Finances and Construction of Semi-Detached

[leechaorui 2]

Would like to seek some advice/ opinion on finances and construction of semi-detached house with slightly more than 6000 sqft land.  The land is fairly rectangular with about 15m frontage, backyard width of about 12m and 43m depth.  Neighbouring semi-detached is slightly below 6,300 sqft.  Currently this semi-detached has done A&A in year 2000.  It looks like an old house with only 3 bedrooms of modest size and the house is small relative to the land.  The current planning guidelines allow for construction of 3.5 storey and the house directly opposite of mine built 3.5 storey without piling as the soil is very solid.  The building contractor opined that the area around do not require piling.

Three possible options that are available:

1.  Retain the house as it is.  It has the old charm of the yesteryears black and white house but the living space is tight though there is a lot of greenery around the house.  

2.  Demolish and erect into another semi detached.

3.  Demolish and erect into a detached house.

Prefer to have more greenery and therefore, not looking to maximise GFA in terms of ground floor space but will install a lift if the house is reconstructed and build to 3.5 storey.  I am a simple person and do not need to decor the house with parquet flooring, huge marble/ granite slabs, fancy cabinets, lighting, sanitary wares, etc.. Looking to use only homogeneous tile for interior space and simple cabinets (do not have so much things to keep).  For bedrooms, vinyl flooring is fine, no need full glass windows but will need aircon, more powerpoints around the house including charging station for electric cars and use pavers for car park areas, a motorised gate with a gate pillar that can also double up as a dropbox.  The house should be built in a way that it is easy to maintain.  The rest of the outdoor areas can be grassland.

In terms of finances, there is still an outstanding housing mortgage loan which can be settled by paying off using CPF savings and there is still excess for retirement.  No other financial debts.  In purchasing this house, CPF was not used and if CPF is used now, it will be the first time that CPF is utilised.  

In terms of cash, have about $900K in cash savings excluding shares and stable annual income of about $0.5m.  If chose to rebuild, will probably wait for the recession to hit first before embarking on reconstruction as the cost of rebuilding now is quite high.  If rebuild, will have to move out and probably stay with parent.

Advice needed on whether I should rebuild given my current financial situation and if rebuild, should go for semi-detached or detached?  Currently the property tax of this house is not high as the living area is small but reconstruction will probably expand the living space signifcantly and cost more in terms of yearly property tax payment and other expenses of maintaining the house such as lift servicing, more toilets, etc.  Have probably not included all information about rebuilding or finances but feel free to ask.  

 

 

 

  

 

 

  

Edited September 3, 2022 by leechaorui
add in the backyard width dimension.

[snoozee 98]

@leechaorui, I typed a long reply to you but need moderator to approve. so just have to wait

[petetherock 13]

I’ve also been stuck in this zone too .. 

[leechaorui 2]

Thanks Snoozee and Peteherock. Will wait patiently to read your advice/comments. 

[petetherock 13]

On 9/1/2022 at 8:58 PM, leechaorui said:

Would like to seek some advice/ opinion on finances and construction of semi-detached house with slightly more than 6000 sqft land.  The land is fairly rectangular with about 15m frontage, backyard width of about 12m and 43m depth.  Neighbouring semi-detached is slightly below 6,300 sqft.  Currently this semi-detached has done A&A in year 2000.  It looks like an old house with only 3 bedrooms of modest size and the house is small relative to the land.  The current planning guidelines allow for construction of 3.5 storey and the house directly opposite of mine built 3.5 storey without piling as the soil is very solid.  The building contractor opined that the area around do not require piling.

Three possible options that are available:

1.  Retain the house as it is.  It has the old charm of the yesteryears black and white house but the living space is tight though there is a lot of greenery around the house.  

2.  Demolish and erect into another semi detached.

3.  Demolish and erect into a detached house.

Prefer to have more greenery and therefore, not looking to maximise GFA in terms of ground floor space but will install a lift if the house is reconstructed and build to 3.5 storey.  I am a simple person and do not need to decor the house with parquet flooring, huge marble/ granite slabs, fancy cabinets, lighting, sanitary wares, etc.. Looking to use only homogeneous tile for interior space and simple cabinets (do not have so much things to keep).  For bedrooms, vinyl flooring is fine, no need full glass windows but will need aircon, more powerpoints around the house including charging station for electric cars and use pavers for car park areas, a motorised gate with a gate pillar that can also double up as a dropbox.  The house should be built in a way that it is easy to maintain.  The rest of the outdoor areas can be grassland.

