Singapore to Stabilize Its Property Market

On the 5th of July, the government of Singapore announced that they will be increasing the rates of Additional Buyer’s Stamp Duty. Moreover, they have also decided to constrict the limits of loan that are applied on property purchases. They are doing all this in order to stabilize their property market by keeping economic fundamentals in mind. The announcement was made after they noticed a massive raise in the prices of private homes.

Minister for National Development Mr. Lawrence Wong said that the government has been looking over the property market very strictly and they are worried the prices that are crossing the limits of economic fundamentals. He also said that the reason why they are taking such steps now is that they want to avoid the problems that might erupt in the future.

 

The government has decided to raise the percentage points by 5 percent for Singapore Citizens (SCs) and Singapore Permanent Residents (SPRs) who will be acquiring another home and by 10 percent for entities. There will be also an increase of 5% to the revised 20% for foreigners who are interested in acquiring a residential property in Singapore. There won’t be any change in the rates for SCs and SPRs who are buying their first residential property.

Revised ABSD Rates with effect from 6th July 2018
Revised ABSD Rates with effect from 6th July 2018

 

If a purchase is made by 2 different parties as a joint purchase, they have to pay the highest rate. They will be providing remission for joint purchases which will be available for a married couple on their first residential purchase after marriage. The condition is that one has to be a Singapore Citizen.

 

The couple can also apply for an ABSD remission so long as they manage to dispose their first property within the duration of six months from the date when they bought the property. Or if their new purchase is a new launch condo / new launch apartment that is still Building Under Construction (BUC), the 6 months period will be from the Temporary Occupation Permit or Certificate of Statutory Completion (whichever earlier) of the new development.

 

The new rates will be implemented from 6th July. There will be a transitional provision for Option-To-Purchase (OTP) that are granted on 5th of July or earlier, for these groups of purchasers, they are expected to exercise their new purchase on or before 26th July 2018 in order not to be affected by the revised Stamp Duty Rate.

 

It has been stated that MND will be reducing the residential property loans by 5 percent for all the housing loans that have been given by financial institutions. The new Loan-To-Value (LTV) limit is now set at 75% for borrowers. If the loan tenure was for more than 30 years or if the borrower is of age 65 or more, he or she is allowed to borrow up to 55 percent (subject to eligibility conditions such as income).

LTV Limit with effect from 6th July 2018
LTV Limit with effect from 6th July 2018

 

Likewise, the new borrowing limit will only apply to residential property sold on or after 6th July 2018. The changed limits will not be applicable to loans that have been given by the Housing and Development Board.

 

When the authorities were asked about the reason behind all these actions, they said that the raising rates in the private residence is the reason. The release said that they have been declining this problem from last four years. They said that this kind of raise in the prices can cross the economic fundamentals and this can cause trouble later since the interest rates are also rising up strongly.

 

The government is trying to stabilize the property market and the issue. They are also saying that they will continue to monitor the market.

 

 

Learn more from the links below

https://www.iras.gov.sg/irashome/News-and-Events/Newsroom/Media-Releases-and-Speeches/Media-Releases/2010/Measures-to-maintain-a-stable-and-sustainable-property-market/

https://www.iras.gov.sg/irashome/Other-Taxes/Stamp-Duty-for-Property/Claiming-Refunds-Remissions-Reliefs/Remissions/Remission-of-ABSD-for-A-Married-Couple/

https://www.channelnewsasia.com/news/business/singapore-property-cooling-measures-higher-absd-rates-loan-limit-10502710

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