The successive rounds of cooling measures have seen property agents who used to make money on the side from property investments, now finding it more difficult to do so, revealed media reports.
According to the Council for Estate Agencies (CEA), these agents comprise a small portion of the agent population, which stood at 31,040 registered salespersons as of 1 January.
One agent revealed that the number of agents investing in local properties accounts for around three percent of the total number of buyers.
“In a pool of about 200 to 300 buyers for a local development, agents may constitute about three percent. For overseas projects, say a good weekend where you have maybe 10 to 20 buyers, agents can make up about 20 percent. But that's because the plate is smaller,” he explained.
Such investments could take the form of a single buyer, or a group of buyers banding together to take up a loan or acquire a property under the name of one person. Thereafter, they would draw a separate legal agreement stating how the loan and ownership of the property will be divided.
During the en bloc fever, property agents would buy into developments on the brink of triggering a collective sale, another agent said.
“If the en bloc sale goes through they would get the windfall. On the other hand, if they sense a problem they can sell the properties at a profit to the next buyer,” he said.
“They usually worked as a team and got someone to broker the deal on their behalf,” said the agent. “The holding period is usually less than a year.”
But the recent cooling measures have made such wheeling and dealing more difficult.
Take for instance the Total Debt Servicing Ratio (TDSR) framework which was rolled out in June. The ruling not only requires “guarantors” to be brought in as co-borrowers, it also imposed a 30 percent cut on the variable income component, effectively limiting the agents’ ability to take on property loans.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email firstname.lastname@example.org