Property News

mpan12 · Apr 28, 2016

Tekkun said:
Malaysian policies are always consistent.
It is how you interpret it. It is like 0 = zero nothing. In Malaysia 0 = infinity.
Just like mpan12 says..he haven't even figure what is the difference between leasehold and freehold. That itself tell you he has not seen a titledeed before and what it is stated in it. To me, that is the basic fundamental of any property consideration, let alone investment.

Yes. I've not seen the title deed before. So what does it say? Like the Msian govt can take back the land anytime they want?

And why is Medini leasehold rather than freehold like many of the parts of Iskandar?

Appreciate if you can share more. Thanks.

xebay11 · Apr 28, 2016

mpan12 said:
That's assuming you want to keep for that long and pass down for generations. But strictly for investment, even for a long time line like 20-25 years, it's still very safe to buy leasehold properties in SG. The value will be there.

Anyway, freehold properties are within reach of more buyers last time. Today, it's only "affordable" for the richer and upper class ones.

All HDB flats are leasehold but look at how it gave many Singaporeans the returns over the years.

SG property market is strong. Many foreign investors love it even till today, though they are more cautious or less interested after the cooling measures were introduced.

If I am a buyer, I'd likely buy a 5 years old leasehold condo than a 20 years old freehold condo just judging on the age factor alone.

If for pure investment POV, meaning just rent out and never stay, then leasehold gives better returns, especially if location is better than the freehold one. But for home ownership, nothing beats freehold. I keep a HDB for extreme emergency and last resort abode in case of massive tragedy and all my properties get wiped out, or I cannot afford to live in them but will never happen as they are all fully paid. But nice to own HDB and can do so much with it. I am waiting patiently for MOP at the end of the year and planning to use the rental to finance an overseas property, JB? Ha ha

winners · Apr 28, 2016

mpan12 said:
I've always been curious about auction sales. How do they happen? Do the owners have to declare they are bankrupt, or they simply tell the bank they don't wish to pay any more, the bank confiscates the property and they will lose all the previous deposits and loans paid?

Same in everywhere around the world. You miss your payments after several months (usually 3) and they will send you a reminder (warning) letter. Thereafter, if you still ignore, they'll send you their lawyer's letter to inform you that they'll put your property on lelong if you still don't pay by a certain date. The bank don't have the time to wait for the owner to become a bankrupt. Don't forget, the bank is still keeping your title deed.

If the lelong goes through and there's excess funds after deducting the outstanding loans + interests, these will be returned to the owner. If not, the owner will still have to top up to the bank. This case will be called negative equity.

winners · Apr 28, 2016

xebay11 said:
If for pure investment POV, meaning just rent out and never stay, then leasehold gives better returns, especially if location is better than the freehold one.

The reason for leasehold to be better for investment is because the yield is usually higher due to the low entry point, ie: for a similar sized and aged property in a similar location, the leasehold one is usually cheaper due to the general impression that the leasehold one has a limited life-span before being returned to the state.

Also in particular in Singapore, banks will not give loans to private properties with less than 60 years of lease.

mpan12 · Apr 28, 2016

xebay11 said:
If for pure investment POV, meaning just rent out and never stay, then leasehold gives better returns, especially if location is better than the freehold one. But for home ownership, nothing beats freehold. I keep a HDB for extreme emergency and last resort abode in case of massive tragedy and all my properties get wiped out, or I cannot afford to live in them but will never happen as they are all fully paid. But nice to own HDB and can do so much with it. I am waiting patiently for MOP at the end of the year and planning to use the rental to finance an overseas property, JB? Ha ha

Go buy Medini. Up and coming area. Future CBD. Can't go wrong bro.

mpan12 · Apr 28, 2016

winners said:
Same in everywhere around the world. You miss your payments after several months (usually 3) and they will send you a reminder (warning) letter. Thereafter, if you still ignore, they'll send you their lawyer's letter to inform you that they'll put your property on lelong if you still don't pay by a certain date. The bank don't have the time to wait for the owner to become a bankrupt. Don't forget, the bank is still keeping your title deed.

If the lelong goes through and there's excess funds after deducting the outstanding loans + interests, these will be returned to the owner. If not, the owner will still have to top up to the bank. This case will be called negative equity.

Oh thanks for the explanation. I think the bank is kind already. Thought they will have legal rights to even confiscate the buyer's present home and demand payment. If the bank auctions off the property but cannot find buyers, won't they take the shit instead while the original owner gets away too easily?

