the move, is such a long period necessary?
• The "no sale, no fee" condition for the marketing agent and lawyers creates warped incentives. Why not require some mandatory upfront payment to them, which will cause more serious thinking as to whether there is an actual majority to warrant going the collective sale route?