In terms of finances, there is still an outstanding housing mortgage loan which can be settled by paying off using CPF savings and there is still excess for retirement.  No other financial debts.  In purchasing this house, CPF was not used and if CPF is used now, it will be the first time that CPF is utilised.  

In terms of cash, have about $900K in cash savings excluding shares and stable annual income of about $0.5m.  If chose to rebuild, will probably wait for the recession to hit first before embarking on reconstruction as the cost of rebuilding now is quite high.  If rebuild, will have to move out and probably stay with parent.

Advice needed on whether I should rebuild given my current financial situation and if rebuild, should go for semi-detached or detached?  Currently the property tax of this house is not high as the living area is small but reconstruction will probably expand the living space significantly and cost more in terms of yearly property tax payment and other expenses of maintaining the house such as lift servicing, more toilets, etc.  Have probably not included all information about rebuilding or finances but feel free to ask.  

 

 

 

  

 

 

  

You'll need to share more on your budget, number of family members, intended stay etc etc

Eg, someone intending to flip should not do too much. Renovations don't add as much value as the owner may perceive..

But if it's your forever home, then a rebuild will make more sense, especially if there are many inhabitants. Talk it through with your spouse, your wallet and then your head... good luck

[leechaorui 2]

3 hours ago, petetherock said:

You'll need to share more on your budget, number of family members, intended stay etc etc

Eg, someone intending to flip should not do too much. Renovations don't add as much value as the owner may perceive..

But if it's your forever home, then a rebuild will make more sense, especially if there are many inhabitants. Talk it through with your spouse, your wallet and then your head... good luck

Don't plan to flip but if there is a good offer that comes along the way, I may sell the property.  Not a big family and the current small living space in the house though tight is still tolerable. 

The contractor who does construction work opposite my house shared that construction cost is facing constant upward revision due to inflationary pressure in raw materials, wages and services cost.  As the family is not big, I don't plan to maximise the ground floor area, probably can use about 2000 sqft of land out of the 6000+ sqft of land to build upwards. 

Not sure of budget required to rebuild and if rebuilt, I am also undecided on whether to construct semi-detached or detached.  In any case, prefer not to take construction loan or bank loan to do construction if I can help it.  Another concern is my neighbour may also rebuild and given his land size of close to 6300 sqft, he could potentially construct a very big house. If I construct a smaller house, the visual contrast between the 2 houses could be very great.  One could look very grand while the other could appear quite mickey mouse and small.

 

I thought renovation such as a new rebuild would still be able to add quite tremendous value to couples. 

[snoozee 98]

7 hours ago, leechaorui said:

Don't plan to flip but if there is a good offer that comes along the way, I may sell the property.  Not a big family and the current small living space in the house though tight is still tolerable. 

The contractor who does construction work opposite my house shared that construction cost is facing constant upward revision due to inflationary pressure in raw materials, wages and services cost.  As the family is not big, I don't plan to maximise the ground floor area, probably can use about 2000 sqft of land out of the 6000+ sqft of land to build upwards. 

Not sure of budget required to rebuild and if rebuilt, I am also undecided on whether to construct semi-detached or detached.  In any case, prefer not to take construction loan or bank loan to do construction if I can help it.  Another concern is my neighbour may also rebuild and given his land size of close to 6300 sqft, he could potentially construct a very big house. If I construct a smaller house, the visual contrast between the 2 houses could be very great.  One could look very grand while the other could appear quite mickey mouse and small.

 

I thought renovation such as a new rebuild would still be able to add quite tremendous value to couples. 

if there is an intention to flip, then you need to plan out your timeline. landed houses prices will usually go up in the long run. back in late 2000s, an inter-terrace can be bought for 700k+. When the property prices spikes through to 2014, inter-terrace prices were averaging for around 2M. Even though prices came down by about 10% (experts were harping 20% drops) after 2014 till 1st quarter 2017, the prices are still way higher than late 2000s. Today, an inter-terrace starting price is from 2.5M up. My reference is around where I'm currently staying and all based on old inter-terrace houses which are at least 30-40 years old. Also remember that if you sell high, you will also need to buy high if you plan to buy another landed house after you sell your current one. Of cos there's always the option of downgrading to a condo in future if your kids decide not to stay with you and your spouse after they get married.

at this point, tender prices are about 30 percent higher than back in 2019. you can see the cost of raw materials (BCA data) from the table below.

if you are planning to have a house with 2000sqf foot print, potentially you can have about 5000+sqf built up for a 2.5 storey house. assuming 5000sqf at $400 per sqf, you are looking at a construction cost of about $2M.

don't worry too much about what you neighbour might do in future as that is beyond your control. design and build your house to your own personal requirements and preferences. nowadays developers usually max out the entire site to build huge houses and if yours has lots of greenery, it can become a unique selling point also. Do note that if you are intending to convert to a detached house, you are also bound by a site coverage ratio of 50% (40% if within GCB areas). So if you detached your house from your neighbour, your neighbour if he choose to rebuilt will also need to redevelop into a detached house and thus will be bound by this site coverage ratio. As such, you are unlikely to have the huge house and mickey mouse house issue.

