Policy Updates!

Bay Windows and planter boxes to be part of GFA.

New rules to KICK in 1st Dec 2008

Developers in Singapore have until the first day of December 2008 to include bay windows and planter boxes into the computation of the gross floor area (GFA) of residential developments.

In the past, bay windows and planter boxes were exempted from the computation of GFA for the following reasons:

(1) Bay windows were originally considered to be raised window ledges and not part of the floor slab. However, to be exempted they must not exceed width of 500 mm and must be raised at least 500 mm from the floor level).

(2) The objective of planter boxes is to encourage residents living in flats and condominiums to provide some vertical greenery to help create visual relief to the high-density living environment.

In fact, planter boxes are for the purpose of planting and cannot be converted to a balcony. In the past, the planter boxes are exempted from GFA computation if they did not exceed 1m in width and 500 mm in depth.

§ The abuses

However, the Urban Redevelopment Authority (URA) has recently discovered that the exemptions had been abused by developers to mainly increase the saleable strata area, whereby planter boxes and bay windows were converted to extra living spaces, and the developers had been charging buyers for them.

The loophole has now been plugged and the developers stand to lose at least 5% in future earnings when bay windows and planter boxes are all considered in the GFA.

This article will provide the background knowledge to the concepts of strata space, GFA (and the computation), and why the matter is relevant to real estate agents.

§ Gross floor area (GFA)

GFA is derived from multiplying the size of the land by its plot ratio*, e.g. when a piece of 15,000 sq feet land has a plot ratio of 1.4, it means the land owner can build up to 21,000 sq feet (15,000 sq ft x 1.4 plot ratio) of floor space. (* plot ratio of a site is the ratio of the gross floor area of a building(s) to its site area.

GFA represents the bulk and intensity of a development for the purposes of plot ratio control and computation of development charge. Using this GFA concept, the owners or developers can decide how much neutral areas they want to provide in their buildings.

For the purpose of computing development charge, all covered floor areas of a building, except otherwise exempted, and uncovered areas for commercial uses are deemed the gross floor area of the building.
In a typical condominium unit, the following floor areas are usually considered part of the GFA, including: balconies (which are open on at least 2 sides), intermediate floor such as a loft, covered enclosed space (regardless of accessibility use or height), CD bomb shelters, walls and columns etc.

§ Strata space

Strata space include space outside what has been defined as GFA, including the planter boxes, bay window, roof terrace, private enclosed space which are not covered and considered outdoor space. However, for many years, developers have been charging buyers for such outdoor space.

The floor area indicated in the Subsidiary Strata Certificate of Title (SSCT) refers to strata space and not GFA.



CPF Refund for property sellers aged 55 or older
Rules to change in January 2009

What will be changed?

From 1 January 2009 onwards, CPF members aged 55 years and above who sell their properties must refund the CPF moneys used in buying the properties to make up the Minimum Sum. However, if the properties were bought without using any CPF savings, the new rule does not apply.

Right now, the existing rule requires property sellers aged 55 years and above who have pledged their properties as part of the Minimum Sum to refund the pledge amount with accrued interest.

Let’s look at an example under the current CPF refund requirement.

Example of how much money Mr Ali has pledged to his own Minimum Sum and how much money he must return to his own CPF retirement account after selling his flat.

(a) Mr Mohad Ali’s Minimum Sum $90,000
(b) Balances in Retirement Account (excluding interest earned) $30,000
(c) HDB flat pledged plus the accrued interest on the pledge $51,000(The flat was pledged for $45,000 when Ali was 55 years old)
(d)Principal CPF withdrawn for the flat plus the accrued interest $100,000

If Mr Mohad Ali sells his HDB flat before 1 January 2009, he has to refund to his CPF Retirement Account (RA) the pledge amount plus accrued interest which is $51,000 ($45,000 original pledge plus accrued interest over the years).

However, if Mr Mohad Ali sells his HDB flat on or after 1 January 2009, he will have to refund to his CPF Retirement Account (RA) $60,000 (which is the shortfall between the Minimum Sum of $90,000 and the balance in RA). By the way, Mr Mohad Ali has withdrawn $100,000 from his CPF account to pay for the mortgage instalments (principal plus interest) of his flat. If he had withdrawn lesser amount, the refund of sale proceeds is different.

Those who use lower CPF amount

Let us look at another example where a property buyer had withdrawn lesser amount from his CPF savings.

Mr Tan Ah Kow is 60 years old and he has sold his HDB flat. Mr Tan has used less CPF moneys for his flat, and has earlier pledged his flat for a lower amount.

(a) Mr Mohad Ali’s Minimum Sum $80,000
(b) Balances in Retirement Account (excluding interest earned) $30,000
(c) HDB flat pledged plus the accrued interest on the pledge $39,000 (The flat was pledged for $33,000 when Tan was 55 years old)
(d) Principal CPF withdrawn for the flat plus the accrued interest $37,000

If Mr Tan sells his flat before 1 January 2009, he has to refund to his CPF Retirement Account (RA) the pledge amount plus accrued interest which is $39,000 ($33,000 original pledge plus accrued interest over the years).

However, if Mr Tan sells his flat on or after 1 January 2009, he only needs to refund $37,000 (which is [d]) to his RA. This because, unlike Mr Mohad Ali who has withdrawn $100,000, Mr Tan has only withdrawn $37,000 (including accrued interest) from his CPF to pay for the flat.

Exception
Property owners who reached the age of 55 before 1 July 1995 will not be affected by the change in the refund rules that will take effect from 1 January 2009.

Annex A – Withdrawal from Special and Ordinary Accounts at age 55 and beyond

The information below is reproduced from the official Central Provident Fund Board website.

If you reach 55 between 1 July 2008 and 31 December 2008, the following rules apply:

CPF Balance at age 55 (less Medisave Account balance)

Amount which can be withdrawn:
$5,000 or less The member can withdraw all his savings

$5,000 to $10,000 The member can withdraw $5,000 and set aside the remainder in his Retirement Account*.

$10,001 to $212,000 The member can withdraw 50% of the total balance in his Special and Ordinary Accounts. The remainder will be set aside in his Retirement Account.*

Above $212,000The member can withdraw all his savings after setting aside the Minimum Sum of $106,000 (as at July 2008) and the prevailing Required Amount ($14,000 for 2008) in the Medisave Account.

*The Retirement Account is created when a member reaches age 55.

From 1 January 2009, members who reach 55 can only withdraw 40% of their Special and Ordinary Account balances, and then the remaining balances, if any, after they have met the CPF Minimum Sum and the Medisave Required Amount in the Medisave Account. This percentage of withdrawal will go down by 10% points each year.

Following shows the percentage of Ordinary and Special Account balances that you can withdraw at age 55.

Withdrawal of Special and Ordinary Account Balances at age 55

Until 31 Dec 2008 is 50%
1 January 2009 is 40%
1 January 2010 is 30%
1 January 2011 is 20%
1 January 2012 is 10%
From 1 January 2013
Only the Special and Ordinary Account balances after setting both the CPF Minimum Sum and Medisave Minimum Sum can be withdrawn


From 1 January 2013, members who reach 55 can withdraw their Special and Ordinary Account balances only after setting aside the CPF Minimum Sum and Medisave Minimum Sum. However, members can still withdraw the first $5,000 at age 55.