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URA acts to curb use of 'SoHo' by developers

It says they should clarify approved use of a development

[SINGAPORE] The Urban Redevelopment Authority (URA) is clamping down on the use of the term "small office home office" (SoHo) for commercial and residential units, as the man on the street may be led to think that such units can be used as homes and offices - whether concurrently or interchangeably.

SoHo is a marketing term which, in reality, does not refer to any specific use or type of development. The planning permission for a residential SoHo unit, for instance, gives it clearance to be used as a home. A separate application has to be made for it to be used as a home-office, and several restrictions apply on the kind of business that can be conducted there.

The liberal use of the "SoHo" label has drawn flak, given that such units tend to be marketed at a higher price, and buyers find out - too late - that they cannot be freely used as a home and an office.

Donald Han, managing director at Chesterton Singapore, said: "A lot of people bought shoebox units on the basis of the developer describing them in their brochures as SoHo. With more shoebox units headed for completion, there could be grouses on the ground when people realise that there is no such thing as SoHo use."

The URA has thus issued a circular to developers and their marketing agents, urging them to make it clear to prospective buyers upfront on the approved use of the development. "Buyers should also find out the approved use of the development before committing to a purchase," said a URA spokeswoman.

Developers who choose to continue marketing their projects under the "SoHo" banner will have to spell out the approved use of the unit in the sale-and-purchase agreement. With residential SoHo units, they must include a clause to specify that the unit is to be used primarily as a home, but that the purchaser can, if he wishes, apply for permission to use the unit as a home-office.

Lee Liat Yeang, a partner at Rodyk & Davidson Real Estate Practice Group, said: "I think URA is concerned that when developers say your unit can be converted to a home office, agents may represent that it can be any kind of office."

Terms and conditions apply under the Home Office Scheme. One of these is that the business should not hire more than two non-resident employees. Businesses not allowed in home-offices include maid agencies, beauty or massage services, commercial schools, sales or marketing businesses, courier services or businesses which cause disruption in the neighbourhood.

Mr Lee said: "Potentially, you can apply for home office use for any residential property. Of course, the nearer you are to town, the more likely it is. But with town centres now split among Woodlands, Jurong, and Paya Lebar, I won't be surprised if people buy a residential unit there and apply to convert it into a home office."

On the commercial front, developers and marketing agents can no longer use the term "SoHo" to market office developments, given that offices are not allowed for residential use.

Mr Lee said this appears to be a clear statement from the URA to discourage developers from using the phrase "SoHo" to market office developments.

The circular issued yesterday came on the back of a string of both residential and commercial developments being marketed under the SoHo banner, such as Far East Organization's residential projects The Siena and The Cape and its commercial project PS100 in Peck Seah Street. All 100 strata office units at PS100 were snapped up over its launch weekend.

That Far East features so prominently in the SoHo space is unsurprising. The group introduced the SoHo concept to Singapore, and unveiled a dedicated Far East SO/HO brand in 2011.

Far East's executive director of property services, Chng Kiong Huat, said the group supports the greater clarity on the use of "SoHo". None of Far East's commercial developments are currently being marketed for sale under the SO/HO brand, although future residential projects that align with the specific brand attributes will continue to be marketed as such.

Mr Chng said: "We have made it a point to highlight to prospective homebuyers the approved use of the relevant units under the Planning Act. Specifically, we take care to highlight to purchasers of our SO/HO properties that they will need to comply with the requisite conditions set out by the relevant authorities should they intend to use their residential unit as a home-office."