Daniel Choy is a professional Commercial and Industrial Property Trainer and Coach. I wrote the article to Forum Page because I felt that the Developers are misleading the Public. It was such a impressively argued article that URA finally decided to stop developers from using the term SOHO to mislead the public. If you are interested to be train as a smart Commercial and Industrial Property investors or agents, do write to danielchoytl@gmail.com to indicate your interest so that I can include you in the next training schedule.
Letter to Straits Times FORUM PAGE by Daniel Choy Tuck Leong
Soho marketing tactics confuse buyers
03 Apr 2013, Straits Times
Because of this, developers are creatively marketing their projects for small office, home office (Soho) use, even though the URA does not recognise Soho as a planning term and does not specifically approve a development for Soho use.
This confuses potential buyers. Why does the URA allow developers to use such marketing tactics to fetch higher prices and boost sales?
What about buildings zoned for commercial use, sitting on commercial land, and being marketed as Soho? Can a commercial building that is used for office purposes be approved for residential use under the Home Office Scheme or other schemes?
What about commercial buildings in a white zone, where some blocks are used for fully commercial purposes while others are used as Soho? Buyers are confused on whether to purchase units under the residential or commercial category.
With the introduction of the additional buyer's stamp duty and lower loan-to-value ratios for residential units, buyers would, of course, prefer to purchase units under the commercial category.
Developers should not be allowed to market their projects as Soho and confuse buyers. If a project is meant for solely residential or commercial purposes, this should be made clear to buyers.
Daniel Choy Tuck Leong
http://www.straitstimes.com/premium/forum-letters/story/soho-marketing-tactics-confuse-buyers-20130403
http://www.ura.gov.sg/uol/media-room/forum-replies/2013/apr/forum13-05.aspx
URA's Reply
Developers must spell out allowable use of properties
06 Apr 2013, Straits Times
Mr Choy correctly pointed out that small office, home office (Soho) is a marketing term used by property agents and developers. It does not refer to any specific development type that is allowable or has been approved by the Urban Redevelopment Authority (URA).
Developments that have been marketed as Soho are approved as either office or residential developments.
Without explicit prior planning permission from the URA, any development that has been approved for office use cannot be converted to residential use, and vice versa.
However, if an owner of a residential property wishes to conduct some small-scale business within his home, he can apply for permission by lodging a notification under the Home Office Scheme.
Introduced in June 2003, the scheme allows home owners, tenants or authorised occupiers of residential properties and flats to conduct small-scale businesses within their homes, provided they do not cause any inconvenience to neighbouring residents, and the proposed use is considered a permitted use.
To minimise disturbances, only up to two non-residents can be engaged and work in the premises for their businesses. Details on the Home Office Scheme can be found at edanet.ura.gov.sg/dcd/homeoffice/HOMainPage/HOindex.jspThe allowable use for each property is clearly spelt out in the option to purchase, and in the sale and purchase agreement.
Developers also have to ensure that the marketing materials for their properties, for example, newspaper advertisements, and sales brochures or pamphlets, provide accurate information to prospective buyers on the allowable use of the properties.
Prospective buyers who come across misleading marketing collaterals can report the matter to the URA, which will then investigate and take action against the developer if there is misconduct or misrepresentation.
Prospective home buyers can also refer to the Home Buyers' Guide (www.ura.gov.sg/lad/HBG/index.htm) on the URA's website for more information on the sale and purchase of uncompleted residential properties.
Han Yong Hoe
Group Director (Development Control)
Urban Redevelopment Authority
http://www.ura.gov.sg/uol/media-room/forum-replies/2013/apr/forum13-05.aspx
http://www.straitstimes.com/st/print/972060
Circular from URA because of Daniel Choy's feedback
Usage of the Term "Small Office Home Office" - From URA
Effective date
With effect from 25 November 2013
Usage Of The Term “Small Office Home Office”
Background
- We have received feedback on the use of the term “Small office home office” (SOHO) in newspaper advertisements, sales brochures and pamphlets. In particular, purchasers may be under the impression that their property can be used concurrently or interchangeably as a home and an office. This circular will provide greater clarity to developers on the use of the “SOHO” term, when marketing their projects.
SOHO is a marketing term
- SOHO is a marketing term used by developers and estate agents. It does not refer to any specific use or type of development that is allowable or approved by the Competent Authority under the Planning Act. The planning permission for a unit marketed as a SOHO unit is for either residential or office use but not for both uses.
Residential properties and the Home-Office Scheme
- Residential units are intended for long-term residential stay, and cannot be converted to other uses, like commercial uses, that could cause disturbances and inconveniences to residents. However, under the Home-Office Scheme, owners of residential units can use their homes to conduct small-scale businesses, provided they do not cause disamenity to other residents. To do so, the owner must register for the home-office use under the Home Office Scheme (see http://www.ura.gov.sg/uol/home-office/Register/Guidelines/about.aspx for details). Only small-scale businesses that comply with the planning guidelines applicable to home-offices (e.g. not hiring more than two non-resident employees) are permitted within residential units. Other commercial businesses or uses that do not meet the guidelines are not allowed.
