Wednesday, December 7, 2011

URGENT! Additional Buyer's Stamp Duty for a Stable and Sustainable Property Market

07 Dec 2011 07:40 PM
1              The Government announced today an Additional Buyer’s Stamp Duty (ABSD)to be imposed on certain categories of residential property purchases. The ABSD will be imposed over and above the current Buyer’s Stamp Duty, and will apply to the purchase price or market value of the property (whichever is higher) for the following purchases:
a)    Foreigners and non-individuals[1] (corporate entities) buying any residential property will pay an ABSD of 10%;
b)    Permanent Residents (PRs) owning one[2] and buying the second and subsequent residential property will pay an ABSD of 3%; and
c)    Singapore Citizens (Singaporeans) owning two2 and buying the third and subsequent residential property will pay an ABSD of 3%.
The ABSD will take effect on 8 Dec 2011[3]. Remission of ABSD will be given for options granted on or before 7 Dec 2011 andexercised within 3 weeks (i.e. on or before 28 Dec 2011) or the option validity period, whichever is the earlier.
2              The Government's objective is to promote a sustainable residential property market where prices move in line with economic fundamentals. Prices of private residential properties have continued to rise, albeit more slowly in the last two quarters. Prices are now 13% above the peak in 2Q1996 and 16% above the more recent peak in 2Q2008.
3              Even with the current economic uncertainties, the demand for private residential property remains firm. Given the uncertainty in stock markets and with interest rates remaining low, private property in Singapore continues to attract investors, local and foreign. Excessive investment demand will however make the property cycle more volatile, and thus increase the risks to our economy and banking system.  
4              The Government has therefore decided to impose the ABSD to moderate investment demand for private residential property and promote a more stable and sustainable market. A higher ABSD rate for foreign buyers in particular is necessary, in view of the large pool of external liquidity and strong buying interest from abroad, and the relatively small size of the Singapore market. Foreign purchases account for 19% of all private residential property purchases in 2H2011, up from 7% in 1H2009.
5              The ABSD will apply in addition to the existing Buyer’s Stamp Duty on property purchases, which are applied at following rates: 1% on first $180,000 of purchase consideration or market value of the property (whichever is higher), 2% on the next $180,000 and 3% for the remainder.
6              For purchases made jointly by two or more parties (e.g. a Singaporean with a PR, or a PR with a foreigner), the higher applicable ABSD rate will be imposed. For example, if a citizen purchases a property with a foreigner, the ABSD of 10% will apply. In the case of a joint purchase by Singaporeans, who each already owns properties, the ABSD of 3% will apply as long as one of the purchasers already owns two properties.
7              Singaporean first time buyers and upgraders, and buyers of HDB flats[4] will not be affected by the new measure. Certain reliefs will be provided so that the measure will not impact home occupation demand by residents. For example, relief will be provided for Singaporean-foreigner/PR married couples buying their homes. Reliefs will also be provided for qualifying developers and for purchases falling within the scope of Singapore’s international trade agreements. More details will be provided on the IRAS website.
Adequate Supply of Private Housing to Meet Demand 
8              The Government will also continue to ensure an adequate supply of private housing to meet medium term demand. There are 41,000 unsold private housing units in the pipeline. The Government will inject sites that can potentially yield a total of 14,100 units in the 1H2012 Government Land Sales (GLS) Programme, similar to the supply in previous GLS programmes. Of these, about 7,000 units will be from sites on the Confirmed List. These numbers take into account the ample pipeline supply and the dampening effect of the ABSD.   
9              To give more Singaporean households the chance to own or upgrade to private housing, the Government raised the monthly income ceiling for the purchase of new Executive Condominiums (ECs) from $10,000 to $12,000 in Aug 2011. We will expand the EC supply in 2012 and are prepared to release sites that can potentially yield 5,000 EC units for the entire year. Sites for 3,500 EC units will be made available in 1H2012, including 3,000 EC units on the Confirmed List. The Confirmed List quantum is comparable to the 3,000 EC units from 5 sites sold for the whole of 2011. More details will be provided in the press release for the 1H2012 GLS Programme on MND’s website.
10              The Government will continue to monitor the property market and adjust our property policies in step with changes in the market and the economy. Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance, said, “We have always had open markets and must keep them that way. However, the reality is that investment flows into our property market are now larger than before, and unlikely to recede as long as interest rates remain low. The additional buyer’s stamp duty should help cool investment demand, and avoid the prospect of a major, destabilising correction further down the road.”
11              Khaw Boon Wan, Minister for National Development, said, “We are ramping up the supply of new EC units through the Government Land Sales Programme. This will help higher-income Singaporeans own private condominium units in an affordable way, as the sale of new EC units is restricted to Singaporean households only.” 
Issued by the Ministry of Finance & Ministry of National Development
7 Dec 2011


ANNEX 1
Existing and Additional BSD Rates
 Transaction
On and before 7 Dec 2011
On or after 8 Dec 2011
Existing BSD rates on the total purchase price or market value (whichever is higher)
Existing BSD rates on the total purchase price or market value (whichever is higher)
Additional BSD rates on the total purchase price or market value (whichever is higher)
Foreigners and non-individuals (corporate entities) buying any residential property
1% on first $180,000
2% on next $180,000
3% for the remainder
1% on first $180,000
2% on next $180,000
3% for the remainder
+10%
PRs owning one and buying thesecond and subsequent residential property
+3%
SCs owning two and buying the third and subsequent residential property
+3%
PRs buying the first residential property
1% on first $180,000
2% on next $180,000
3% for the remainder

No Change
NIL
SCs buying the first and/ or second residential property

 Examples of Additional and Total Buyer’s Stamp Duty Payable 
 Assume property purchase of $1 million

SCs buying first and/or second residential properties
PRs buying first residential property
Foreigners and non-individuals
PRs owning one and buying the second and subsequent residential property
SCs owning two and buying the third and subsequent residential property
Existing buyer’s stamp duty 
$24,600
$24,600
$24,600
$24,600
Additional buyer’s stamp duty
NIL

$100,000
$30,000
$30,000
Total stamp duty on $1 million purchase of residential property
$24,600

$124,600
$54,600
$54,600


[1]This includes corporate, trusts and collective investment schemes amongst others.
[2] A person is regarded as owning a property for the purpose of ABSD as long as he owns part of that property. Overseas properties will be excluded from the count of properties owned.
[3] The measure will apply to a property purchase if the option for purchase is exercised or the agreement for transfer is executed, whichever is earlier, on or after 8 Dec 2011. Where no option for purchase is granted and only an agreement for transfer is executed, then the measure will apply to the agreement for transfer if it is executed on or after 8 Dec 2011. 
[4] The purchase of HDB properties will not be affected by this measure. Only Singaporeans and Permanent Residents are eligible to be HDB flat lessees (i.e. own a flat). Existing residential property owners who buy an HDB flat or a new unit under the Design, Build and Sell Scheme (DBSS) or the Executive Condominium (EC) Housing Scheme will not be subject to the ABSD, since the existing flat/property will have to be disposed of as part of the conditions for the purchase of the HDB/DBSS flat or EC unit.

1 comment:

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