So for the JB condos you mentioned now on auction sale, so fast the owners default on payment.... Actually, I don't think the loan is difficult to pay off. Maybe the owners find it pointless to continue holding on to the condos which are not giving them the returns they expect.

xebay11 · Apr 28, 2016

winners said:
The reason for leasehold to be better for investment is because the yield is usually higher due to the low entry point, ie: for a similar sized and aged property in a similar location, the leasehold one is usually cheaper due to the general impression that the leasehold one has a limited life-span before being returned to the state.

Also in particular in Singapore, banks will not give loans to private properties with less than 60 years of lease.

Yep, exactly right. So in the end it depends on your needs and budget. Also the 40 year thing on bank loans, I believe only for private properties right? HDB not applicable?

xebay11 · Apr 28, 2016

mpan12 said:
Go buy Medini. Up and coming area. Future CBD. Can't go wrong bro.

Only will consider FH landed and near causeway, no "what if" type locations. But if the RM2m rule kicks in, I will strike Johor off the "to buy" list.

Tekkun · Apr 28, 2016

mpan12 said:
Yes. I've not seen the title deed before. So what does it say? Like the Msian govt can take back the land anytime they want?

And why is Medini leasehold rather than freehold like many of the parts of Iskandar?

Appreciate if you can share more. Thanks.

I am not a lawyer, so please check with your lawyers for confirmation.

All leasehold land belongs to the state and is leased out to an owner for a number of years. Land owners have to pay to extend the duration of the lease subjected to approval and valuation. You are buying the right to stay for a duration of time. The land does not belong to you.

Additionally, during a sale and purchase process, consent is required from state authorities (Land Office) before the transfer can proceed. The state can withhold approval for any number of reasons. This is where the State can implement enforceable new policies. Due to this additional step, it can take much longer to buy / sell a leasehold property. (I had properties that took me 9 months to get approvals before my S&P is concluded) Leasehold land with less than 66% left is often not favored by banks.

I have not seen any Medini title deeds yet but based on information, this is my best interpretations. I suggest you guys check it out with your lawyers (must be Malaysian lawyers )

For Medini, the leasehold is slightly different. Actually the original land is freehold but it is sold to the Medini as a master developer who inturn sell it to individual developers on a leasehold basis. Ultimately, the land after the lease would belong to Medini. You do not own the land, you buy the right to stay for a limited time unless you renew the lease for $X amount of money, subjected to approval which should not be a problem. I also understand only 1 person can be registered on the title deed in Medini, so it is worthwhile to check it out.

Freehold land on the other hand belongs to the owner (the purchaser) indefinitely. No approvals / consent needed. Buy and sell as you please. No limit on names appearing on the title deed.

In every State leasehold title, there will be a note like this at the bottom of the title.

Translation

"Important Restrictions"
This ownership cannot be transferred, mortgaged or held in lien without the approval of State Authorities

Tekkun · Apr 28, 2016

By the way, it must be reminded that Land Office and State Administration are totally 2 different thing. What happen to the RM1m or RM2m Foreign Investment requirement is a State Admin matter. It is separate from the requirements of the land office though they may intertwined in decision making.

kawan2sgmy · Apr 28, 2016

We are guessing if resale hdb price will continue to come down further?
If we were to buy, it’s for keeps for the long term as you had mentioned. And only my son qualifies to buy.
We are also contemplating between getting an old FH or a new LH condo BUC.
For old FH, it really looks very run down, and honestly we don’t feel proud to be the owner, unless willing to renovate.
For most new LH, it will be ready only 4 yrs later, but they are so small for the smaller units, but the surrounding looks nice.
All units come with big open balconies which in my opinion, serves no definite purpose except for hanging clothes to dry.
The quantum for bigger units is just too high. Better to buy 2 smaller properties.
We feel we are kind of being trapped by all the govt policies!
Or are we complicating ourselves?
Any thoughts to share? TIA!

xebay11 said:
In SG leasehold is a total no no, assuming freehold will be under your family for 1,000 years ie. ten generations and leasehold only lasts one generation and yet costs 80% of freehold. Also unique in Singapore is the issue of loans from bank and payment using cpf funds, I think once the property reaches 35 years cpf cannot be used to pay for the property. Basically making it almost worthless.

