Saturday, December 10, 2011

Why projects must be built and sold in five years

Straits Times: Sat, Dec 10
THE Government has explained its rationale behind a new rule requiring developers to build and sell all units on residential sites within five years or face a 10 per cent stamp duty.


In response to questions posed by The Straits Times, the Ministry of Finance (MOF) said the five-year limit is imposed to ensure that developers follow through with the development.


'A five-year condition for completion of development and sale is needed, as otherwise, developers holding on to their units are no different from corporate entities holding investment properties,' an MOF spokesman added.


Developers will have to develop any residential land parcels they buy from Dec 8 and sell all the units in the project in the timeframe - if they want to avoid paying the new 10 per cent additional buyer's stamp duty.


These include government land sale (GLS) sites and private-sector sites, including collective sales.


Experts had said this is likely to take a toll on the collective sale of large sites as the possibility of poor market conditions or delays in court approval could make a developer think twice about whether it is able to meet the five-year deadline.


They added that land banking has been made more difficult and costly and these costs might be passed on to end-buyers eventually.


On whether exceptions to the five-year deadline might be considered, the MOF said any appeal for extension will depend on the facts and merits of each case.


Five years is a reasonable time for developers to complete and sell their developments, it added.


The cooling measures on Wednesday included an additional 10 per cent buyer's stamp duty on foreigners and corporate entities buying any residential property.


Even before the additional stamp duty was introduced, any developer buying a GLS residential site had been given a five-year limit by the state to complete the project, but there was no stipulated timeframe for the sale of units.


ESTHER TEO


Source: The Straits Times © Singapore Press Holdings Ltd

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