Effect on collective sales

How does this effect owners in collective sales? 

I suspect this will have a big effect on ex-HUDC estates that undergo collective sales, as the vast majority would probably have to downgrade to a HDB afterward due to the preponderance of sale committee and consenting majority ineptitude in these estates.

Well there are many kinds of owners with varying degrees of liquidity but all of them would now not be able to downgrade to a HDB unless they sell their private property within 6 months via collective sale or privately. I am not a lawyer, but I would assume, the collective sale would have to be STB/HC  approved and not just 'in the process'.

Since collective sales are notoriously long and uncertain, timing that HDB purchase is crucial and trickier now. Under the old system, owners who could afford to , just went out and bought a resale HDB at any time and waited for the collective sale to go through. They bought early to avoid the spike in resale prices in the area that surely would occur nearer the sale completion date. If the sale did not go through, they had 3 choices: a) just wait out the 3 year holding period before selling their HDB and move back into the private property (which they had rented out in the meantime). b) sell their private unit and stay in the HDB or c) keep both.

Now, if they bought the HDB too early in the process, they would be forced to sell their private unit before the sale's completion. Six months is not a long time to find a buyer, and depending on what point the collective process had reached, the seller could find himself selling at a steep discount from the RP. The buyer would naturally be a flipper - who else would buy.

For example:

If the CSA has been signed but not the S&P, then the seller has to price his unit so as the buyer can have a reasonable chance of making a profit when and if the sale goes through. Bear in mind the new owner would have to pay 3% sellers stamp duty for selling the property within 3 years to the developer-buyer. This new stamp duty is not the deduction stated in the Fourth Schedule  ('1. Stamp duty paid on the purchase of the lot or flat') and is not recoverable from the collective sale proceeds. The buyer can claim financial loss, though.

If the S&P has been signed, then it becomes even more difficult to sell the unit in the prescribed 6 month period unless at a steep discount.  The buyer cannot claim financial loss and so must make his profit from the seller's distress sale.... the MinLaw closed that loophole a long time ago. 

(c) shall not be taken to have incurred a financial loss by reason that the proceeds of sale for his lot, after such deduction as the High Court may allow (including all or any of the deductions specified in the Fourth Schedule), are less than the price he paid for his lot if he had purchased the lot after a collective sale committee had signed a sale and purchase agreement to sell all the lots and common property to a purchaser.

Do not be lulled into thinking that it is just a hop, skip and jump from signing the S&P and completion of sale. After the S&P has been signed, the sale committee has 1 YEAR to make it's application to the Board for sale, the Board has 2 months tops to mediate and the High Court is indeterminable. 

So unless, special consideration is granted to en bloc sales, buying that HDB before completion becomes a very risky business indeed. 

Special consideration? I don't think that will happen.