Developers hold firm despite fast-approaching ABSD deadline
It is a crisis time for property developers as they face a strict deadline of completing and selling all their units at their residential projects that is due by next year. Developers who failed to sell all their apartment units within the first 5 years of purchasing the residential plot will be charged with Additional Buyer Stamp Duty (ABSD).
The ABSD remission rule was developed back in 2011 that stipulates that residential property developers must construct and also sell units in residential areas within the five years from purchasing the site. If they were unable to do so, they will face a 10% levy on sites purchase price and an additional interest of 5% per annum. The levy was further increased to 15% in January 12, 2013 and residential plots that were purchased on this date or later will be affected.
The impact of the ABSD remission rule could be felt and in recent times companies with unsold stock are increasing their marketing efforts so as to avoid the penalties that arise from the ABSD remission rule and this could amount to multimillion dollars. Several marketing as well as promotional activities are being implemented. Deal sweeteners such as the Deferred Payment Scheme is also introduced. The scheme allows purchasers to pay partial payment of the property at a later stage.
Developers that have only 40% or less units unsold within a development have the alternative of form a company to purchase the remaining unsold units. This is believed to be cheaper than the imposed ABSD charges. By buying the remaining units, developers only need to pay 15% ABSD on the remaining unit, however if there were to pay the levy, it would be 15% of the purchased price of the land and a 5% interest. As housing demand has been regaining gradually, developers remain firm and continue to maintain the prices for these new launches. Hence, even though the ADSB deadline are approaching, developers will less likely be selling their unsold residential units at fire sales price as they still have the holding power to hold on to their units.
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Below are some developments that have newly obtained their TOP.
Upcoming new launch condo
Developments that will TOP in 2017/2018