That is why barring HDB investments, which I am getting about 5% returns, my residential investments are all freehold.

xebay11 · Apr 28, 2016

kawan2sgmy said:
We are guessing if resale hdb price will continue to come down further?
If we were to buy, it’s for keeps for the long term as you had mentioned. And only my son qualifies to buy.
We are also contemplating between getting an old FH or a new LH condo BUC.
For old FH, it really looks very run down, and honestly we don’t feel proud to be the owner, unless willing to renovate.
For most new LH, it will be ready only 4 yrs later, but they are so small for the smaller units, but the surrounding looks nice.
All units come with big open balconies which in my opinion, serves no definite purpose except for hanging clothes to dry.
The quantum for bigger units is just too high. Better to buy 2 smaller properties.
We feel we are kind of being trapped by all the govt policies!
Or are we complicating ourselves?
Any thoughts to share? TIA!

Here are my thoughts, if HDB continue to fall, good.

Since your budget allows only old rundown FH VS a new LH Condo, you need to know your needs. Frankly, I know the temptation to get newer LH condo is there but I would not touch, as it is short term benefit by long term pain, if you want to sell a depleting lease property later for whatever reasons.

An exception to me buying a LH condo is those with Mall / MRT below, ie, mixed development type, these LH condos hold their value well.

OK if all else out of reach, do consider less than 10 year old HDBs in prime areas near the city, or next to malls / MRT to me, if you can get a good deal, they are very good value for investment or own stay and cheap and easy to maintain.

As for big open balconies, I love them especially on high floor with good views, you can put a nice two piece dining set and relax with a beautiful skyline view. At least in Singapore, city views are the only real views, we do not have real sea views, river views or lake views, no matter how glossy the brochures look. I like City View DBSS at Boon Keng in particular.

Forgot to say that buying two smaller properties do take into account ABSD which may be quite sizable, especially so in proportion to smaller quantum purchases, so may not be worthwhile, that is why l started buying overseas now.

snowbird · Apr 28, 2016

mpan12 said:
Oh thanks for the explanation. I think the bank is kind already. Thought they will have legal rights to even confiscate the buyer's present home and demand payment. If the bank auctions off the property but cannot find buyers, won't they take the shit instead while the original owner gets away too easily?

So for the JB condos you mentioned now on auction sale, so fast the owners default on payment.... Actually, I don't think the loan is difficult to pay off. Maybe the owners find it pointless to continue holding on to the condos which are not giving them the returns they expect.

If the bank seize the property and auction it off, the owner will lose all his money in the down payment, from all installment paid and maybe money for the renovation / fixtures too, so owner is not getting away too easily, he just did a quick cut loss and exit the market.
However, there are too many defaults and banks cannot find buyers for their seizure, then you'll see another sub-prime crisis JB style.

Tekkun · Apr 28, 2016

How does house auction work in Malaysia.

1. Final Loan payable minus final auction price = Borrower have pay the difference.
2. Borrower liable personally for loan between him and bank. Property is just a collateral.
3. Final loan payable include all interests, outstanding, auction costs, repossession costs, etc.
4. If auction is higher than outstanding loan, borrower get balance too.
5. Sometimes, outstanding loan is much smaller than auction.

No such thing take back property, cut and run.

And if kena auction, you be black listed and that information is shared across all financial circles. No more house and car loans, no more credit cards, etc.

gooddebt · Apr 28, 2016

Tekkun said:
How does house auction work in Malaysia.

1. Final Loan payable minus final auction price = Borrower have pay the difference.
2. Borrower liable personally for loan between him and bank. Property is just a collateral.
3. Final loan payable include all interests, outstanding, auction costs, repossession costs, etc.
4. If auction is higher than outstanding loan, borrower get balance too.
5. Sometimes, outstanding loan is much smaller than auction.

No such thing take back property, cut and run.

And if kena auction, you be black listed and that information is shared across all financial circles. No more house and car loans, no more credit cards, etc.[/QUOTE

only blacklisted in MY , SG still safe...
if auction amt smaller than loan, can the foreign buyer just act blur and dont pay balance ? nothing much the banks can do ?

kawan2sgmy · Apr 28, 2016

Thanks for your kind thoughts!
You have raised valid points, a very observant property investor indeed!
Current yield of LH properties is pretty low, not sure about future yields and future capital appreciation.
The Poiz at Potong Pasir, a mixed development, is asking abt $1400 psf base price; so a 2 bedder wld likely cost abt 1.2mil.
But how to live in a 800-odd sf for a family with children! At most it’s liveable for 2 adults. Our country is fast becoming like HK.
No wonder our govt says it’s still not time to take away the cooling measures. Yes the ABSD is another hurdle!

Btw, what is your take on those very old LH properties like Mandarin Gardens & Laguna Park, where they sit on large plots of valuable land with full sea view - your favoured million dollar view!

xebay11 said:
Here are my thoughts, if HDB continue to fall, good.