I think what Pete is trying to say is that if you are planning to flip in the near future, don't spend too much on doing renovations (A&A) as it doesn't add much value to the existing house. rebuilt is another thing on its own

[leechaorui 2]

There is no intention to flip but will consider selling if offered a very attractive price.  You are spot on in the cost of demolition and erection of new house.  The contractor that is building the house opposite of my place did quote me imformally : design and build, $2m for 3.5 storey and construction is  expected to take up to 2 years from the time submissions are approved and work can be started, baring any unforeseen circumstances.  This price doesn't include lighting, cabinets, toilet items, aircon, solar panels, etc.. but include vinyl flooring/ homogenous tiles for flooring, door frames, one small made in China lift, wooden doors with keys, aluminium windows, gate pillar, motorised gate, termite treatment with warranty and all M&E works and carpet grass for the garden.  I think his price is less than $400 psf, though it still adds up to $2m.

To pay for the rebuilding cost, I will still need to save up for a few more years.  Hence, not in a hurry to rebuild.  For rebuild, is it better in terms of value appreciation to build into detached or remain as semi-detached?

At present, my house is in livrable condition as A&A works was done in 2000 by the previous owner.  You are right in your computation of landed property prices as the prices have moved up quite a fair bit over the last 20 years.  

It is fine with me to keep the house as it is and moving house is quite a big hassle.  The cost to pay for constuction is also quite steep, not to mention the after construction defects discovery.  If shoddy materials and workmanship took over from good sense construction, the house will end up with a lot of difficult to rectify defects.  The trouble of chasing after contractor, getting them to honour their commitment and setting aside time for defect rectification works can be quite painful and disruptive.

This money if not spent on construction, can be a good source of reserve for comfortable retirement.   Hence, don't really know if I should really plan to rebuild.

 

 

 

 

Edited September 6, 2022 by leechaorui

[snoozee 98]

then you need to ask yourself what is deemed by "attractive".

your 2M estimate based on less than $400psf is because of the calculation of 3.5 storey. based on 2000sqf foot print, the potential built up for 3.5 storey is almost 7000 sqf hence the cost. I think most design and build contractors will exclude all those items. But if you go through an architect to project manage for you, these items can all be part of the tender requirements so contractors will have to quote for them as well.

whether a semi-d or detached will be of higher value will depends on your location. you can do a quick search for any properties currently being sold around your area and see how much they are being sold for. comparison criteria would be houses with same number of storey with similar land size and age.

construction cost is always going to go up due to inflation and such. So if there is a compelling reason now for you to rebuild and this reason will still be there 5 or 10 years down the road, then you might as well do it now rather than later. at least you will have more years to enjoy the house by doing it earlier.

I would suggest you discuss with your partner on what are your long term plans esp the lifestyle after retirement. I think most of us who have kids would like to have at least one kid eventually staying with us even after they get married even though the kids may think otherwise. So if you rebuilt your house to a 7000 sqf house but end up only 2 pax staying there, would you want to stay in an empty house? or are you contented with the size of the current house which may still be big for 2 pax but still manageable. But if the house is going to be your home till you grow old, does the infrastructure allow you to move around easily? we all will grow old and if unfortunately if our legs decided not to work well in future, will we be able to climb up and down the stairs daily if there's no lift in the house?

There can be 1001 questions to be asked but these can only be asked and answered by you and your partner. In short, the answers to your plans 15 or 20 years down the road will give you the answer to whether to take the plunge today to rebuilt the house.

[leechaorui 2]

Hi Snoozee, the houses that are sold at the estate I am staying in are quite varied in prices.  There was a 5000sqft old semi detached (condition is very poor, no window, no door, seriously damaged flooring, etc..) along the road sold for $6.9m.  There are also terrace houses sold for between $3m to $4m.  There are a few new built detached and semi-detached houses of about 2400sqft for semi detached and about 4,000 sqft for detached sold for $6m and $10m respectively.  Didn't really keep track of prices after I bought the house and only look at the prices now.

