ABSD remission is currently obtained by upgraders to ECs; after receiving a key to the latest Executive Condo unit, they are given 6 months to dispose of their HDB flats.
The head of the Singapore Real Estate Developers’ Association advised the government to immediately consider allowing those first-time upgraders to delay payment of the Additional Buyer’s Stamp Duty (ABSD) from their HDB flat to private property until six months after the completion of the private property.
This follows the government’s clampdown on Monday on the re-issuance by private housing developers of options to buy (OTPs).
Currently, ABSD remission is granted to HDB upgraders who purchase a new executive condominium (EC) unit. (ECs are a mixture of public-private housing.) After having obtained the key to their new EC home, this party is given 6 months to dispose of their HDB flats.
If the proposal of Redas President comes into effect, HDB upgraders purchasing a private home will not face the burden of having to pay the Additional Buyer Stamp Duty (ABSD) within 14 days of signing the selling and purchase agreement.
This will benefit a lot to ease the cashflow of the actual first-time upgraders and hence minimize the need to order the OTPs to be extended, “Mr Chia said on Tuesday.”
Private property owners have to pay 12% ABSD if their former home has not been leased.
For Singaporeans purchasing their second residential home, this ABSD rate applies. However, if the transaction is made by a married couple (which must include a citizen of Singapore), if they sell their first residential property within six months after the sale of the second property (assuming it was not finished at the time of purchase), they are entitled for a refund from the ABSD. Within six months of the acquisition date of the second home, Singaporean couples purchasing a completed second property have to sell their first house.
The Ministry of Finance ( MOF) said on Monday in a reaction to queries from The Business Times last week that ABSD is intended to mitigate demand for residential properties.
“Any changes to the ABSD system would have an effect on the residential property market and should therefore not be looked at in isolation. In order to ensure a healthy and healthy residential property sector in Singapore , the government continues to closely track the residential property sector,” said a spokesperson for the MOF.
Buyers who need more time to sell their new homes have been demanding the reissue of OTPs.
On Monday, the government imposed new conditions on housing developers’ sales licenses.
These involve prohibiting developers from providing buyers with upfront deals to re-issue the OTPs, preventing developers from re-issuing OTPs within 12 months of the expiry of the earlier OTP to the same buyers for the same unit, and requiring developers to notify buyers of this condition up front.
However, upon request, the authorities are prepared to extend, up to 12 weeks from the date of the OTP, the three-week validity duration of the OTP. In the past, OTP validity could be continued for up to eight weeks or, upon expiry, the OTP could be reissued.
In his speech at Redas’ Mid-Autumn celebration, Mr. Chia urged the government to consider extending additional relief and versatility, considering the economic downturn, to assist the real estate and built environment market.
“It will help all affected parties to prepare ahead better and carry out updated contingency plans,” he said at the event.
“We have recently expressed the important concerns of our members to the Minister and offered input and recommendations for a more competitive near-and long-term property market,” Mr. Chia said.
Desmond Lee, Minister for National Growth, was the guest of honour at the gathering. In his response, Mr. Lee stated: “We will continue to closely watch the effect of the pandemic on the sector and, where appropriate, change our policies.”
Many of the latest government programs include granting investors a six-month extension of the construction date of the project and remission deadlines for ABSD.
Mr Lee has said the importance of creating resilience in the environment has been shown by the pandemic. “We need to be prepared to take on potential incidents of the ‘black swan’ that could arise… For example, we should look at how we handle the acquisition and management of building materials, increasing digitalization, and implementing more innovative construction technology.”
“He added:” More than anything else, this pandemic has reinforced our mutual commitment to speed up the transition of our entire sector of building and development ecosystem, so that we become more interconnected and resilient. This will also help us increase efficiency, allowing us to develop and manage our city more efficiently and sustainably.
By pursuing development and advancement activities and encouraging the implementation of innovative methods, technologies and prototypes, developers play a vital role in this.
Mr Lee also emphasized that “we would need to recognize the degree to which Covid-19 may permanently change the way we live, function and play” in planning and developing the city.
Working from home is an example. But it might well be that some firms want to preserve substantial flexible employment practices for company resilience until Covid-19 finally passes, as it may. Workers’ mentality as preferences will also change. With more people working from home, we may anticipate shifts in their habits of driving, shopping use and lifestyle to arise.
Some of these improvements are short-term, while others could well be lasting systemic changes, and as far as technology and systems are concerned, we will have to be sensitive. If the pandemic begins to unfold ahead of us, much of this needs to be closely considered, so that we can see how our urban environment would need to alter and evolve, ”he said.