With so many new regulations coming up in short spans of time, many people are confused.
....
With so many new regulations coming up in short spans of time, many people are confused.
You would normally associate HDB with residential flats. However HDB also has shophouse units which are considered commercial properties. These commercial properties are normally located with town councils or town centres near hawker centres.
Some of these HDB shophouses contains residential quarters.
Due to these residential quarters within the HDB shophouses, this has caused a lot of confusion as to where they are considered HDB flats or partial HDB flats (apportioned by the size of the unit).
What if you already own a private property, can you buy a HDB shophouse commercial unit that also happens to have a residential dwelling?
Apparent if we go by the HDB rules that applies on HDB flats, then you cannot buy a HDB shophouse if you already own a Private property.
Say for example the HDB shophouse is 1600 sq feet made up of 2 floors.
— 800 Sq feet on 1st floor and
— 800 sq feet of residential unit on the second floor.
If you have NO outstanding housing loan, then the bank will consider to lend you 80% of the valuation for the property. However, if you have any existing home loan, some banks are considering: -
— Lending you 80% on the commercial portion of the HDB shophouse of 800 sq feet
— Lending you 60% on the residential portion of the HDB shophouse of 800 sq feet
Apparently some Singapore banks are still checking with MAS with regards to the treatment and classification of such property. As these properties typically have quite a number of regulations attached to it’s ownership and business use, they can be risky both for the property buyer as well as the banks who lends money out on these type of properties.
So we decided to check with HDB on how they Classify HDB shophouses
————————- Original Message —————————-
Subject: ENQUIRY ON PURCHASE OF COMMERCIAL PROPERTIES
From: ”Yit Hah LEE” >xxxxx@hdb.gov.sg>
Date: Fri, October 21, 2011 6:40 pm
To: Property Buyer Mortgage Consultant
————————————————————————–
HOUSING DEVELOPMENT BOARD
Your Ref :
Our Ref :
Date : 21 Oct 2011
TEL : 1800-8663073
FAX : 63972477/8
EMAIL : pldmail@hdb.gov.sg
xxxxxx
Dear xxxxx,
ENQUIRY ON PURCHASE OF COMMERCIAL PROPERTIES
We refer to your email of 19 Oct 2011.
2 Please be informed that although some HDB commercial properties have living quarters attached to them, these properties are sold or tenanted out as a commercial property under a single title and deemed as non-residential. The prevailing policy that persons who buy non-subsidized flats are not allowed to concurrently own an HDB flat and private property within the minimum occupation period is applicable only to private residential property.
3 We have also no restriction for foreigner/ Singapore Permanent Resident to purchase HDB commercial shops (i.e. shop with living quarters at 2nd storey or shop without living quarters) provided the individual(s) are above 21 years of age and is not an undischarged bankrupt.
4 You may visit our website at http://www.hdb.gov.sg> Commercial Tenants > Lessees > Managing your sold premises. There is more general information on the procedure; policies for Resale/ Transfer of Shop. Alternatively, you can call our toll-free enquiry hotline at 1800-8663073
Yours faithfully
LEE YIT HAH (Miss)
SENIOR ADMIN EXECUTIVE
for HEAD, TENANCY; LEASE MANAGEMENT UNIT
PROPERTIES; LAND DEPARTMENT
CLARIFICATION FROM HDB REGARDING HDB SHOPHOUSE
We are thankful to Ms. Lee of HDB for her fast response to clarify the issue of HDB shophouses.
Even though this property is treated as Commercial, many of these properties have maybe between 40 plus years to 70 plus years of remaining leases as most HDB shophouses were older designs built in the 1970s onwards.
Will there be racial quota?
We can’t help but wonder what would be the racial quota of these shophouses on the residential units?
How many people can stay in it?
Banks are generally only lending to HDB shophouses with a minimum of 60 years of remaining lease. The maximum tenor of the loan is capped by (Remaining lease – 30 years). This is not a rule set in concrete or by regulation, but a rule that banks normally apply.
Property Buyer’s advice
If for any reason HDB shophouses come in at the cheaper range of the price range, this can best be explained by the possible ambiguity of investing in such category of properties. Investors fear uncertainty and generally apply a discount to uncertainty. Banks similarly may impose either a longer processing time or some conditions on lending on such property, or stay away completely.
The value of this investment will very much depend on the Singapore regulatory environment governing this type of housing as well as credit availability or restrictions at the point of sale. Else this asset will be purely a yield play without too much excitement on capital gains.
As trading volume is rather thin, you could very easily pick a gem as well as a lemon.
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Ref:http://www.stproperty.sg/articles-property/financial-guide/can-i-buy-a-hdb-shophouse-with-attached-residential-quarters/a/101594#.U-jdYfj_hE8.facebook
Ref:http://www.stproperty.sg/articles-property/financial-guide/can-i-buy-a-hdb-shophouse-with-attached-residential-quarters/a/101594#.U-jdYfj_hE8.facebook
Conditions of buying a shop in Resale market
Lodgement Scheme
Under the new lodgement scheme, lessees who wish to sell their shops only need to lodge or file their resale details via the online application with an admin fee of $100/- (exclusive of GST) from 5 Jul 06.
However the lodgement scheme is not applicable under the following scenarios :
- shops that have not been issued with leases
- there is a need for the lessees to sign a fresh Agreement for Lease with HDB
- exceptional cases which involves a material change of use requiring HDB’s evaluation
- HDB would first assess whether the proposed use will cause any disamenities to the surrounding. Examples of such cases are family restaurants and those who want to change their living quarters to non-residential use.
Request for Inspection Reports
Under this scheme, the shop lessees may choose not to have an inspection of the premises during the resale/transfer application. They may engage their own Qualified Person (QP) or accredited checker (instead of HDB conducting a site inspection) to verify that any alteration and addition works carried out/ to be carried out in the premises meet all statutory requirements.
For this option, both transferors and transferees are required to submit a " Declaration and Undertaking form" (26KB).
For works done prior to 1 Oct 05, they can request for HDB's renovation records/inspection report at a fee of $300/- (exclusive of GST). For works done after 1 Oct 05, they can appoint their own QP to verify that the works done meet BCA/FSSD's requirements.
Ref:http://www.hdb.gov.sg/fi10/fi10330p.nsf/w/RetailOpenMktBuyCond?OpenDocumentv
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