The house just right behind me is huge.  The agent shared with me that the owner sold the house for $27m.  The prices have quite big variation.

You are right about empty house.  Hence, not sure of whether to rebuild as there are not many people in the house.  Having a bigger house is nice but high maintenance cost, very low utilisation and high taxes are the consequences.

 

 

Edited September 7, 2022 by leechaorui

[snoozee 98]

your area is a 3 storey landed zone or one that is governed by plot ratio hence will fetch a premium over houses in a 2 storey landed zone since there is a potential to build bigger houses with the additional storey.

based on the data you provided, old houses are being sold at a cost of about $1400psf and new houses at about $2500psf.

The price variations will depend on who actually bought the houses as well as the potential of the land. for the $27M house, if it was bought by a developer, there could be a potential to built into a cluster house (if the land is big enough) or into multiple semi-d or terrace houses. I'm not sure how huge this piece of land is, but assuming $27M at $1400 psf, the land size would be about 20,000sqf. Assuming the land size is 20,000sqf and there is enough frontage, the developer could build 8 units of 2500sqf semi-d on that plot of land as each semi-d needs to be at least 200sqm in size. with each semi-d being sold at $2500psf, each unit can be sold at $6.25M which will net the developer $50M. After factoring in construction costs, stamp duties, etc, there is a potential profit of maybe 10M for the developer.

now back to your house. Assuming your house can be sold at $1800psf, which is about $10M, would you flip it now for gains assuming you have reached your MOP? since brand new houses are sold at $2500psf, if you rebuilt your house and sell it, it can potentially net you $15M. So even if you spend $2M to rebuilt it, there is a potential gain of $3M. Is this enough to entice you to flip the house since $3M will likely be able to give you a very nice retirement? Your net gain is likely to be more since I don't think you bought the house for $10M in the first place.

Now, even if you don't do anything now, with inflation and land price appreciation in the future, you would still be likely to be able to sell the existing house for $10M or close to this figure. There are only about 80K landed houses in Singapore and not all of these 80K of houses are freehold as well so even if there is recession in the (near and far) future, we are unlikely to see big corrections in freehold landed house prices.

[leechaorui 2]

Hi Snoozee, I am not sure of plot ratio.  So far, I noticed that the houses surrounding me could build to 3.5 storey.  I doubt that my house would be worth $10m.  That is a lot of money.  I can see your logic that even with rebuilding cost sunk in, the value of the house can still appreciate further and more than the construction cost.  Thank you for your sharing.

[snoozee 98]

3 hours ago, leechaorui said:

Hi Snoozee, I am not sure of plot ratio.  So far, I noticed that the houses surrounding me could build to 3.5 storey.  I doubt that my house would be worth $10m.  That is a lot of money.  I can see your logic that even with rebuilding cost sunk in, the value of the house can still appreciate further and more than the construction cost.  Thank you for your sharing.

search online for URA Space. then select Check Control Plans. On the top left hand side, click on Filter and turn on the Landed Housing Area filter.

after that you can go to where you house is located on the map and see if it falls under any red areas. If it does, then your area should read 3-STOREY MIXED LANDED which indicates all types of landed housing up to 3 Storey plus attic.

if your house area don't fall under a landed housing zone, then you will need to go back and check the URA master plan. You can go back to the first page of URA Space and select Explore Development Site then on the top left side, click on Layers and select Master Plan Approved Amendments. After that go to where your house is located on the map. if your house is marked with beige colour and nearby with the number "1.4", it means your house is governed by plot ratio which usually indicates can built up to 3 storey plus attic as well for a single landed dwelling.

[leechaorui 2]

Hi Snoozee,  followed your navigation to URA website.  There is nothing on Road Reserve.   Got the following info.  

GROSS PLOT RATIO (GPR)

GPR of landed houses is resultant of the allowable building envelope

 

BUILDING HEIGHT CONTROL

Maximum 3 storey

 

 

[snoozee 98]

7 hours ago, leechaorui said:

Hi Snoozee,  followed your navigation to URA website.  There is nothing on Road Reserve.   Got the following info.  

GROSS PLOT RATIO (GPR)

GPR of landed houses is resultant of the allowable building envelope

 

BUILDING HEIGHT CONTROL

Maximum 3 storey

 

 

road reserve won't be on URA site. need to buy the plans from SLA.

your house should be on a location which is governed by plot ratio and building height since you see the above information. basically can rebuilt to 3.5 storey house max.