Since your budget allows only old rundown FH VS a new LH Condo, you need to know your needs. Frankly, I know the temptation to get newer LH condo is there but I would not touch, as it is short term benefit by long term pain, if you want to sell a depleting lease property later for whatever reasons.

An exception to me buying a LH condo is those with Mall / MRT below, ie, mixed development type, these LH condos hold their value well.

OK if all else out of reach, do consider less than 10 year old HDBs in prime areas near the city, or next to malls / MRT to me, if you can get a good deal, they are very good value for investment or own stay and cheap and easy to maintain.

As for big open balconies, I love them especially on high floor with good views, you can put a nice two piece dining set and relax with a beautiful skyline view. At least in Singapore, city views are the only real views, we do not have real sea views, river views or lake views, no matter how glossy the brochures look. I like City View DBSS at Boon Keng in particular.

Forgot to say that buying two smaller properties do take into account ABSD which may be quite sizable, especially so in proportion to smaller quantum purchases, so may not be worthwhile, that is why l started buying overseas now.

Frodo · Apr 28, 2016

winners said:
Not to worry. Frodo is confirmed, chopped and double-confirmed to retire in JB. He's getting the keys to his 2nd unit soon. As he had said before, all these will eventually be titled to his children. Can I be his god-son or better still, his son-in-law? lol.

LOL! I am pretty much happy to live out the rest of my days in JB. Keys to second house still 2 years or more away. While I look forward to that being completed, I am also not in a hurry since a longer lead time is good for me to pay down current debts. My kids still not weddable yet…wait a few more years lah! LOL! Anyway, to reply on the earlier point, I was saying that if really is stuck, it would have been better to be stuck when with property at below RM1 million, compared to being stuck with property above RM1 million. Point is lesser loan burden lor, from my peasant perspective. Consider me naïve, but I believe things will look up for JB in the next few years.

winners · Apr 28, 2016

xebay11 said:
Yep, exactly right. So in the end it depends on your needs and budget. Also the 40 year thing on bank loans, I believe only for private properties right? HDB not applicable?

Most Singapore banks will not give loans for private leasehold properties with less than 60 years left. As for HDB, CPF cannot be used for those less than 65 years. Previously HDB loans can only be from HDB until recently when banks are allowed to participate. I believe the banks' cut-off point should also be similar to the CPF cut-off point. Banks are not too keen on loans for HDB apartments because in case of bankruptcy by the owner, the HDB will have the first priority to administer the distribution/payment of the proceeds from the lelong of the HDB apartment. Also, the banks will never have the right to lelong the HDB apartment without the full consent from the HDB.

Frodo · Apr 28, 2016

kawan2sgmy said:
Thanks for your kind thoughts!
You have raised valid points, a very observant property investor indeed!
Current yield of LH properties is pretty low, not sure about future yields and future capital appreciation.
The Poiz at Potong Pasir, a mixed development, is asking abt $1400 psf base price; so a 2 bedder wld likely cost abt 1.2mil.
But how to live in a 800-odd sf for a family with children! At most it’s liveable for 2 adults. Our country is fast becoming like HK.
No wonder our govt says it’s still not time to take away the cooling measures. Yes the ABSD is another hurdle!

Btw, what is your take on those very old LH properties like Mandarin Gardens & Laguna Park, where they sit on large plots of valuable land with full sea view - your favoured million dollar view!

2 bedder for $1.2m, 800sqft? Wow….considering that is about RM3.3 million, that is more than enough to pay off my two JB properties and still leave a cool RM1.8 million for drinking kopi the rest of my days! Haiz….other than holding on to my HDB for dear life (unless can sell for $1 million!:p) there is simply no way for me to buy any property in Singapore. Good for you guys to have more options

Tekkun · Apr 28, 2016

gooddebt said:
Tekkun said:

How does house auction work in Malaysia.

1. Final Loan payable minus final auction price = Borrower have pay the difference.
2. Borrower liable personally for loan between him and bank. Property is just a collateral.
3. Final loan payable include all interests, outstanding, auction costs, repossession costs, etc.
4. If auction is higher than outstanding loan, borrower get balance too.
5. Sometimes, outstanding loan is much smaller than auction.

No such thing take back property, cut and run.

And if kena auction, you be black listed and that information is shared across all financial circles. No more house and car loans, no more credit cards, etc.[/QUOTE

only blacklisted in MY , SG still safe...
if auction amt smaller than loan, can the foreign buyer just act blur and dont pay balance ? nothing much the banks can do ?

Click to expand...

Credit cards and Banks do not have borders as far as credit risks is concerned. Next step is bankruptcy. You can't even pass immigration as the system is linked.

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