- To provide more clarity for purchasers of residential properties, we strongly urge developers who use the term “SOHO” in any of their advertisements to highlight the approved use of the unit to prospective purchasers. Developers should let prospective purchasers know the restrictions on its use by inserting the following pre-approved clause in the Sale and Purchase Agreement and disclosing the contents of this clause to intending purchasers before the acceptance of the booking fee:
“Approved Use of the Unit
The Unit is approved for use for residential purpose under the Planning Act. The purchaser may not use the Unit for any other purpose unless permitted by the Competent Authority or authorised under the Planning Act. The Purchaser is authorised to use the Unit as a home-office for a small scale business only if the conditions for the change to home-office use as set out in the Planning (Development of Land Authorisation) Notification e.g. lodging the required registration form for the change in use with the Competent Authority, are complied with.
Office properties are not allowed for residential use
- Office properties are to be used according to their approved use (i.e. as offices), and are not meant for residential use. Hence, developers should refrain from using the term “SOHO” for office developments in any of their advertisements and should not make any representations to intending purchasers that the office units may be used for residential uses.
Marketing collaterals
- Developers are required to ensure that representations made to prospective purchasers, including but not limited to those in advertisements (e.g. in newspapers or websites) and sales brochures for their projects, are accurate. The Controller will not hesitate to take action if developers are found to have contravened any rule.
- If developers engage estate agents to assist them in marketing their properties, they should provide estate agents with accurate information about the allowable use of the development so that estate agents would not misrepresent any information to the prospective purchasers.
- I would appreciate it if you could convey the contents of this circular to the relevant members of your organisation. If you or your members have any queries concerning this circular, please do not hesitate to call our hotline at Tel: 6329 3512 or e-mail us at ura_coh_registry@ura.gov.sg. We will be pleased to answer queries on this subject matter. For your information, our past circulars to the professional institutes are available from our website http://www.ura.gov.sg.
Thank you.
SIN LYE CHONG
CONTROLLER OF HOUSING
URBAN REDEVELOPMENT AUTHORITY
CONTROLLER OF HOUSING
URBAN REDEVELOPMENT AUTHORITY
Be clear on Soho, URA tells developers
Units marketed as such may be a home or an office - but not both
The Straits Times - November 26, 2013
By: Janice Heng
By: Janice Heng
The Cape (above) is one of Far East Organization's Soho developments. The term Soho usually refers either to homes with design elements such as high ceilings aimed at buyers who may work from home, or to small offices. But the URA says ''Soho'' does not signify any official planning status. -- PHOTO: FAR EAST ORGANIZATION
DEVELOPERS here have been warned to be careful when marketing properties as "small office home office", or Soho units.
They should make it clear to buyers that the term Soho does not refer to any official planning status, said the Urban Redevelopment Authority (URA) in a circular yesterday.
Units marketed as Soho have planning permission for either residential or office use, but not for both, the URA said.
It issued the circular to professional institutes, including the Real Estate Developers' Association of Singapore, after receiving feedback on the issue.
When "Soho" is used in marketing, it usually refers either to small offices, or homes with design elements such as high ceilings aimed at buyers who may work from home.
It is more often used to refer to residential units rather than office ones, said Mr Ku Swee Yong, chief executive of real estate agency Century21.
But as for what exactly a Soho residential unit allows, "the market has been confused for a while already", he said.
Many employees may legitimately do some work from home. What is not usually allowed is running a business out of a home.
Small-scale businesses can be run out of homes only if owners register for the "home-office scheme".
The business must meet guidelines such as not hiring more than two foreign employees.
The URA strongly urged developers to insert a clause stating the approved use of the property in the Sale and Purchase Agreement.
As for all office properties - even if marketed as Soho units - they are not meant for residential use.
Developers should not give a different impression, and "should refrain from using the term 'Soho' for office developments in any of their advertisements".
Far East Organization said it is not marketing any commercial developments under its dedicated 'SO/HO' brand at the moment.
"We support the greater clarity on the use of the 'SOHO' term as set out in the latest circular by the URA," said executive director of property services Chng Kiong Huat.
He added that Far East has "made it a point to highlight" that buyers must comply with regulations if they want to use their residential unit as a home-office.
A call for such clarity was made in April when Mr Daniel Choy wrote to The Straits Times' Forum page, saying the term 'Soho' confuses potential buyers.
His job as a real estate agent is made harder by such confusion, he told The Straits Times yesterday.
He would like developers to be barred from using the term.
Mr Ku sees the circular as aiming "to make our developers a little more disciplined" and raise awareness among agents. But he doubts it will clear the air: "I think the confusion will still go on because there aren't any real punitive measures."
The URA also said developers should "provide estate agents with accurate information".
Regardless of how projects are marketed, agents should be clear on the facts, said Mr Jeffhery Foo, president of the Institute of Estate Agents, Singapore: "There is an onus on us to make such clarifications upfront."
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