Sunday, October 23, 2011

Fewer PRs getting landed homes

FEWER landed homes have been sold to permanent residents (PRs) this year compared with previous years as strict new rules trimmed their share of the market.
PRs' share of the landed housing pie fell from 6.8 per cent in 2006 to 3.7 per cent in the first nine months of this year, according to caveats lodged with the Urban Redevelopment Authority (URA).

In fact, only 91 caveats have been lodged for landed homes by PRs so far this year. That is well down from the 179 caveats lodged in the same nine months of last year. For the whole of last year, PRs made up 5.4 per cent of the market.

Law Minister K. Shanmugam said earlier this month that the strict criteria have been tightened again recently, with the number of approved applications set to plunge by more than half.

He did not elaborate on the specific changes to the criteria.

The Government believes landed homes should be mainly for Singaporeans, and that exceptions should be rare.

The issue of foreign ownership has been in the spotlight recently. Some reports have indicated that foreigners - including PRs - are snapping up a larger slice of the housing market here.

PRs who want to buy landed property here have to meet strict criteria under the Residential Property Act, unlike for non-landed homes such as condos.

They must apply to the Singapore Land Authority's Land Dealings (Approval) Unit, which will consider factors such as the person's professional qualifications, work experience and investment in Singapore.

Foreign citizens who are not PRs can buy landed property, but only at Sentosa Cove.

However, the number of caveats lodged by PRs is only an approximation of the number of approvals given. This is because some buyers might choose not to lodge caveats.

But their already falling numbers seem to be in line with the Government's recent push to make it even harder for PRs to buy landed homes.

Property agents that The Straits Times spoke to agreed that obtaining approval has become noticeably tougher in the past few months. They added that approvals are usually given to PRs who are businessmen and professionals, such as lawyers, bankers and doctors.

RealStar Premier Group managing director William Wong said that approvals are typically given to those who have held PR status for at least two years.

'Some might get rejected because the duration of their economic contribution is not long enough. If you have not been here for more than two years, you might not have a high chance,' he noted.

Just this month, an application to buy a good-class bungalow - usually of more than 15,000 sq ft - by one of his PR clients was rejected, surprising even the lawyers, Mr Wong said. The PR, a retired private banker, was told that a smaller house might stand a better chance of approval.

In general, PRs face restrictions buying landed properties larger than 15,000 sq ft, but exceptions have been made in the past.

For example, the former head of a semiconductor firm had bought a good-class bungalow as a Taiwanese PR in the past.

Ms Jasmine Png, a team associate director at OrangeTee, added that approvals usually take between four and six weeks. Whereas approvals used to given in four weeks previously, more are now given only closer to the six-week mark.

Mr Alexs Chua, managing director of property agency AC MacGyver, however, said that he has sold six to eight landed homes to PRs in the past year. They make up about 30 per cent of his clients.

'The rejection rate has been higher compared with one to two years ago. Approvals are usually given to those already living here for a while, with a career and who are committed to be based here. If you spend most of your time out of the country, it might be harder to obtain approval,' he noted.

Over the last three years, an average of about 230 applications were received each year from PRs for the purchase of landed residential property. About 60 per cent of the applications were approved, the Law Ministry said.

Foreign ownership of landed homes now stands at about 3.5 per cent.

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